Rex to join Virgin Australia in a race to the middle ground

The new capital city flights of Regional Express will share Virgin's mid-market approach.

By David Flynn, November 10 2020
Rex to join Virgin Australia in a race to the middle ground

Regional Express will adopt a mid-market model for its direct flights between Sydney, Melbourne and Brisbane, although the airline intends to retain the business class seats of its ex-Virgin Boeing 737s.

The positioning will see Rex stake out largely the same turf which Virgin Australia will target under new owners Bain Capital.

However, several blanks in Regional Express playbook are yet to be filled in, and may not take shape until Virgin reveals its revised ‘customer experience’ proposition in the coming weeks.

Rex will begin Sydney-Melbourne services on March 1, 2021, with Brisbane joining the nascent inter-capital network by early April.

Six Boeing 737s, all previously leased to Virgin Australia, will form Rex’s launch fleet.

Beyond the triangle...

The ambitious assault on Australia’s lucrative ‘golden triangle’ between the east coast capitals could later extend to Canberra, Adelaide and Perth, according to the airline’s investor deck for what it termed Project Mother.

“If our (triangle) services prove successful, we will inject up to 10 aircraft into the domestic market by the end of 2021,” says Rex Deputy Chairman John Sharp.

“From there, we intend to develop a full domestic airline network, linking all the capital cities over time.”

While Rex’s Project Mother documents sighted by Executive Traveller gave the capital city service the cumbersome tag of being an ‘LCC ++ hybrid airline’, Sharp simplifies this by saying “I think we'll be somewhere in the middle.”

Mid-market position

“Technically what we've been offering as a regional airline is a full-service airline,” Sharp tells Executive Traveller.

“Our ticket price includes a certain amount of checked luggage, and also catering on board, if it’s tea or coffee or a drink of some sort and a snack… we don't charge extra for that.”

“We'll probably carry that same level of service across into the domestic airline, which will sort of position us between a low cost carrier and a full service legacy airline, but the final decisions have not been made yet.”

Rex's Boeing 737 service proposition will be consistent with its regional roots.
Rex's Boeing 737 service proposition will be consistent with its regional roots.

Sharp confirms that Regional Express will retain the eight business class seats of its ex-Virgin Boeing 737s, with the Virgin branding removed of course.

“There'll have to be some modifications to the leather upholstery which has an embossed Virgin logo, but that’s not a very difficult thing to do.”

But how those seats will be marketed is another TBA: Rex could promote them as a conventional business class offering, to square up against Qantas and Virgin Australia, or as more of a ‘premium’ cabin where the sole differentiator against economy would be comfort and legroom.

Rex will retain the business class seats of its ex-Virgin Boeing 737s.
Rex will retain the business class seats of its ex-Virgin Boeing 737s.

“It could be any one of those, that’s yet to be decided,” Sharp admits.

Helping Rex’s fare stratification in the main cabin will the retention of Virgin’s five rows of 30 extra legroom Economy X seats.

Lounge access

Access to Rex’s airport lounges at Sydney, Melbourne and potentially Brisbane – Sharp confirms discussions are underway with Brisbane Airport Corporations – could be included with those 'business class’ tickets and even on some economy fares.

Rex's airport lounges are pretty much no-frills affairs.
Rex's airport lounges are pretty much no-frills affairs.

“We're looking at whether there's any free access to the lounges for certain types of ticket in economy and business, as a complimentary part of the package,” Sharp says.

The annual lounge membership program, for which travellers pay $329 per year, will also continue.

Sharp also confirmed that Rex was considering a frequent flyer scheme, but this would come well after the launch of capital city flights.

“Frequent flyer programs are good, they’re usually the most profitable part of an airline operation, so we certainly don't rule out having one,” Sharp tells Executive Traveller.

“But we want to take things one step at a time, we don't want to spread ourselves too thinly. So our focus will be on getting the airline up and running, and getting it to work properly before we take on any more tasks.”

“And when we've got that bedded down, we will then look to do things like the frequent flyer program and other initiatives.”

Read more: Rex to challenge Qantas, Virgin in loyalty dogfight

David

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.

so Rex will have ex Virgin aircraft, pilots, cabin crew & engineers but much lower costs.

I think Rex will clean up. Watch out Qantas & Virgin.

Who cares if Qantas has bigger market share around whole of Australia, the money is in the golden triangle, Monday to Friday peak hours. The rest is just something for expensive aircraft to do the rest of the time.

Can't wait to book some Rex jet flights.

17 Jun 2020

Total posts 159

With Qantas getting rid of service desks at airports and lounges amongst other service cuts, a fairer headline would be Rex is joining Virgin Australia and Qantas in a race to the middle ground.

QF

11 Jul 2014

Total posts 533

Our company's travel budget is intact, who is going to offer the best deal will be the deciding factor, along with all the other perks we expect? 

upup

what other perks ?

Think qantas is trying to convey that rex & virgin will be inferious. Not sure if there will be any difference, except for price.

