Australia, New Zealand & the Pacific Airline and RPT Rumours & News in Australia, enZed and the Pacific

Rex Expanding Into Jets

Old 11th May 2020, 22:28
  #1 (permalink)  
Thread Starter
 
Join Date: Jul 2007
Location: Australia
Age: 54
Posts: 1,953
Rex Expanding Into Jets

News item on radio today, mentioned that Rex were looking at acquiring ten jets to run east coast domestic service.
Interesting development if they proceed, plenty of airframes available, flight crew available etc.
Stationair8 is offline  
Old 11th May 2020, 22:30
  #2 (permalink)  
 
Join Date: Sep 2019
Location: HKG
Posts: 72
Left field! One minute they want a Government bailout now they are looking to expand?!

Noted...
Green.Dot is offline  
Old 11th May 2020, 22:34
  #3 (permalink)  
 
Join Date: Jun 2005
Location: AWOL from YWOL
Posts: 98
Rex takes fight to Qantas and Virgin

From AFR (https://www.afr.com/companies/transp...0200511-p54rvs)

Regional Express Holdings will capitalise on the turmoil from Virgin Australia’s collapse and invest $200 million launching capital city services to compete with Qantas, Jetstar and Virgin Mark II.

In a move that could harm the sale price achieved by Virgin’s administrators, the regional airline operator is working on a business plan that includes leasing 10 narrow-bodied jets as well as employing new pilots, cabin crew and ground staff.

Virgin's administrator, Vaughan Strawbridge, has called for indicative bids for Virgin to be lodged by Friday. Industry sources say the business was worth about $1 billion depending on the amount of secured and unsecured debt.
Several consortiums have shown interest. They include Canadian infrastructure investor Brookfield, Wesfarmers, private equity companies Bain Capital and BGH Capital and distressed debt specialist Oaktree.

Rex’s deputy chairman John Sharp said the move by Rex to start a new capital city airline would require about $200 million in capital investment.
This would be achieved through the sale of new shares in Rex, which has been listed on the ASX since 2005. The company is controlled by executive chairman Lim Kim Hai and his business partner and Rex founding shareholder, Lee Thian Soo.“We have been talking to half a dozen private equity and investment banking entities about investing in this new venture,” Mr Sharp told The Australian Financial Review.

“We are working with those parties and will narrow that down to one in the next three weeks or so. The most significant aspect of this is we will be the only capital city operator that is debt-free.”

Three-airline market

Mr Sharp, a pilot and former transport minister in the Howard government, said competition would be good for consumers and the economy. “We may well have a three-airline market,” he said. Mr Sharp said the new Rex capital city operations would be a cross between Qantas and Jetstar but with a lower cost base. “This will be halfway between a full-service airline and a low-cost airline,” he said.

The plan is to start flying between Sydney, Melbourne, Brisbane, Adelaide and Perth early next year when the airline industry comes out of the coronavirus freeze. Rex has already had discussions with the Civil Aviation Safety Authority about amending Rex’s Air Operator’s Certificate to include jet aircraft and not just turbo-prop aircraft.

Cheap leases

Mr Sharp said this was a good time to lease narrow-bodied jets such as Boeing 737s or Airbus A320s because of the distressed state of the global aviation market. “We plan to lease a fleet of about 10 aircraft and hire new pilots, cabin crew and ground staff,” he said.

Mr Sharp said Rex would leverage its existing management and corporate infrastructure to run the new services. “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,” he said. “We are doing this because we see an opportunity. We have the advantage of having successfully run an airline for 18 years,” he said.

Mr Sharp said Rex was confident of being able to fly in and out of Sydney because it was the third-largest holder of slots at Sydney Airport. “We will bring a much lower cost base to the capital city routes,” he said.

Mr Sharp said Rex would be able to compete with Virgin and Jetstar on the price of tickets because of its lower cost base. “For example, a Virgin captain is paid about $240,000 a year compared to about $200,000 for a Jetstar captain,” he said. “We would not want to pay anything more than Jetstar is paying. Even if we do go to Jetstar’s level we will still be 20 per cent cheaper than Virgin.”

Rex, which was founded in 2002 out of the wreckage of Ansett, flies to 60 regional destinations. It has a fleet of 60 Saab 340 aircraft and has made an operational profit every year since 2004.

