Rex pulls out of CBR

[apacau]

Rex Withdraws Canberra Service
17 December, 2004 2:14 pm

Regional Express (Rex) today announced it will cease operating services from Canberra to Sydney from Wednesday, 29 December 2004 following a lengthy review of the route’s viability.

Managing Director Geoff Breust said that the decision to withdraw was an agonising one as Rex was well aware of its social responsibility in maintaining competition in the prime Sydney-Canberra route.

Mr Breust said there were two core reasons for the massive $9m loss incurred on this route since beginning in August 2002 - the dominance of Qantas Business Travel (QBT) in government bookings and the cost of using Canberra Airport.

“Rex fares are usually cheaper but to expect QBT to apply the best fare of the day policy and direct passengers to any airline other than Qantas is like hoping the fox will guard the chicken coop,” Mr Breust said.

“Like many others, I fail to see how QBT remains as travel manager for most of the Government departments when there is a clear conflict of interest with their parent company.

“Yet this situation has remained pretty much unchanged in the 3 years since Ansett and its travel arm collapsed and QBT took over as travel manager.

“Our withdrawal together with that of Virgin Blue a few months ago clearly demonstrates the impact this unusual arrangement has on competition. Rex has demonstrated that in all cases where the playing field is level it can successfully compete. However in this case the stranglehold of QBT makes the playing field far from level.”

Mr Breust added that another reason for the withdrawal was the high infrastructure cost of operating the Canberra-Sydney route. Last year alone, Rex paid $2.8m in air navigation, airport charges, fees and leases at Canberra Airport to fly 65,000 passengers on the route.

Mr Breust said that arrangements are being made to accommodate passengers booked to travel after 29 December and Rex travel consultants are on standby at 13 17 13 to help with the travel arrangements of all those affected.

“I would like to take this opportunity to thank all those who have supported Rex loyally in the past two and a half years especially the Federal and ACT Governments who have made numerous attempts in reminding the public service to abide by the best fare of the day policy.”

Mr Breust predicted that fare prices on the Canberra-Sydney route will rise if the situation prior to Rex’s entry is anything to go by.

“To all those outraged by this situation, I do make this promise that we will return when the right operating conditions are put in place.”

Mr Breust paid tribute to the 10 Canberra-based Rex staff thanking them for their total professionalism, exemplary service standard and unabiding loyalty to the airline and customers. All staff have been offered either redeployment within the Company’s other operations or to receive their full entitlements.

Reasons for the withdrawal

- Rex has sustained $9.12m in losses on the Canberra to Sydney route since beginning in August 2002
- Dominance of Qantas Business Travel in government bookings
- The carriage of only 65,000 of the 832,000 passengers who fly on the route each year or 7.8% of the market
- Significant cost associated with using Canberra Airport including a total of $2.8m in air navigation, airport charges, fees and leases

The last flight will be ZL382 on Tuesday 28 December 2004 at 6.45pm out of Canberra

Rex Canberra Passengers

Arrangements are being made for an estimated 1,000 passengers booked to travel from 29 December 2004
Passengers booked to travel on or after this date should contact the Rex Customer Call Centre on 13 17 13

Arrangements are also being made to accommodate Canberra-based passengers who hold Rex Flyer or Rex Lounge memberships

Rex Canberra Staff

Arrangements are being made for our ten in total full time, part time and casual staff at Canberra Airport to be offered either redeployment within the Company’s other operations or to receive their full entitlements

Travel Agents

Agents are advised not to make alternative arrangements directly with Qantas. To ensure that all Rex Customers are processed correctly, Agents must contact the Rex Customer Contact Centre on 13 17 13.

Qantas are unable to accept any bookings that are not processed within the guidelines of the specific arrangements that have been put in place between Rex and Qantas. Please be aware that customers may be denied boarding if the correct procedures are not adhered to.

[Buster Hyman]

I have a soft spot for Rex, battling on as they are, but when I was doing the CBR run regularly, they were not that much cheaper. (They were just stopping the run from MEL) I couldn't justify paying the same fare for a long flight to CBR when I could get a jet for about the same.

Still, if it's not making money, get out of there!

[Raider1]

I have many friends in Rex Canberra and wish them all the best for the future.
Unfortunately Rex simply did not have the frequency to cut it with the business traveller CBR/SYD. I have always had a soft spot for Rex as an ex AN employee, but with my current employment requiring frequent travel I admit I often by-passed REX because I needed the flexibility to change flights at short notice.
I wish REX all the best on other routes where their type of operation is perhaps more suited.

Good Luck Geoff.

