Australia's Regional Express (Rex) has landed itself a big fish, signing a letter of intent with Atlanta-based Delta Air Lines to enter into "a definitive commercial arrangement" later this year. That will translate into an interline agreement whereby Rex's and Delta's passengers can seamlessly connect on and off each other's flights. Down the track is the prospect of a full-scale joint venture with Delta and Rex joining a major airline alliance.

Rex & Delta Air Lines to forge interline agreement

The fine details are yet to be ironed out, but Simple Flying understands the interline agreement fundamentals, including reciprocal interline ticketing and baggage services, seamless connections, and reciprocal frequent flyer recognition and earning opportunities are among the partnership's initial features. The two airlines are eyeing a Q3 2022 start date.

It will mean a Rex passenger boarding one of their planes in Parkes can connect in Sydney onto Delta's daily A350-900 flight to Los Angeles, and from there onto nearly 50 cities in the US. Conversely, a Delta passenger originating in Cincinnati will be able to travel through to Ceduna or any one of Rex's 60 odd other Australian destinations on a single ticket with their luggage taken care of for the entire way.

Rex's Deputy Chairman John Sharp calls the agreement a milestone moment and another step in Rex's evolution from a regional carrier to a bigger player. "It's a very big step up for us," he told Simple Flying. "We're going from offering connections on a regional network to offering a global service via our domestic services and this connection with Delta."

An odd pairing that's not so odd

On one level, this is a real odd couple pairing. Delta is one of the world's biggest airlines with a global footprint and nearly 900 planes in the air. Rex is a relative airline minnow, operating flights within Australia with just 63 planes, only six of which are jets. But Rex's upsizing ambitions are well-known within Australia, and in this case, there are clear-cut benefits for both airlines.

Around 20% of Delta's Sydney-bound passengers continue onto other Australian destinations immediately after landing in Sydney on DL41. Delta previously fed passengers onto (and took passengers from) Virgin Australia flights. But Virgin Australia dropped Delta last December in favor of United Airlines.

Virgin Australia will have wrapped up its relationship with Delta by June. That leaves Delta at a loose end and at a competitive disadvantage. Unless you were a rusted-on Delta loyalist and needed onward travel in Australia, ex-US passengers were likely to book onto United or the about to be paused American Airlines flights to Sydney and take advantage of their Australian interline agreements. American passes passengers back and forth with oneworld buddy Qantas. Traveling in the opposite direction, travelers heading to the US and not originating in Sydney were also liable to choose an airline that offered an interline agreement.

A small but tasty morsel for Delta

Delta's deal with Rex helps neutralize that competitive disadvantage. Sydney Airport is Rex's top port. In addition to regional turboprop flights coming and going from the airport, Rex's Boeing 737-800 fly in and out of Sydney from Melbourne, Brisbane, and the Gold Coast. Rex is getting more Boeings shortly and will start flying to new destinations. Rex tells Simple Flying their flight arrival and departure times from Sydney will be coordinated with Delta's morning arrival and departure times.

“Rex will be a valued partner that will bring additional connectivity and geographic reach to both airlines,” said Delta’s Vice-President – Alliance Partner Development, Jeff Arinder. “We look forward to welcoming more customers to our flights from Sydney to the US and

providing a world-class customer experience in the air and on the ground.”

The new partnership signals the evolution of Rex

Rex won't be pinned down on a precise start date for their interline agreement with Delta. There are still a few things to do. Aside from working out the nuts and bolts of the agreement with Delta, they have a few housekeeping items at home to sort. By the time this interline agreement does kick off later this year, passengers can expect more Rex planes, more Rex routes, new and improved Rex lounges, and a Rex frequent flyer program. It won't bulk up Rex's size to match Delta, but it will even up the product offering.

Rex's John Sharp says the partnership with Delta marks a significant milestone in the airline's maturity from a small player to becoming a bigger airline with the type of product offering passengers expect from growing carriers.

"It is part of the evolution of our business offering, not just the best regional network around, but also access to our expanding domestic network. This takes our passengers into an international network with the second-biggest airline in the world, with destinations on every continent."

This is Rex's second significant partnership agreement announcement in as many weeks. The airline recently signed a deal with Princess Cruises to funnel passengers to and from ships. Australia's normally buoyant cruise scene is about to restart and when the season is in full swing, thousands of cruise passengers embark and disembark in Australian ports every day. John Sharp says these kinds of agreements will provide a steady and reliable stream of passengers onto his planes every day.

It's that kind of reliable constancy Rex wants to lock in over the long term. As Australians (and international travelers to Australia) take to the skies again, Rex's planes are filling up and business is booming. After introducing mainline 737-800 flights last March, the airline is on the cusp of another growth spurt. More Boeings are coming into Rex's fleet and new routes are on the cards. The airline's plans for intrastate jet flights in Queensland are well known and if Rex is to max out their new partnerships, routes like Sydney - Adelaide would also have to be on the cards.

Rex has done well to hook its big North American fish - and the news will surprise many. For Delta, it's a case of landing a small but tasty morsel that will offer a fuss-free and steady passenger stream to and from its Sydney flights.