The Saab 340 aircraft flown by Rex seat 34 people which is the right scale for the regional routes. There is no competition on 85 per cent of the routes flown by Rex.
dijical is offline  
Old 11th May 2020, 22:43
  #4 (permalink)  
 
Join Date: Feb 2004
Location: Mt Druitt
Posts: 167
Short memories. Qantas done the same thing a few years ago and they were doomed Then by miracle (bullish!t), turned it around Cook the books (pay for Jetstar maintenance etc), then stop once found out and like magic... Profit

REX thought they'd try it out too. The rest have, so why not. It's all about 'Jobs for Australians,' not off-shoring ALL profits

Senior Management in Aviation, get away with lies and deceit too easily in Oz... Like politicians

​​​​​​​REX needs fleet replacement at some time. Possibly an opportune time.
snoop doggy dog is offline  
Old 11th May 2020, 23:01
  #5 (permalink)  
 
Join Date: Jul 2008
Location: Australia
Posts: 273
Just goes to show that there is nothing new under the sun. I think Mr Lim and John Sharp realise that Virgin is probably not going to emerge from administration and that now is the time to expand. Upgrading an AOC is simpler (in a relative sense) than obtaining a new one. Just look at the experience of Virgin Blue and Impulse in 2000. Impulse were up and running with 717s before VB. As to who will fly the things well thats a whole different ball game. There will be plenty of experienced NB pilots willing to sign whatever is put in front of them to get back into the air.
Lookleft is offline  
Old 11th May 2020, 23:02
  #6 (permalink)  
 
Join Date: Nov 2007
Location: Berkshire
Posts: 6
AMBITIOUS ..Their average aircraft is 25 years old . They don't own an an aircraft under 20 years old . They fly only a few Jets the West Wind ,10 pax I believe. YES REX definitely needs fleet replacement some time soon

Last edited by TheFrenchConnection; 11th May 2020 at 23:04. Reason: missed word
TheFrenchConnection is offline  
Old 11th May 2020, 23:05
  #7 (permalink)  
 
Join Date: Jul 2010
Location: Asia
Posts: 792
Virgin MK2 will almost certainly pull out of marginal and loss making routes, some of which which REX may be able to turn a profit on with a smaller aircraft and lower cost base. Regional jets might be a better starting point as they could replace the SAAB on longer sectors, and a lot of travel to and from regional airports is non discretionary. Trying to fill an airliner with highly price conscious bogans and make money while competing with two larger established operators doesn't always work, just ask Impulse and Tiger Airways.

Kendall Airlines had its fair share of problems when transitioning to RJs and CASA would certainly be keeping a careful eye on them.
krismiler is offline  
Old 11th May 2020, 23:21
  #8 (permalink)  
 
Join Date: Jun 2007
Location: The Outer Marker hut
Posts: 202
So we have/had a few domestic jet operators all of whom cry poor on a semi regular basis, two of which have just gone under, aaaaaand now we have Rex wanting to reinvent the wheel by filling the void at an even lower cost? Good luck.
bazza stub is offline  
Old 11th May 2020, 23:24
  #9 (permalink)  
 
Join Date: Aug 2018
Location: Melbourne
Posts: 259
Originally Posted by TheFrenchConnection View Post
AMBITIOUS ..Their average aircraft is 25 years old . They don't own an an aircraft under 20 years old . They fly only a few Jets the West Wind ,10 pax I believe. YES REX definitely needs fleet replacement some time soon
theres nothing special about flying jets. Impulse started with beech 1900s and now they fly A320s and 787s.

There are plenty of unemployed jet pilots both local and overseas Aussie expats who would jump at this, which would also satisfy any issues CASA might have with lack of jet experience in the operation.

Sounds like it would be a near full service carrier with a low cost base. This might be the kick in the pants the Aussie domestic market needs to break up the comfortable duopoly.
ECAMACTIONSCOMPLETE is offline  
Old 11th May 2020, 23:47
  #10 (permalink)  
 
Join Date: Sep 2019
Location: HKG
Posts: 72
Out of all the things I have read on PPRuNe lately this is one I can actually see as a probable chance of going ahead. A cashed up Singaporean with a golden opportunity to almost “steal” jets in a busted market, a weakened QF and VA and plenty of 320/737 pilots who will sign up.
Green.Dot is offline  
Old 12th May 2020, 00:02
  #11 (permalink)  
 
Join Date: Oct 2013
Location: New Zealand
Age: 67
Posts: 0
It’s all fun and games at the Sharp end

If it’s what Sharp wants it’s what he will get. Too many friends in high places. Sharp embedded himself in aviation as a consultant and lobbyist after life in politics. It would appear that his travel rort affair, approximately $9,000, ended up being a godsend as he has gone on and done very well for himself don’t you think? Mr Lim has reaped the benefits of some favourable decision making that Mr Sharp has been able to achieve in his current role at REX. Funny that....
Paragraph377 is offline  
Old 12th May 2020, 00:14
  #12 (permalink)  
 
Join Date: Jun 2018
Location: Melbourne
Posts: 65
Hotdamn that is out of left field! As others said it’s a good time go get a cheap lease but sometimes it’s best to stick with what you’re good at. 10 737/A320’s and the training, proving, marketing and every other cost associated with introducing something like this... doesn’t come cheap. Not impossible by any means, just a very expensive experiment.

