Rex Chairman Stuck in Timewarp

[kangarooflyer88]

Came across this interesting article in the AFR which discusses how John Sharp, Rex's Deputy Chairperson is out of touch with travellers:

Stuck in a time warp with Rex’s John Sharp

Rex is the Spirit of Bygone Australia. It may be time to broaden its appeal.

www.afr.com

From the article:

It’s a red flag when your deputy chairman inserts himself in menu planning. Sharp firing up the pie warmer – that’s what Rex investors really need, isn’t it? Maybe he should DJ the lounge playlist too, and they’ll have The Very Best of John Williamson on infinite loop.

It’s another red flag when some old duffer from Young attempts to overlay his Menzies-era landed gentry sensibilities on a product that must appeal to today’s capital city road warriors in order to achieve commercial scale.

There is almost no crossover between country pub customers and regular Sydney-Melbourne flight passengers, nor of their tastes.

I would tend to agree with the columnist that if Rex wants to be more than an afterthought in the Australian aviation sector, they need to do more than worry about what porkies they give customers. Now perhaps I am out of touch as a Canadian travelling here in Australia, but when I flew regularly in Canada between Toronto and Montreal on business the major airlines targeted their offerings for us, offering not just high frequency service but the ability to move the flight you're on back and forth at no extra cost. In addition, some airlines even offered flight passes which would give travellers a fixed set of one-way travel credits they can use to book flights between these popular routes, making budgeting for business travel easier whilst providing the flexibility we needed. In all the times I flew (mostly Air Canada) I frankly didn't care what soft drinks or food were on offer, particularly on such a short flight. Get me to my destination when I need to and I'm a happy camper.

-RooFlyer88

 

[Quickstatus]

if Rex wants to be more than an afterthought in the Australian aviation sector,

Why would it be an afterthought?. It is serving an essential service in a niche sector. An afterthought airline would be Compass V1 and V2

 

[farmboy]

Why would it be an afterthought?. It is serving an essential service in a niche sector. An afterthought airline would be Compass V1 and V2

Just ask a few of the rich-listers, business people, and medical specialists who commute daily to the country centres what they think of Rex and its frequent basic service. They will tell you its service is manna from heaven.
Its easy for the city types to forget where all of the food comes from, (clue, it ain't George St) and that without support of rural communities the country would drop dead. Literally.

 

[kangarooflyer88]

Just ask a few of the rich-listers, business people, and medical specialists who commute daily to the country centres what they think of Rex and its frequent basic service. They will tell you its service is manna from heaven.

Yes and being a regional airline that serves rural Australia isn't gonna get you to multi-digit marketshare domestically. Like it or hate it, the vast majority of traffic is transported between metropolitan centres like Sydney to Melbourne or Adelaide to Perth. This isn't me speculating, one can simply look at any report from BITRE on this very question:

It's easy for the city types to forget where all of the food comes from, (clue, it ain't George St) and that without support of rural communities the country would drop dead. Literally.

As someone who has grown up in rural Canada and whose Dad works in agriculture I can understand the sentiment, farmers feed cities and the work at industrial centres in these areas is also important. But that isn't really the premise of this story. The premise of the story is that Rex is portraying itself as wanting to be a big boi in the Australian domestic market, but fails to recognize the important role serving those major urban centres is to achieve that ambitious goal. What is required for business folks taking the regular trek from Sydney down to Melbourne versus a Doctor flying out to Albury is quite different, indeed.

-RooFlyer88

 

[MEL_Traveller]

As a frequent flyer on the MEL-SYD route there is nothing ‘out of touch’ about Rex. Yeah, the lounges are a bit basic, and there’s no FF program. But otherwise the only thing holding Rex back are the handcuffs of status. People will pay $600 for an economy fare on Qantas or Virgin rather than a $349 business class fare in Rex.

Maybe they need to do some better marketing… a full page add in the Herald Sun or equivalent saying ‘don’t forget us for last minute fares’?

 

[kangarooflyer88]

As a frequent flyer on the MEL-SYD route there is nothing ‘out of touch’ about Rex. Yeah, the lounges are a bit basic, and there’s no FF program. But otherwise the only thing holding Rex back are the handcuffs of status. People will pay $600 for an economy fare on Qantas or Virgin rather than a $349 business class fare in Rex.

