Regional airline out to prove knockers wrong
By SCOTT HANNAFORD
Australia's youngest airline, Regional Express, took off in a storm of controversy yesterday amid warnings the operation would fold by the end of the year.
The airline, badged "rex", was launched at Canberra Airport by Deputy Prime Minister John Anderson in a ceremony to welcome the player to the turbulent industry.
The Canberra-Sydney express shuttle will be its busiest route, but the carrier will expand its network over coming months into areas of NSW, South Australia, Victoria and Tasmania.
But vice-president of the Aircraft Owners and Pilots Association Bill Hamilton said rex would find it tremendously difficult to survive and would be unlikely to make it past Christmas.
"I sincerely hope I'm wrong, but my personal opinion is that they will be unlikely to succeed because there have been 11 airlines big and small go under in the last two years and [rex] will face all the same fixed costs as those other airlines," he said.
"It is all largely factors beyond their control, like the situation in the bush and fuel and airport costs."
But rex chief executive Michael Jones came out swinging at the comments, calling them uninformed and inaccurate.
"Those comments are a load of crap," he said. "The nay-sayers don't know our business plan, don't know how much money we have, so it's an irrelevant comment."
He said that before the sale of Hazelton and Kendell Airlines to the Australiawide consortium they had been losing a combined $3.5 million a month. With the economies Australiawide had made, the consortium would be able to sustain those sorts of losses for up to two years.
Staffing on the planes had been cut in half, the planes had been leased at a 50 per cent discount, and because the two airlines had been merged, they still had bulk purchasing power.
"It is going to be tough for Regional Express for the next few months. The airlines have been very fragile and starved of capital for quite some time," he said.
"We have plenty of money and we have the dedication of staff and a good business plan to make sure we are successful.
"The Government has done its bit, the staff have done their bit, now it's up to the passengers to show their support."
Mr Anderson said it was a great moment after a long battle to see Kendell and Hazelton reborn, but there would be no more Federal Government financial assistance to keep the company afloat.
"They had a customer base before the Ansett collapse. I'm confident they can get that base back, provided they get the support of the travelling public." One of the major consortium partners and Canberra businessman Pawl Cubbin said it was a great day for Canberra, especially as around a third of the investment in rex had come from Canberra's business community.
A dramatic improvement in the number of flights to Canberra, and great customer service would have an impact.
Eight Singaporean investors had bought a 30 per cent stake in Regional Express for an undisclosed sum, one of the investors said yesterday.
Lee Thian Soo said he and seven others had pooled their resources and invested in the new airline together. The new airline planned to approach Singapore Airlines to propose an inter-airline alliance soon.
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