Also wonder if they plan to employ off the street jet guys and cause chaos in the SAAB ranks or flow through from prop to jet when it’s all up.

I gather this is either Rex chasing some publicity since it’s all about VA and QF these days or it’s a long long long long way off seeing a Rex tailed NB jet in the sky.

But hey, jets = jobs! I hope they pull it off.
LostWanderer is online now  
Old 12th May 2020, 00:17
  #13 (permalink)  
 
Join Date: Dec 2006
Location: australia
Posts: 661
If nothing else a spoiler by REX to announce, anyone looking at VA2 would have to consider the impact of an existing operator expanding with an expected lower cost base, if nothing else REX would erode an uncertain market post CV19.
Maybe not a dealbreaker but would have to be a consideration.

Of course that assumes anyone looking at VA2 is actually looking to run it as an airline rather than just maximising any perceived assets.
galdian is offline  
Old 12th May 2020, 00:17
  #14 (permalink)  
 
Join Date: Oct 1998
Location: Melbourne, Victoria, Australia
Posts: 23
Originally Posted by krismiler View Post
Virgin MK2 will almost certainly pull out of marginal and loss making routes, some of which which REX may be able to turn a profit on with a smaller aircraft and lower cost base. Regional jets might be a better starting point as they could replace the SAAB on longer sectors, and a lot of travel to and from regional airports is non discretionary. Trying to fill an airliner with highly price conscious bogans and make money while competing with two larger established operators doesn't always work, just ask Impulse and Tiger Airways.

Kendall Airlines had its fair share of problems when transitioning to RJs and CASA would certainly be keeping a careful eye on them.
Krismiler, there is no such thing as a ‘regional’ jet.

Ansett managements push to introduce the CRJ at Kendell was a sorry example of this misconception. That they attempted it with such a top heavy management structure meant that they were doomed from the beginning. The issues there were nothing to do with anything that is part of CASA‘s role and everything to do with a lack of understanding of the operation AN took over.

A jet is a jet, and it will always have different operating economics to a turboprop. If you really think “Regional jets might be a better starting point” on routes like MEL-BNE and SYD-PER then I’m not sure you understand the economics of airlines.
flyonthewall is offline  
Old 12th May 2020, 00:37
  #15 (permalink)  
 
Join Date: Oct 2007
Location: Australia
Posts: 107
Sharp is the Treasurer of the National Party and has been very successful in getting support for Rex under the guise of helping Regional Australia aviation.


CASA will fall over backwards to help him get his jets on the Rex AOC. With excess VH registered A320's and B738's around, what is the hold up.
Pundit is offline  
Old 12th May 2020, 00:46
  #16 (permalink)  
 
Join Date: Feb 2008
Location: The Hot Box
Posts: 452
Originally Posted by LostWanderer View Post
But hey, jets = jobs! I hope they pull it off.
I don't. They are disgusting company in relation to treatment of their employees and the last thing the our industry needs them getting larger market share.
kingRB is offline  
Old 12th May 2020, 00:51
  #17 (permalink)  
 
Join Date: Oct 2007
Location: Australia
Posts: 107
Disgusting company or not, they will get government support, they will get market share. Vale VA
Pundit is offline  
Old 12th May 2020, 01:00
  #18 (permalink)  
 
Join Date: Feb 2011
Location: Oz
Posts: 675
Originally Posted by kingRB View Post
I don't. They are disgusting company in relation to treatment of their employees and the last thing the our industry needs them getting larger market share.
Yep, but they will have no issue at all getting type rated applicants, most still current.

They could breed their own as such. They will pay substantially lower A320/737 rates vs the market, would they want to take on those who will cause union problems in the future? There are a few operators here that are fairly selective with who they take and where they came from.

It won’t be a career job so no point joining expecting long term wage increase to market levels. It will always be a bottom of the barrel remuneration. 100k FO, 160k LHS. Suck it up or simply leave for China.

PoppaJo is offline  
Old 12th May 2020, 01:42
  #19 (permalink)  
 
Join Date: Jul 2008
Location: Australia
Posts: 273
There were operational problems with the CRJ at first but that had a lot to do with how they were introduced. No surprises that TJ was a big part of that problem. The early Kendell pilots were set up to fail as they did their endorsement in Canada, their line training in South Africa then were expected to operate to Ansett procedures for their check ride! This time around there won't be any parent company dictating how the operation will be introduced and there will be more than enough experienced pilots to handle the expansion.
Lookleft is offline  
Old 12th May 2020, 01:46
  #20 (permalink)  
 
Join Date: Jan 2008
Location: Die Suddetenland
Posts: 136
is it EBA time at REX?
Oriana is offline  

Thread Tools
Search this Thread

Contact Us - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service - Do Not Sell My Personal Information

Copyright © 2018 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.