Having patronized the Rex lounge at SYD and a number of other airports I am inclined to agree with you that the lounges aren't bad. Sure they don't have showers and the booze selection isn't as numerous, but at least it's not chock-a-block with blokes pretending to be an executive of an ASX company yelling at colleagues on speakerphone.

Maybe they need to do some better marketing… a full page add in the Herald Sun or equivalent saying ‘don’t forget us for last minute fares’?

Advertising might make some business travellers more aware of the option but again it doesn't solve some of the fundamental flaws of Rex service at it is now. In particular, their service isn't really well targeted to the business market as they only fly out to MEL from SYD, 6 times a day:


Compare that with QF that runs 37 flights daily down to MEL meaning you can find a flight that meets your schedule and if you need to make that last minute change (i.e. due to a meeting running late or ending early) chances are Qantas will be able to put you on a flight that works.

Now perhaps if they came out with something innovative (at least in the Australian market) like a flight pass product where businesses can pre-purchase credits they can redeem anytime for one-way tickets on the Rex network, that could be of interest to travel managers who want both flexibility and to keep costs under control.

-RooFlyer88

 

[Quickstatus]

Yes and being a regional airline that serves rural Australia isn't gonna get you to multi-digit marketshare domestically

You assume that that is their business plan is wholesale domestic marketshare. Whereas their goals might be different - such as profitability.

fundamental flaws of Rex service at it is now.

Why should it compete with an large incumbent. In my view it's doing quite well in its space. I think the 737 is a opportunity they grabbed out of the VA1 crash. A head to head with the incumbents is in their interest ?

 

[kangarooflyer88]

You assume that that is their business plan is wholesale domestic marketshare. Whereas their goals might be different - such as profitability.

And in the article it states that they aren't profitable either, quoting from the article:

"Whether you’re operating profitably, that’s what’s relevant.”

Rex posted a net loss of $17 million for the half to December 31, a period in which Qantas and Virgin generated record profits. It must be rather tricky to operate profitably as a trunk route airline without any passengers.

Why should it compete with a large incumbent. In my view it's doing quite well in its space. I think the 737 is an opportunity they grabbed out of the VA1 crash. A head to head with the incumbents is in their interest

That statement is contradictory either they want to compete with the large incumbents or they want to stay in its lane of niche regional travel. They can't have it both ways!

 

[Quickstatus]

they aren't profitable

And market share increases profitability?

That statement is contradictory

I don't think so. It can seek out opportunities that arise if it makes sense to them.

 

[muppet]

…
Compare that with QF that runs 37 flights daily down to MEL meaning you can find a flight that meets your schedule and if you need to make that last minute change (i.e. due to a meeting running late or ending early) chances are Qantas will be able to put you on a flight that works.

In reality …. Say I want to change a flight last minute to Sydney today - grand total of 11 seats between 10am and 3:30pm. If I can’t get to MEL in the next 15mins, it’s a 1pm flight for me.

If I’m in business, good luck.

 

[kangarooflyer88]

In reality …. Say I want to change a flight last minute to Sydney today - grand total of 11 seats between 10am and 3:30pm. If I can’t get to MEL in the next 15mins, it’s a 1pm flight for me.

If I’m in business, good luck.

You're right that on this particular day, Rex would have more seat availability with some flights showing a Y9 between MEL and SYD. However, I would maintain that this is the exception rather than the general rule. In your example for instance, QF decided to cancel a flight which would mean passengers would be forced onto other Qantas flights sucking up the seat availability there. This analysis also doesn't take into account the possibility that QF can push people onto their luxury brand, Jétstar if things get really hairy which would boost up the number of available seats yet again.

What I will say though is that Rex could do a lot of things to gain a sizeable marketshare in this competitive capital to capital service. Aside from the aforementioned flight passes, one other thing they could consider is simply offering business class only on these flights and charging a price that puts it just slightly above QF economy. Perhaps they could even lock in that price meaning that customers can walk up and get on the flight for said price. I will concede that it would be difficult for Rex to match the frequency of Virgin or Qantas on these services, they simply don't have the crew and aircraft to handle it. But there is plenty of room for distinction here.

-RooFlyer88

 

[dajop]

And in the article it states that they aren't profitable either, quoting from the article:

If you delve into their results, they suggest that the domestic jet operations have been profitable since September, whilst the regional Saab operations have been loss making are now cash positive and expect return to profitability in Q3. This contravenes the article you quoted that suggested "t must be rather tricky to operate profitably as a trunk route airline without any passengers.". Indeed anecdotal evidence from AFF members backs this up suggesting a noticeable increase in loadings in the last few months. These reports (and perusals of expert flyer seat maps after departure) suggested they used to fly "without any passengers" but are now have much fuller cabins.

