Disruptor: Could Rex Become A Key Domestic Airline For Australia?

Springboarding off its long-established regional network, Regional Express (Rex) has the chance to become a key Australian domestic airline over the next few years. The airline is doubling its nascent Boeing 737-800 fleet in the next 12 months and expanding its footprint across highly competitive trunk routes. A fourth major domestic carrier has the potential to significantly reshape Australia’s domestic airline industry.

Regional Express (Rex) has the potential to emerge as a significant Australian domestic airline. Photo: Rex

“Australia has been a duopoly for a long time – you have Virgin Australia and Qantas in more recent times, and prior to that, Ansett,” Rex’s John Sharp recently told Simple Flying’s Future Flying Forum. “The Australian market is big enough to accommodate more than two airlines … Rex is going to be a disruptor with not only added additional services, but we’ve also brought in prices never seen before.”

In addition to its existing six Boeing 737-800s, Rex anticipates taking a further eight in 2022, with two due before April and the remainder over the course of the year.

Rex says Australians will welcome the competition as it beefs up Queensland services

In the last month, Rex has announced it will begin jet services into the Queensland capital of Brisbane from Sydney and Melbourne. The airline has major but as yet unannounced expansion plans in Queensland focusing on coastal regional cities.

Those incoming Boeings, some of which will be based in Brisbane, will underpin that Queensland expansion. A decentralized and geographically large state, Queensland has a buoyant intrastate aviation sector that proved relatively immune to recent border closures and travel restrictions. Building up a substantial Queensland network offers Rex a kind of hedge against future interstate border closures that frequently cause mass flight cancelations.

“Australians will welcome the competition, even if Qantas and Virgin won’t,” said Mr Sharp. “Australians who travel will welcome it because we’re a well-established, credible airline. We’ve got a great reputation for delivering a good service, and we’re doing this expanded network at affordable prices.”

Rex operates a fleet of 60 Saab
340 and six Boeing 737-800NG aircraft to 61 Australian destinations. Photo: Rex

If the airline plays its cards right, Rex’s expansion plans could fly

Rex was established in 2002 by former Ansett Australia employees who bought regional carriers Hazelton Airlines and Kendell Airlines before merging them and rebranding to Rex.  The new airline took over many of Kendell and Hazelton’s routes, most of which primarily focused on regional New South Wales.

A well-regarded former Australian airline executive, Simon Westaway, told a recent OAG webinar Rex was a good example of an airline “owning” a region – in this case, regional New South Wales – and investing in that region over the long term.

“They (Rex) have done a good job over the years just slowly growing their regional network. Obviously, they’ve got lots of slots at Sydney Airport, and they can see an opportunity.

“If they can do a considered growth and be quite considered about the markets they go into, they could get a niche and build up their available seat kilometers, which, as we all know, is the name of the game.”

Rex’s Boeings now fly to six key Australian destinations. Photo: Rex

Dusting off an old strategy?

In the bad old days of the duopoly, Ansett and Qantas effectively carved up the country between them. While flying to the same destinations, Ansett “owned” markets like Canberra, Western Australia, and the Gold Coast. Qantas owned other markets.

It wasn’t necessarily the best outcome for passengers, but it was good for the two airlines. It’s a strategy that ended after Ansett collapsed in 2001. Ansett’s successor in the local market, Virgin Australia, has never pursued an ownership strategy. But there are signs Rex is dusting off the Australian aviation 1990s playbook and contemplating the strategy’s revival – at least within Queensland.

Rex already flies to 25 destinations in Queensland, and John Sharp says he’s not finished in the Sunshine State yet.

“We have plans to further expand the domestic network next year with a particular focus on major Queensland regional centers and holiday destinations.”