[Eastwest Loco]

Having been made redundant 3 times in my airline career, i feel deeply for the Rex Canberra people.

Rest assured guys and girls, the good stuff floats to the top.

It still bloody hurts though, and I am not ashamed to say I have bawled my eyes out once I got home when my mighty little ailine was stolen, only to have a worried spaniel and a very young son crawl up onto my knee. There are reality checks we all need and get wether we want them or not.

There is a light at the end of the tunnel and it is NOT the 4.17 from Penrith.

Wherever you go, whatever you do, remember your little operation with huge pride and boast about it. You deserve that for your efforts, and that way it will NEVER die.

Best regards

EWL

[Wirraway]

Sat "Weekend Australian"

Qantas monopoly on Sydney-Canberra as Rex bows out
Steve Creedy, Aviation writer
December 18, 2004

MORE than 800,000 travellers flying between Sydney and Canberra each year face a Qantas monopoly later this month after the only other carrier servicing the route announced yesterday that it was pulling out.

Regional Express said it would stop operating its six daily flights to Canberra on December 29 after losing $9 million on the route since August 2002.

Ten staff will lose their jobs because of the move but Qantas and Rex have struck a deal whereby the flying kangaroo will honour the tickets of about 1000 passengers booked to fly after the end of the month.

Rex yesterday blamed its decision on the dominance of its competitor's corporate travel arm, Qantas Business Travel, in government travel, and the cost of using Canberra Airport.

"To expect QBT to apply the best fare of the day policy and direct passengers to any airline other than Qantas is like hoping the fox will guard the chicken coop," said Rex chief executive Geoff Breust.

"Like many others, I fail to see how QBT remains as travel manager for most government departments when there is a clear conflict of interest."

Mr Breust said high infrastructure costs on the route - the airline last year paid $2.8million in air navigation and airport charges to carry 65,000 passengers - also contributed to the decision.

He predicted ticket prices would rise and service standards would drop on the route under a Qantas monopoly.

The Rex decision, and a similar one earlier this year by Virgin Blue, came despite attempts by the federal Government to encourage bureaucrats to take services other than Qantas and give the other carriers at least 10 per cent of government travel.

Qantas chief Geoff Dixon yesterday rejected the claim that Rex was forced to withdraw because of QBT's dominance, saying the decisions by Rex and Virgin reflected the difficulty of making money on the Sydney-Canberra route.

"Qantas's jet operations between Sydney and Canberra are not profitable but like most airlines we operate a combination of profitable and unprofitable routes," he said.

Mr Dixon said Rex had received more than 10 per cent of government traffic on the Sydney-Canberra route and that QBT honoured the best fare of the day policy.

But Mr Breust said his research showed the regional carrier got 7.8 per cent of the 832,000 passengers who flew the route each year.

He called on the Government to ban QBT from tendering for government travel contracts.

Meanwhile, Virgin Blue chief executive Brett Godfrey yesterday sold 5 million shares in the company, or about 15 per cent of his stake, for $9.4 million.

Mr Godfrey's remaining stake is worth $53.2 million at yesterday's closing price of $1.89. The sale was his first since the airline floated in December last year.

===========================================

[Interceptor]

"Meanwhile, Virgin Blue chief executive Brett Godfrey yesterday sold 5 million shares in the company, or about 15 per cent of his stake, for $9.4 million.

Mr Godfrey's remaining stake is worth $53.2 million at yesterday's closing price of $1.89. The sale was his first since the airline floated in December last year".
-----------------------------------------------------------------------------------

What happened to the virgin culture/flare where everyone is on the same happy team ? Obviously when it comes to sharing the riches this does not apply!

[hoss]

He probably had to 'sell up' to pay for the Xmas party;) .

[Oz Ocker]

"Obviously when it comes to sharing the riches this does not apply!". Is that right Comrade?
So do the pilots pool there saleries with the cabin crew and ground handlers on pay day, then divvie it up equal between 'emselfs?
Did I hear ya say "That's a diffrent kettle a fish."??

My understandin is Godfry got the shares instead ofa cash payment. Them shares coulda gone either way.
Would you then be willin to chip in an pay Godfry the diffrence if they'd gone down from the issue price?

Bout bl@@dy time e started ta get somethin back from all the skullwork e's put inta VB since befor Day 1.
If it wasn fer Godfry (and Sir Dickie, a course), there'd be NO Virgin Blue.

Come to think about it, wasn't it 2 1989 pilots who floated the idea to Sir Dick, and e anded it to Brett ta work out the feesability?
Who was them guys?


Be seein' youse round!

[Gibbo]

Interceptor,

Come off it mate.

