Executive Traveller exclusive
Regional Express says it will be flying six Boeing 737 jets between Sydney, Melbourne and Brisbane by April 2021, following the launch of Sydney-Melbourne services on March 1, 2021.
It’s a brazenly ambitious assault on Australia’s hyper-competitive corridor – the industry’s crown jewel for corporate and leisure travel – which will pit Rex against muscle-bound incumbent Qantas and a streamlined Virgin Australia.
[An earlier version of this article alluded only to Sydney-Melbourne flights; Rex has since confirmed that Brisbane flights will launch in early April]
The first of six Boeing 737s – all previously leased to Virgin Australia – has already arrived at Rex’s Sydney base, where it will be used for ground training as well as venturing into the sky for proving flights (still in a de-branded white livery) in early December.
At least three jets – one of them said to the airline’s nominal flagship, bearing the registration VH-REX, which is currently assigned to a Saab 340B – will take part in the March 1 launch of Sydney-Melbourne flights, with three more slated to be in place by early April.
Those six Boeing 737s all date from the Virgin Blue era and carry an average age of 11.5 years, predating the release of the later Virgin Australia aircraft featuring the modern 'Boeing Sky Interior'.
'Virgin not in our cross-hairs'
Executive Traveller understands these ex-Virgin jets will largely be flown by ex-Virgin pilots, backed by ex-Virgin attendants and ex-Virgin engineers.
Even Rex’s internal Project Mother codename for its capital city push was a nod to the Brisbane-based challenger, because “Mother is the opposite of Virgin” chuckles Rex deputy chairman John Sharp.
All the same, Sharp insists that Rex doesn’t have specifically Virgin Australia in its cross-hairs.
“I don't think anybody’s in our cross-hairs, and I don't like to portray ourselves as taking on Qantas, Jetstar, Virgin or Uncle Tom Cobley,” he tells Executive Traveller.
“All we see ourselves as doing is adding to the choice that travellers will have… we don't want to be seen to be taking on anybody.”
But isn’t Rex taking on all players, and by necessity seeking to carve out its own slice of their market share?
“Well, that's true,” Sharp admits, “we will need to get some market share… but the thing to focus on is not so much market share, but profitability and sustainability.”
In common with outgoing Virgin Australia CEO Paul Scurrah and Virgin’s new owners Bain Capital, Sharp refuses to worship at the altar of market share.
“You want to be able to operate the business in a way that enables it to survive – whatever market share we get that achieves that outcome is secondary.”
Building the customer base
A baseline of that market share will come from Rex’ existing customers who fly between regional centres and the capital cities.
“We think there's a fairly large portion of our regional travellers connecting onto other flights,” Sharp explains.
“Let’s say you're flying from Dubbo to Melbourne. You fly the first sector with Rex to Sydney, and then you get onto a flight to Melbourne.”
Today, that inter-city leg is made with a competing airline – from March 2021, Sharp expects passengers will complete their journey with Rex.
“We’re not certain as to the exact number because we don't book those connecting flights, but as as a ballpark figure we estimate somewhere between 30-40% are connecting onto other services, and obviously we would want to capture all of those passengers.”
“That gives us a good start, and obviously we're going to need more than them, and hence more leisure travellers,‘best fare of the day’ government travel and so on.”
Sharp also hopes that small businesses will be among the first to sample Rex “because we are generally very competitive in our price.”
The people who run small businesses “are usually they're the ones doing the travelling (so) they’re more conscious of price,” compared to “corporates where the people doing the travelling are not paying, so they’re less price-conscious.”
So how low can Rex’s fares go, in order to attract all those travellers?
“We think we'll be very competitive against Jetstar, and we’ll be competitive against Qantas against Virgin. Of those airlines, Rex has probably about the lowest cost base so are probably in a position to offer very competitive prices.”
Sharp even expects an early degree of ‘sampling’ by curious travellers, “people who will want to try something new and different.”