Australia’s Regional Express (Rex) Acquiring Boeing 737s

Filed Under: Other Airlines

As Qantas’ entire long haul fleet is grounded and Virgin Australia undergoes an ownership change, Australia’s Regional Express (Rex) is growing, by acquiring Boeing 737s.

What is Regional Express (Rex)?

Some context is probably valuable to start, for those outside of Australia. Regional Express, commonly referred to as Rex, is Australia’s largest independent regional airline.

The airline operates a fleet of 60 Saab 340 turboprop aircraft, seating around 34 passengers each. Rex is the world’s largest Saab 340 operator.

Prior to the coronavirus pandemic, the airline operated 1,500 weekly flights to 59 destinations throughout Australia. The airline has a real niche, as it operates to all kinds of smaller markets that aren’t widely served by other airlines.

Rex’s route network

Oh, Rex’s website also looks like it’s straight out of 2008, or something.

Rex’s website

Regional Express is acquiring 737s

There’s some exciting expansion on the horizon for Regional Express — Rex has signed a letter of intent to lease six Boeing 737-800 aircraft:

  • The first 737 will be delivered to Rex on November 1, 2020
  • The remaining five aircraft will be phased in over the following four months
  • Rex plans to acquire a further four 737s, for a total of 10, if there’s a continued increase in demand

So, what’s Rex planning to do with these planes?

  • During the first phase, as of March 1, 2021, Rex will deploy three 737s to fly between Sydney and Melbourne
  • Two more aircraft will begin service before Easter
  • From there, Rex will continue to grow its domestic jet fleet in line with the return of passenger demand

The airline expects to obtain full regulatory approval by December, and also plans to start selling tickets around that time, pending regulatory approval.

It’s my understanding that Rex is getting these 737s from Virgin Australia, given that the airline has shrunk, and returned several 737s to leasing companies.

Virgin Australia Boeing 737

Only time will tell how Rex configures these 737s — I imagine the company will want to minimize expenses, but will these planes be in a one-class configuration, or…?

Virgin Australia’s 737 business class — will Rex offer a similar product?

Australia is becoming a competitive market… domestically

While Rex has been a competitor in Australia for years, in reality the airline hasn’t competed in many high volume markets. For example, it’s hard to compete in the Sydney to Melbourne market when you’re flying small turboprops. Not only do they have higher per-seat operating costs, but they also provide an inferior customer experience, with planes that are louder and smaller.

737s will allow the airline to compete much better between major cities. This is exciting for Australian consumers, as it means that there will essentially be three major domestic airlines in Australia (to be thorough, there’s also Jetstar, a wholly owned Qantas subsidiary, and Alliance Airlines, which operates charter services, largely for the mining industry).

Unfortunately internationally, Australia will be much less competitive. Qantas will eventually resume global flights, while Virgin Australia has gotten rid of all 777s, meaning the airline will no longer operate long haul flights. While Virgin Australia hasn’t ruled out reintroducing long haul service eventually, that won’t be happening in the coming years.

Virgin Australia is getting rid of its 777s

Bottom line

While Regional Express has been a major player in regional Australian markets, the airline will now be acquiring 737s, which will allow it to compete in major markets. This is great for Australian consumers, and I look forward to seeing what Rex’s 737 onboard product will be like.

What do you make of Rex acquiring Boeing 737s?

(Featured image courtesy of Paul Spijkers)

Comments
  1. It can only be good for consumers. QANTAS must have been thrilled to see Virgin go under, and it’s still unclear what direction the resurrected VA will take, eg, full-on domestic competition with QF, or something less than full-service. REX making these acquisitions should give QF and VA something to think about, even though it is very small by comparison.

  2. I don’t think this will last long. Many of us fly Rex because they are not a big airline. The personal service, the Rex lounge, and the ease of avoiding crowds and security checkpoints makes rex unique. And we have another major airline you are forgetting…Jet Star, of whom Rex will never be able to beat on price.

  3. Everytime we get a third (Jetstar QF Low Cost) airline it’s WAR! QF is a formidable opposition, due to Covid traffic drop for the first time has a fleet of small jets and ATR props based in Melbourne which could easily take on Rex on it’s regional routes. Rex has a history of when QF comes to town it leaves, doesn’t even try to compete. Bit of blood n guts in the industry and no mention of Alliance Airlines?

  4. It will be interesting to see if REX expands its catering beyond its trademark “sweet or savoury?” in any intercapital routes! In markets where there is currently competition between REX and QantasLink, whilst REX is generally (but not always) cheaper, I find both the hard and soft products on the QLink better (especially the DH8-400s, although there is some fun to be had in the backwards facing seats 1E and 1F in the DH8-300!)

  5. Anything that disrupts the Qantas dominance is a good thing for the consumer. Domestic airfares are quite outrageous in Australia. No single airline group should have 65-70% control of the domestic market.

  6. “This is exciting for Australian consumers, as it means that there will essentially be three major domestic airlines in Australia.”

    Seems Lucky isn’t aware of Jetstar (nor previously Tiger).

  7. I’m based overseas, so it’s not like I flew REX daily, but I have flown them several times. Okay for the regional routes, with no one else competing on most routes.

    SYD-MEL is/was the 3rd biggest route in the world by passenger volume, so that’s a good starting point for REX.

    But it’s a huge leap from Saabs to 738’s, from points of view of capacity, engineering/maintenance and crew capability…and also probs gate access, as they have only had gates in the commuter terminals. Then again, I guess they can pick up many formerly Virgin Australia gates.

  8. PS –

    Alliance is the unspoken star in the Australian aviation industry. They are aggressive, and breaking the model. Queensland (Brisbane) is their base, with a great regional network, formerly the regional partner for Virgin…Brisbane has the best regional network in Australia, due to Queensland’s regional economic strength compared to the other AU states.

  9. Apparently according to executive traveller they are creating a new frequent flyer program to! All good news though!

  10. It was a fairly big surprise when REX announced its plans to expand in the middle of a pandemic given that the history of third airlines in Australia is very grim (JQ is fully owned by QF and Tiger has just been euthanised by the new owners of VA, so they don’t count).

    REX won’t try to compete with QF on quality or premium cabin experience, having seen VA nearly go under doing just that. I suspect they will try to use their regional network to provide single itinerary journeys with short layovers that aren’t possible on QF or VA while offering good value, “cheap and cheerful” service.

    QF obviously won’t take this lying down (while VA will just be happy to keep the lights on), but how they respond will be interesting. QF could flood REX 737 routes with capacity, but they’d likely already have a dominate position on such routes anyway (e.g. SYD-MEL, SYD-BNE, MEL-BNE). Maybe QF tries to take REX on on regional routes instead.

  11. They could also take the risk by joining one of the two remaining global alliances if their Singaporean owners are willing to the CAPEX risk for them.

    On a positive note, REX does’nt have the negative “baggage” that VA had with the Star Alliance group (e.g VA being ‘enemies’ with NZ and UA) for the many Star Alliance “fans” out there.

    Although SQ may (or may not) be a factor towards REX joining the Star Alliance, considering they’re looking at restarting a scaled down codeshare/FF agreement with VA (minus the Velocity/Krisflyer point swap).

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