QF

11 Jul 2014

Total posts 533

To me, the old Virgin was better then Qantas by a long shot. 

Qantas even copied some of Virgins ideas, the staff looked after myself and my family a lot better as well. 

Virgin Australia - Velocity Rewards

24 Jan 2018

Total posts 370

Virgin won't be able to lure Government and big business accounts from Qantas, but as we all (should) know, its medium and small businesses which are the nimble workhorses of the economy.  On business trips (90%+ of my travel, locally and abroad), the last thing I want to have to worry about is seating, luggage limitations - all the extra perquisites I expect to make my day smoother.  Those nickel & dime optional extras may, perhaps, be fine for the holiday-makers beyond Row 6 (including me when in holiday mode), but otherwise - NO.  

Virgin can steal Rex's thunder by targeting medium/small business travelers where, often, the passenger is either decision maker or a MAJOR influencer on which airline is used for the next flight (i.e. we're what you might term 'fiscally promiscuous' and quick to respond fiscally when not happy).  

My message, keep the same, pre-covid service for Rows 1-6 (Business and EconomyX), do what you want further back (they'll scream loud enough when they can't take it any more).  And if Bain is in any doubt about that . . . 

boeing t

think you might have been mislead by someone ...

Rex & apparently new virgin will give you

"seating, luggage" & all the extra perquisites I expect to make my day smoother"

It's not jetstar.

Not quite sure, what you think you'll miss out on flying Rex or new Virgin ?

On golden triangle, qantas, virgin & rex will want to keep all business types happy.

QF

11 Jul 2014

Total posts 533

Regular Flyer

Have you flown REX, they need to pick up there act if they think they can make it to number 2, and not having a Frequent Flyer Loyalty Program to start with isn't a good thing, it's like there saying there going to fail from the start.

No one has flown rex jets yet, but will be ex virgin aircraft, pilots, cabin crew, engineers etc.

Not so sure frequent flyer programmes are as important as perceived to be by a few.

I get almost all my qantas & virgin points from cards, but so many cash discounts these days, it doesn't make sense to pay more to get a few points, which can get you free tickets, but not free if you have to pay taxes, charges, including fuel surcharges.

With so many millions of people with airline credits, think using points for flights is going to be tricky for next few years.

QF

11 Jul 2014

Total posts 533

The question was have you flown REX not REX Jets, they need to pick up there act if there joining the fight for customers.

Tav
Tav

20 Oct 2020

Total posts 4

I just can’t see this ending well for REX. Jetstar squeezing from below, Qantas from above, a well re-capitalised Virgin right beside, no FF program, a subpar lounge offering, no meaningful differentiation, and they are launching into one of the most challenging market periods in memory. I don’t mean to be harsh but what exactly are they thinking? 

rex won't be competing with jetstar.

rex already have a market, will have lowest costs, even lower than jetstar, but will offer much better service.

Any airline would be insane to get into a price war with a competitor with much lower costs.

Qantas - Qantas Frequent Flyer

29 May 2020

Total posts 12

Virgin will also be a smaller airline so Rex have marketshare to pick up.  Plus I'd say there are a fair few people burnt by Virgins refusal to refund and the stupid conditions for using fare credits that they will jump ship.

silver

what actually has virgin mark 2 to do with virgin mark 1 except for name ?

Virgin 1 ticket holders are lucky to get anything at all.

14 Oct 2016

Total posts 76

To some extent, I think REX has noticed they leaking customers to other airlines as they don't have a network of their own between the capitals. Since the Saabs are getting old and will need to be replace with the ATRs eventually which have greater capacity, they will need to get more customers on their regional routes and one way they can probably do that is by offering more connectivity.

It will be a success as long as they don't over extend themselves and keep the network compact for the first few years at least. Bundling of flights is probably very key to the overall success.

XWu
XWu

09 May 2020

Total posts 281

@Pcoder 

I am not saying they will not consider ATR but There are limited options of ATR with configuration less than 40 seats (for example a special ATR-42-400 with reduced seating ending up having a large freight area within the pax cabin itself) and if they increase their seats capacity it will automatically attract airport security requirement (and the levy from the city council running the airport will have to be added to the pax fare) and adversely affect the price competitiveness with Qantas.

So if ATR is going to be part of their equipment, there will be a big change in their pricing structure and bargaining power with the council as their tolerance to vacant seats yet paying for the security tax is affected significantly.

the 40 seat rule seesm to have gone out the window, probably brought about by 2 things

1. councils who own small regional airports, don't/can't pay high security costs when only 1 or 2 flights a day.

That would would out to be $100 or more per passenger.

2. covid 19

ABC resported around 10 days ago, that 8 regional airports no longer have to have security. Think it included Longreach & Barcaldine.

I will try & find the link.