The mistake they made early on was to not do deals with the important travel agent groups, which they have since rectified. They didn't make their lowest fares available outside of the Rex direct booking channel, and thus when anyone searched on Google flights, Kayak or skyscanner, they didn't compare well with VA or JQ, but that has also changed.

 

[RooFlyer]

It’s a red flag when your deputy chairman inserts himself in menu planning. Sharp firing up the pie warmer – that’s what Rex investors really need, isn’t it? Maybe he should DJ the lounge playlist too, and they’ll have The Very Best of John Williamson on infinite loop.

A typical AFR effort, sneering about those not on the George St/ Collins St axis.

I'd love Alan Joyce, or his Chairman, to "insert himself in the menu planning" or at least go down to the shop floor and see what has been served up in the name of Qantas meals and all the other stuff.

 

[justinbrett]

Rex is effectively two different airlines - the legacy small prop regional airline, and the new jet capital city airline.

The latter will be interesting to see how it evolves. I don't think they're going anywhere (pretty hard to lose money on those routes right now), and if nothing else they can transport regional pax interstate instead of just intrastate - and don't underestimate the DL feeder traffic.

That said, I don't see many rusted on QF/VA customers switching. I don't think the article is that far off - Rex really could make this a mainline competitor to VA/QF but they really need to make some big changes if they want to realise their goal of 25% of the market. Otherwise they will remain a niche player - but a successful niche player nonetheless.

 

[MEL_Traveller]

Having patronized the Rex lounge at SYD and a number of other airports I am inclined to agree with you that the lounges aren't bad. Sure they don't have showers and the booze selection isn't as numerous, but at least it's not chock-a-block with blokes pretending to be an executive of an ASX company yelling at colleagues on speakerphone.

Advertising might make some business travellers more aware of the option but again it doesn't solve some of the fundamental flaws of Rex service at it is now. In particular, their service isn't really well targeted to the business market as they only fly out to MEL from SYD, 6 times a day:
View attachment 319933

Compare that with QF that runs 37 flights daily down to MEL meaning you can find a flight that meets your schedule and if you need to make that last minute change (i.e. due to a meeting running late or ending early) chances are Qantas will be able to put you on a flight that works.

Now perhaps if they came out with something innovative (at least in the Australian market) like a flight pass product where businesses can pre-purchase credits they can redeem anytime for one-way tickets on the Rex network, that could be of interest to travel managers who want both flexibility and to keep costs under control.

-RooFlyer88

37 flights a day is meaningless if you can’t access them.

Some of those flights will be delayed or cancelled, forcing pax onto flights still operating.

I had an issue last week with a cancelled flight, call centre couldn’t help, and I watched in real time as flight after flight kept filling up, taking away my options. Eventually I had to bite the bullet and just go out to the airport where they got me kn the next flight… three hours later.

From an environmental point of view I really don’t understand how business people need 15-minute frequency. Surely no one is *that* important? Plan you meeting better rather than expecting a plane to waiting at your convenience

 

[dajop]

From an environmental point of view I really don’t understand how business people need 15-minute frequency. Surely no one is *that* important? Plan you meeting better rather than expecting a plane to waiting at your convenience

15-min frequency is surely just spreading the capacity across the hour for better ground and ATC management, it's not about someone who needs to travel at 07:15 and can't wait until 07:30 (or can't arrive earlier for a 07:00) When they used to operate 330s and 767s on MEL/SYD I don't recall them having too many, if any, xx:15 or xx:45 flights, but those aircraft obviously had a higher passenger capacity. If they had some 787's in the same configuration that JQ have (high density, but very similar to the density on the QF 737's) on the route, they could probably do away with the 15/45 flights.

 

[jneil29]

Rex are so focused on their jet services their core regional business is suffering.

They’re under resourced, over committed and under staffed.

Sharp really should have shut his mouth last year when QF VA and JQ were struggling with crew issues because it’s Rex’s turn now. They can’t keep crew on the Saabs and it’s having huge operational implications.

I know many a Rex regional crew who are tired overworked and over it and many are planning to leave if things don’t improve.

 

[anyonebutqantas]

What a shockingly elitist article.

 

[Saab34]

Frequent Flyer program clearly not happening now I assume.

Perhaps funds are tighter vs what we know.