If you resent Brett Godfrey making a shed load out of his days at work then you are either never going to make big bucks for yourself, or never going to be honest to yourself if you do make them!

Gibbo

[Wirraway]

Mon "The Australian"

Glenn Milne: Plane trouble delays, possibly grounds, Deputy PM
December 20, 2004

IT was an announcement little noticed outside Canberra. But it may end up having profound implications for the future of Deputy Prime Minister John Anderson. On Friday, Regional Express Airlines (aka Rex) said the jig was up; it would abandon the route between Sydney and the national capital citing $9million in losses at a cost of 10 jobs.

In the context of the broader economy it might sound like small beer. But the political portents for Anderson and the National Party generally are much more significant. Rex grew out of the Ansett collapse through an amalgamation between Hazelton Airlines and Kendall Airlines, both Ansett subsidiaries. It moved to fill the gap left by the withdrawal of Ansett's regional services. Anderson, who is also Transport Minister, regarded the threat to country centres as so great that he convinced the Government to tip in $15million.

Along with Kay Hull, the National Party member for Riverina, Anderson has moved mountains to protect the fledgling carrier, based in Wagga Wagga, the population centre of Hull's seat. Rex employs 200 people in and around the central south-western NSW city. But following Rex's announcement on Friday that it is quitting the Sydney-Canberra route there are real doubts within the aviation industry about the carrier's ultimate survival. "The betting is it will be death by a thousand cuts," said one senior industry figure yesterday. If that happens, the rural and regional backlash against Anderson himself would be substantial, especially since the Ansett collapse also occurred on his watch at a cost of 13,500 jobs. The Government is still feeling the aftershocks with continuing rows over employee entitlements.

Anderson is not so secure in his position as leader of the National Party that he could ignore the political impact of Rex's demise. Anderson agonised in the last term over whether to stand down as leader, before finally opting to stay on. The drawn-out process, which brought into question his capacity to make judgments and stick to them, weakened him. It exposed personal doubts and a loss of confidence. Just as importantly, it infuriated his natural successor, Mark Vaile.

The puzzling thing about Rex's Friday decision is that it was within Anderson and the Government's gift to prevent the shutdown of Rex's Sydney-Canberra service. The question being asked within the industry is "why" Anderson didn't move. Announcing Rex's abandonment of the Sydney-Canberra corridor, the company's managing director, Geoff Breust, blamed what he called the federal Government's "flawed" travel policy.

This debate centres on complaints by the smaller airlines that the Government is failing to implement a "best fare of the day" approach. In other words, rather than simply automatically going to Qantas for bookings, the bureaucrats in charge of the Government's various travel offices should actively seek out the cheapest possible fare each day. That's been made even more difficult by the fact that Qantas Business Travel is now in charge of all Government bookings – an arrangement Rex's Breust likens to having the fox in charge of the henhouse. The figures are staggering. The Government currently spends $300million a year of taxpayers' money on airline travel by public servants and politicians, including ministers. In September this year, Virgin Blue also withdrew from the Sydney-Canberra service – a route dominated by public servants and MPs – again citing the Government's failure to apply "best fare of the day" policy.

That leaves Qantas with a monopoly over the short-haul route. Publicly funded passengers will now pay as much as $450 for the round trip to Sydney, more than three times the amount of a few months ago. Qantas now has 95 per cent of all Government travel expenditure. That figure gets even better for Qantas in the case of Defence, the highest spending department on airline travel with a 2002-03 domestic budget of $104million. Of that amount Qantas gets 97 per cent, Rex 0.55 per cent and Virgin Blue just 0.01 per cent, despite Virgin offering the cheapest fares in the market.

The figures on market share in respect of Anderson's own department are just as astounding. Last year, Transport spent $2.6million with Qantas on domestic travel, Rex accounted for $98,000 and Virgin Blue just $4000. No wonder Rex is in trouble and Virgin is complaining.

Despite these figure Qantas chief Geoff Dixon continues to argue that Qantas Business Travel – which co-ordinates Government travel purchasing – adheres to "best fare of the day policy".

"At the end of the day," says Dixon, "the customer has the right to choose the best overall option for their business and travel needs, based on a range of factors including price, flexibility and service." It's that last word "service" that many in the industry believe is the key to Rex and Virgin being effectively locked out of the Government market. What a Qantas ticket really means is automatic entry for senior bureaucrats and all MPs to the Qantas Chairman's Lounge and the Qantas Club – features not supplied by Rex or Virgin. But if Rex folds, Anderson may have to reconsider. Unless he wants the Chairman's Lounge to suddenly turn into the political departure lounge.