No security screening at some regional Australian airports under new Federal Government rule 4 Nov 2020 ABC News

here it is from 4 Nov 2020

https://www.abc.net.au/news/2020-11-04/security-screening-removed-at-regional-australian-airports/12845286

No security screening at some regional Australian airports under new Federal Government rule

XWu
XWu

09 May 2020

Total posts 281

@regular flyer

Thank you 

You may not have seen what I wrote on in comments section on 4 Nov in the ET article headlined “Rex ready to battle Qantas, Virgin on Sydney-Melbourne-Brisbane”, which I will reproduce below:

“Not exactly related to this particular news but just also pointing out the news item on ABC news website profiling on certain regional (western QLD) airports currently having airport security checks will no longer be required to do so “ under new Federal Government rules to be rolled out across the nation by Christmas“

It is unclear if this new rules were in fact the one enacted in late 2019, or if there are further changes made without requiring further amendment of actual wording of the aviation transport security bill by redefining the assessment criteria of risk when allocating the airport to the tiers which determines the level of security required

Although this may not mean that REx will sought to start direct routes between these airport to BNE (and risk their current QLD sponsored outback mail-run-like network), it should by right mean lower airport fees (and lower fares if QF choose to pass on those savings) but may still indirectly affect pax numbers of QLD govt sponsored REx network.

The other lead-in issue is whether any airport in other states will see themselves downgraded in their requirements of airport security, whatever “new rules” are involved”

think only regional airports that will get exemption from security are those that have very few flights.

If an airport has 1 to 2 flights a day, maybe only 5 or 6 days a week, they can't justify spending $1/2m on xray machines & paying 6 people, 4 hours minimum @ $100/hour or more, (that's $2400 minimum) for one 34 seater aircraft, that is rarely full.

Thai Airways International - Royal Orchid Plus

15 Jan 2013

Total posts 320

i admit the saabs of theirs are getting on in years.while nowhere near as old as when kendell replaced the airlines of south australia operations in south australia in the mid eighties fokker friendships in those days,it's well overdue.i would feel a lot safer on say a qantas link dash 8 same kind of sectors at the present time.

XWu
XWu

09 May 2020

Total posts 281

There'll have to be some modifications to the leather upholstery which has an embossed Virgin logo, but that’s not a very difficult thing to do.”

As I wrote elsewhere, there is always simple solution of industrial strength stick-on badge, but the badge itself cannot be too thick and the adhesive definitely have to be industrial strength and not come off in just 6-12 months (or worse, get stuck on the passenger’s clothes!)

Qantas - Qantas Frequent Flyer

11 Oct 2014

Total posts 551

Perhaps John Sharp can have a chat with NSW Premier Glad and get a hold of some of those gorgeous green and white, self-adhesive "Sit Here" stickers that appear so commonly on every train, bus and ferry in Sydney ? 

XWu
XWu

09 May 2020

Total posts 281

Actually quite impressed that those stickers even stay on the fabric of the train seats in the first place . Haven’t been in Sydney for quite a few months, so can’t tell if they peeled off by now. 

Give that they came up with the fairly unimpressive flying wings badge with “rex” in the centre, I wouldn’t assume anything is ruled out

16 Dec 2016

Total posts 45

So what happens on a Friday night in Sydney when there’s a storm? It will be like Tiger where you’d wait for 6 hours or hope there’s a seat on Qantas.  This along with their questionable engineering standards will steer me away from Rex, no matter how much Sharpe’s National mates are backing this  

MARKS

exactly the same as happens with qantas. No airline wants to schedule any flight out of SYD after 2100. So if a storm they have 2 hours to get out.

XWu
XWu

09 May 2020

Total posts 281

@Markspark

Actually the curfew at SYD does not apply to propeller planes less than 34000kg MTOW, so in theory the Saabs can take off whenever safe.... 

of course if you are talking about the 737 city shuttle service, then they will not normally schedule flights after 9 pm just like Qantas, and the few times I make the mistake of flying JQ into SYD (usually because they are running late as my luck with JQ) they will not depart from MEL or BNE if less than 100 min before 11pm

There will be times when some of the jets of any airline actually touch the ground a few minutes after 11pm, some readers may notice, but actually that is allowed as long as the approach to land is cleared to land BEFORE 11pm or whatever shoulder period is written into the curfew.

The main issue is how the mid market airlines (VA and REx) treat their pax who had their flights cancelled in transit (either while trying to get into SYD while transiting BNE or MEL from regional centres, or while transiting in SYD to other cities or regional centres):

QF and VA(2011-2019) will organise overnight accomodation charged back to them and put you on the next available seats the next day, unless you don’t want to continue.

Tiger and JQ tell you the flight is cancelled and you will be refunded in their own sweet time (why people expect more from LCCs I will never know)

REx..... I don’t think their Saabs were ever seriously affected by the SYD curfew (I had a few delayed departure and arrival ou/in to SYD but never as late as 11pm) and not sure how many time they have to cancel flights affected pax in transit from one regional centre to another.

So. 2021 will be a new experience for Jet-aged REx and VA MMC (mid market carrier) to see how they treat their pax

have heard of few cases where passenger have faked heart attacks so aircraft could land after 2300 without big fine.


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