View Full Version : Rex in the news again!

4th Aug 2010, 10:07
No one seems to be winning the airline wars in South Auz. History repeating itself, again.

Rex cuts services to Mt Gambier, Pt Lincoln on rising costs, competition

Valerina Changarathil
From: The Advertiser (http://www.news.com.au/adelaidenow/)
August 03, 2010 10:26AM
Regional Express will cut some of its regional services in SA. Source: Herald Sun

STIFF competition and increased charges have clipped the wings of flight operator Regional Express in South Australia.

The airline will offer 24,000 fewer seats on its Adelaide-Mt Gambier route from September 1 and 38,000 fewer seats on its Port Lincoln-Adelaide route from August 23.
Rex Airlines network strategy general manager Warwick Lodge blames "unilateral decisions" by Mt Gambier airport operator District Council of Grant for the 15 per cent scaleback in its operations on that circuit.
"We had a clear plan to increase flights on this route because of the positive numbers we were seeing," Mr Lodge says. "We had budgeted the move, but the council's decision to raise airport tax by close to 50 per cent will raise our costs substantially."
The Council voted to increase airport tax by $3 to $9.50, excluding GST, from September 1.

This hike would increase Rex's costs by $300,000 a year.

"We had no option," Mr Lodge says.
The airline carried 97,000 passengers on nearly 4500 flights to and from Mt Gambier airport in the past financial year.
Services on the Port Lincoln-Adelaide route were being cut due to poor performance and growing competition from QantasLink.
"It was a disappointing turn of events after seven years of hard work, but the market is not growing to support the existence of two air carriers," Mr Lodge says. Both QantasLink and Rex are struggling to fill seats, "averaging less than 50 per cent load factor".
The airline carried 150,000 passengers on this route last year.
Rex's other routes to Broken Hill, Ceduna and Kangaroo Island are all showing "good signs of growth", Mr Lodge says.
Rex is Australia's largest independent regional airline, providing about 55,000 annual flights to 35 destinations throughout New South Wales, Victoria, Tasmania, South Australia and Queensland.

And this.

Rex to cut flights

28 Jul, 2010 11:30 PM
REGIONAL Express will cut the number of flights between Port Lincoln and Adelaide next month because it cannot sustain operating with passenger numbers below 50 per cent of its capacity.

While passenger numbers overall into Port Lincoln have continued to increase, the introduction of QantasLink services has increased the number of seats available by 170,000 a year so load factors have dropped to below 50 per cent for both airlines.

Rex network strategy and sales manager Warrick Lodge said neither airline was making a profit on the route and they were both subsidising services.

Mr Lodge told the Port Lincoln Times yesterday Rex would cut 38,000 seats a year, an 18 per cent reduction in capacity, with the worst performing flights to be cut from August 23.

This will result in six or seven return Rex flights a day rather than the current eight or nine.

"The convenience of having flight frequency spread evenly throughout the entire day will be lost and unfortunately it is the frequency and the subsequent schedule convenience that is the most significant catalyst of regional passenger growth," Mr Lodge said.

QantasLink will maintain its current schedule and senior corporate communication advisor Kristy McSweeney said passenger loads were well above expectations.

"QantasLink is fully committed to our operations in Port Lincoln."

The load factor for the route, including both airlines, was 47.8 per cent for May and Mr Lodge said passenger numbers fell by another 2 per cent in June.
It is once again expected that the total market will not achieve an average load factor that exceeds 50 per cent."

Load factors averaging less than 50 per cent provide enough revenue to cover Rex's operating costs but not overheads and Mr Lodge said he believed QantasLink would be in a worse situation than Rex.

"We believe the situation is much worse for our competitor as its aircraft asset cost is some 10 times higher, its pilots are paid much more and it does not have the efficiency of an extensive South Australian network to support its solitary aircraft."

However Ms McSweeney said the current level of capacity performed well commercially for QantasLink and was well supported by the community.

Mr Lodge said airfares would not fall below those experienced during early promotional periods because it would mean even bigger losses in an environment of unsustainable low load factors.

"Port Lincoln was having arguably the best air service in the world for a city of its size.

"It is such a pity that in a moment of folly it is now on the start of a downward spiral that could do considerable harm to its social and economic fabric," he said.

5th Aug 2010, 06:49
It's those greedy pilots again ! Those better paid pilots flying those Q400s with over DOUBLE the seats of a saab, are they getting double a saab pilot ? Rex really have a thing about pilot wages eh !

5th Aug 2010, 08:29
Actually I'm not really sure if REX have a thing about pilot wages, not management in any case. It's more a case of them laughing all the way to the bank for securing such cheap labour. Apparently even second year FO's in the company are on less than $46000 a year, poor bastards!

Not even enough to buy some "Flied Lice" in Singapore.

"It's not flied lice, it's fried rice....... you Plick"

7th Aug 2010, 01:36
Qantaslink tried this same thing a couple of years ago. Came in destroyed a company and then promptly left. Rex I think was the only incumbent still standing for the SA intrastate routes.

Will they do it again and who will still be standing then? Time will tell.

7th Aug 2010, 02:06

The withdrawal of the Government subsidy for Airservices charges isn't going to help Rex, either ---- back to a level playing field with QLink on this cost.

And all before the costs of the ratbag "enhanced security requirements" really start to bite.

Have a look at the RAAA announcement, aimed at all political contenders.

Tootle pip!!

7th Aug 2010, 02:39
A lot is different since last time

in 05/06 Rex Added flights in the wake of competition

in 2010 Rex cuts flights in the wake of competition

With Rex cutting flights to MGB leaves them open/ vulnerable to competition

7th Aug 2010, 05:45
"Mt Gambier airport operator District Council of Grant" needs a rocket put up their rear end. What a great way to encourage tourism and community fellowship by nailing it to an airline that is trying to keep it's head above water. :confused:

O'Conners first, now REX. Is Sharp in the sights as well??

Soon the only way to fly in to YMTG will be MED1 on the PC12.

Good on you guys. Please take a really good hard long look at yourselves and think about your actions and how they might effect the next round of local elections. :ouch:

Unbelieveable!!!!!! :ugh:

On eyre
7th Aug 2010, 07:30
As I understand it the Mount Gambier passengers tax increase (which Rex could and should pass on to passengers) is to put some money into the kitty for runway works (nothing major done since the runway was constructed in WWII) - sound planning one would think.
The Port Lincoln situation is different - the route is robust enough to have two carriers. Passenger numbers have increased since Qlink re-entered the market (seriously this time). I predicted that Rex would reduce their flight schedule by up to three flights per days and that is was has happened. Passengers now have a choice and the standard fare reduced from $107 to around $90 one way. Qlink with Qantas have the ability to grow the market with discount through-fares to other capital city ports and locals and visitors alike are taking advantage of that. More tourists are visiting and increasing that sector of Port Lincoln's economy. Rex are the only ones to be feeling the pinch - it's called a free market economy and Mr Lodge blaming the locals for putting air services into a downward spiral by choosing to fly on the alternative to Rex is just sour grapes.

Curved Approach
10th Aug 2010, 08:28
Apparently even second year FO's in the company are on less than $46000 a year, poor bastards!

REX 2nd Year FO $49,344