And finally, election years are long years and this is my last column for the year. Thanks to all of you for both the bouquets and the brickbats. Enjoy the beach and we'll resume the dialogue in the new year.

===========================================

[rescue 1]

Shapeshifter, perhaps Mr Milne is stretching the plight of REX.

He does however highlight the continued support by the Minister of Qantas for his airline, to the detriment of the travelling public.

For a country that aspires to equal opportunity - this smacks of cronyism, and anti-competitive behaviour.

[TurbineDreamer]

One of two things are happening here with Mr Milnes's story.

Either

1. He is writing the story in away that may put pressure on the government to do something about this issue. By using threatening language like "REX FOLDING", that is the last thing the minister wants to hear (and lets face it, he is so stupid he would believe it) and may get the minister into action. I suspect that this is a very deliberately written article to get it up the minister. ( From my understanding REX are doing very well on other routes in Victoria and South Australia, and I haven't heard any negative things about other NSW routes. I couldn't believe they are under pressure to fold, this is just a sensible decision to drop the route so the company doesn't get into financial trouble. If anything this shows good management by REX. Did I just contradict my self by using good management and an airline in the same sentence- OH My god I just did.)

OR

2. Milne is an idiot with no idea.



I am hoping the 1st option is correct, though I fear it is the second.

[Like This - Do That]

Whilst attention is being paid to QBT it seems no attention is being paid to Canberra's charges. Do the figures $2.8M for 65000 passengers carried add up? That's $43 per passenger moved through CB.

Mr Anderson will go onto the telly looking earnest and sympathetic and will say nothing about CIA's monopoly pricing at CB (or Max the Axe and SY's similar monopoly abuse). He certainly won't say anything about his and former transport minister Sharp's roles as Transport & cabinet ministers during the FAC sell offs.

:*

[cornholyo]

Rex pulls out of Canberra Would be more interesting if it was about Rex pulling out of Adelaide.......

[Howard Hughes]

Welcome back Cornhy!!

Cheers, HH.

:ok:

[DJ737]

No doubt, the best fare of on the day will be applied 100% of the time on the SYD-CBR-SYD route after DEC29 :rolleyes:

DJ737
The Roo Rooter :E :ok:

PS. Just wait for the DJ frequent flyer program in the new year, THAT line in the sand is gonna move big time. :E :p

[questil]

Back to the topic
As DK once said (or similar) if a route is not profitable dont fly it. I think you will find the saabs will be redeployed within the network to enhance capacity on routes which are usually full more than likely to South Australia. And possibly new routes on the east coast. All indications are the company is doing extremely well no meat feat in such a competitive environment.

[apacau]

This morning's news reports that Virgin Blue has offered to underwrite Rex on SYD-CBR. Very interesting concept - I wonder how it would work and what the mechanics would be???

[Buster Hyman]

I can just see the QF planes now apacau "DJ/KD No Way!"

[Pete Conrad]

OK, there is more to this than meets the eye, as an ex KD employee who flew into CBR in the Saab, let me tell you in the good old day of AN, loads were great naturally and the service was great.

After AN collapsed, a number of us rallied the government departments to get custom back to KD, and threw our heart and soul into making KD work under administration. Sometimes it worked, other times it fell on deaf ears as the public servants wanted a reliable service. We did have our die hard customers.


Bottom line is, if you want the Canberra market to succeed you need to offer the same, if not better service than what QF did or does, as well as offer the competitive fares.

I feel for the REX guys, good guys and the hard work put in by the great Cecil Wagstaff - god bless him, and his tireless efforts to make Canberra work, unfortunately, market forces and loyalties are just too greatly swayed on that route.

I hope REX keep going strong in other areas as there are alot of great guys there and they deserve to keep going strong, especially in the regional areas that rely on them.

[Eastwest Loco]

All I can say to Rex, and their employees with that result is GO YOU GOOD THANG!!!!!!

The airline only came into bad times in the KD days when AN management invaded Wagga at the same time as Don Kendell was being operated on, and immediately turned it around on many routes, from profit into loss. This was done by applying their already misproven yeild management theories based on medium to medium large jet theorums on turboprop routes. Plus the addittion of the CRJ - KD did not want it and knew it was a dead duck.

It just goes to prove that Jed, Wokka and all the other guys and girls involved had it right. They are doing it again now.

Well done dude - and do not stop.

20 year old son's girlfriend flew down on the SAAB last week from MEL for a Chrissy visit - said it was the nicest flight she ever had.

Nothing has changed - thankfully.

Best regards

EWL