Make no mistake, as has been alluded to here before and confirmed in the media last week, Rex planned this whole operation on the basis that there wouldn’t be a Virgin to compete with.
When Virgin entered administration we had the Rex chairman dancing around the still warm carcass making disparaging remarks about their management and operation and talking down their value in attempt to switch off the life support once and for all.
Then we had their announcement about commencing capital city routes coinciding with the pointy end of negotiations over who was going to take over the reigns at Virgin.
Rex’s plans and expansion schedule is very similar to how Virgin Blue entered the market in the absence of a defunct Ansett.
Rex thought they were going to slide easily into a domestic market vacated by Virgin and regardless of the impact of COVID would be able to carve a niche in the absence of at least one major competitor.
Rex have never had any real competition, their regional operation is unique for anywhere in the world in that (as they’ve stated many times themselves) their main competitor is the car. The majority of their routes are sub 1 hour, devoid of any competition and some are heavily subsided.
Where Rex have had competition and after the proverbial whinge to the local councils/government they are soundly beaten or quit the route all together (think Port Lincoln or Dubbo where QantasLink have squeezed what once were profitable for Rex or more recently Merimbula or Kangaroo Island where given the threat of competition withdraw all together)
The majority of passengers carried by Rex are Government, medical or business travellers looking to complete their business in one day instead of the two or three if driven. There are very few country residents that use Rex to connect onto other airlines to fly interstate or overseas.
So in light of all of this, where does this leave Rex in entering what has been a notoriously difficult domestic market?
Rex have never put much effort into marketing or brand awareness, in fact they’ve only in the last few months for the first time created a social media presence.
Unless you’re from the country no one has a clue who Rex are and those that have had to use the service are aware of the arrogant indifference often displayed (think the chairman’s remarks to a country Doctor telling him not to bother flying with them again when he had a genuine question regarding a delayed service, the constant threats of withdrawing marginal services if local council don’t toe the line or the constant whinging about the ‘poaching’ of pilots even though their business model is based around a high turn over of crew at their training academy).
Rex are about to find that the bare bones arrogant effort they’re used to operating with in an environment of no competition with a captive consumer base, isn’t going to translate into early success when upscaling their operation into a totally different market they have no experience in.
As in the past, it’ll be those with the deepest pockets who will survive and the question is who is going to throw cash at Rex to enable them to survive what’s going to be a tough initial few years?