Regional airline Rex will take on Qantas and Virgin Australia for the hearts and wallets of frequent flyers with the launch of its own loyalty program later this year.
The challenger confirmed the timeline in a statement this morning, citing a positive outlook based on its revenue and traffic for July 2022, with those results expected to “be further boosted by the launch of our Frequent Flyer programme in the coming months.”
Regional Express will also step up the growth of its inter-city Boeing 737 network. A seventh jet will take to the skies “later this month, and we are in advanced discussions to lease another two for later this year” – representing a 33% increase in the size of the currently six-strong fleet.
The Rex Frequent Flyer program underpins the airline’s bold move to become Australia’s third national carrier since it commenced flights between Australia’s capital cities in March 2021.
The airline now connects Sydney, Melbourne, Canberra, Brisbane, Adelaide and the Gold Coast with a fleet of Boeing 737 jets, in addition to a well-established regional network serviced by Saab 340 turboprops.
A 2020 presentation to investors and sighted by Executive Traveller listed the launch of the Rex Frequent Flyer program as a ‘strategic milestone’, with an eventual value between $1 billion and $1.6 billion “in 3-4 years” after capital city flights commence, at which point the airline predicts it will reach a total market capitalisation of $5 billion.
Rebooting Rex Flyer
Prior to its foray into the jet era, Regional Express operated a loyalty program called Rex Flyer, which operated along very simple and straight-forward lines: take nine paid flights and get one flight for free.
It’s speculated that the rebooted Rex Flyer will skew towards a more conventional points-based system, with travellers earning some form of ‘Rex Points’ according to the type and value of ticket they buy.
Whether this would also include some form of status credits, which in turn would deliver selected perks such as lounge access and upgrades to the airline’s most frequent flyers, remains to be seen.
The airline’s Business Flyer program remains active and is aimed at travellers who belong to a business with an ABN (and carries a $99 two-year membership fee).
The business owner and employees can attach their Rex Business Flyer membership number to a Regional Express booking; for every sector flown under the membership number, the business receives one point.
Earning 18 points within two years sees the business given two Reward Flights: these are valid for any seat on any Rex flight within the following six months, and can be booked for anybody, not just the business owner or staff.
Challenges and opportunities
But there’s no doubt the Rex Frequent Flyer program will have to muscle its way into a loyalty landscape dominated by two well-established players.
The behemoth Qantas Frequent Flyer scheme has close to 14 million members, many of them considered to be rusted-on followers of the Flying Kangaroo.
Virgin Australia’s competing Velocity Frequent Flyer lists almost 11 million members on its books, although there’s considered to be a high degree of duplication between Qantas and Virgin due to travellers holding membership and status in both programs.
The typical perks of a frequent flyer program range from priority services such as check-in, boarding and luggage handling and a more generous luggage allowance to preferential seat selection and airport lounge access.
At the same time, building a new program from scratch will give Regional Express “a unique opportunity to be different to the cookie-cutter frequent flyer model and bring real competition to the domestic market,” loyalty specialist Mark Ross-Smith, CEO of Loyalty Data Co, told Executive Traveller last year as the prospects of a revitalised Rex rewards program appeared on the horizon.
“When Virgin Australia revamped its Velocity frequent flyer program in 2011, it shook up the market and drew spend away from Qantas.”
Room for three?
A crucial part of the Regional Express loyalty proposition will be the ability to earn frequent flyer points on the ground, Ross-Smith says, through a network of carefully-chosen retail partners – with banks at the forefront.
“Both Qantas and Velocity generate significant, high-margin revenue by selling frequent flyer points to banks and third parties,” he explains.
“The big banks are likely to welcome Rex into the loyalty program and eventually the credit card space, as having a third domestic player will place downward pressure on the price banks pay airlines for each point.”
But is there room for three home-grown frequent flyer programs?
"The big winner will be the Australian people, with more choice," Ross-Smith reflects. "Ultimately the market will decide.”