Regional airline Rex plans to launch flights between Australia's capital cities, taking on Qantas and a reborn Virgin Australia in the process to create what it calls "a three-airline market."
The ambitious project would see Rex carve out a share of the east coast's highly-profitable 'Golden Boomerang' corridor as well as the coast-to-coast transcontinental route.
“Presently Rex flies from to the regional centres to all the capital cities in Australia," Rex deputy chairman John Sharp told ABC Radio, "and the proposition is that we add to that by flying between (the capital cities)."
Rex's capital city push would call for a $200m warchest courtesy of deep-pocketed investors.
“We have been talking to half a dozen private equity and investment banking entities about investing in this new venture,” Sharp told The Australian Financial Review, adding that Rex intended to settle on a single partner "in the next three weeks or so."
This announcement by Rex also appears timed to spoil or at least soften initial bids for Virgin Australia, the first round of which are due this Friday, May 15.
Administrator Vaughan Strawbridge of Deloitte has previously said 20 "interested parties" were scoping out the sale, but their bids could be reduced if they see a more competitive market taking shape in what has until now been considered a two-horse race.
Deloitte's pitch to the would-be owners of Virgin Australia highlighted its key domestic routes, including the 'Golden Triangle' of Brisbane, Sydney and Melbourne, which it described as "historically one of the most profitable operating jurisdictions globally for air travel."
What capital cities would Rex fly to?
Rex currently connects regional centres to one another and also to many mainland capitals, but its new capital city service would offer direct flights between Sydney, Melbourne, Brisbane, Adelaide and Perth.
This would mirror the core domestic network of Qantas, Virgin Australia and Jetstar, although the number of routes and the frequency of those services would depend on how many aircraft Rex could field.
What aircraft will Rex fly?
To launch its capital city network, Rex would seek to lease 10 single-aisle jets, either in the Airbus A320 or Boeing 737 series.
The airline believes that in the current depressed state of the air travel market, these jets would be available at very attractive rates.
Will Rex capital city flights be low-cost or full-service?
Rex deputy chairman John Sharp tells The Australian Financial Review that the new capital city service would be a cross between Qantas and Jetstar but with a lower cost base, saying "this will be halfway between a full-service airline and a low-cost airline."
This is a similar 'hybrid' model that's been mooted for Virgin Australia Mk II and also flown overseas by the likes of JetBlue, Norwegian and, some would suggest, AirAsia X.
Will Rex capital city flights offer business class?
Rex's capital city playbook is still a work in progress, but is more likely to include a 'premium' cabin rather than full-service business class.
However, this could extend to being more of a European business class model where the middle seat in a 3-3 layout remains free – and is perhaps dressed with a temporary plastic shroud, similar to what's done on British Airways' Club Europe services – along with a little extra legroom or recline compared to other economy seats.
When would Rex begin capital city flights?
Domestic travel restrictions imposed due to the coronavirus pandemic give Rex some breathing space to develop its new network, which will also include hiring new pilots, cabin crew and ground staff, as well as negotiating with airports for precious take-off and landing slots.
The capital city service is expected to begin in March 2021, with Sharp allowing that "the domestic aviation market is not going to go back to what it was three months ago so we are ready to scale up in line with demand."