Rex is reviewing its Canberra services

[Wirraway]

From ABC News:

Regional Express Airlines (Rex) is reviewing its Canberra services after acruing losses of $9 million since it began operation.

Rex shareholder Bob Winnell says the blame lies with the Federal Government, which is not supporting the airline despite its competitive fares.

Mr Winnell says the Canberra routes are now under review.

"We have had almost a nil response from almost every federal department and out of 15,000 flights a week, Regional Express is getting 200 government passengers - it's an appalling situation," he said.

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[Hugh Jarse]

"We have had almost a nil response from almost every federal department and out of 15,000 flights a week, Regional Express is getting 200 government passengers - it's an appalling situation," he said. That's because the government has a CONTRACT with QF, which was gained by competitive tender.

Dunno when it comes back up for renewal, but I'm sure it will be hotly contested.

[Torres]

"..after acruing losses of $9 million..." That is serious brass!!!:{

Think I said on another thread that "where there's smoke, there's usually fire. I hope the smoke wasn't from burning excessive $100 bills!"

I guess it is..........

Wirraway. "...out of 15,000 flights a week..." Into Canberra? I hope that was your error of adding in a few extra naughts! That's one every 40.32 seconds.....!!!

[Wirraway]

Tues "Sydney Morning Herald"

Qantas rivals have a test for ACCC boss
By Anthony Hughes
July 8 2003

New competition chief Graeme Samuel is facing another early test of his mettle as rivals to Qantas step up an attack on the carrier's stranglehold on government travel.

Regional Express, known as Rex, said yesterday it would complain to the Australian Competition and Consumer Commission that it had been denied sufficient access to government business, essentially public servants travelling between Canberra and Sydney and Canberra and Melbourne.

Rex has been reviewing its commitment to these routes after losing about $8 million on them in its first 11 months of operation.

It says it may have to withdraw from the services if the situation doesn't change.

Rex argues that Qantas Business Travel is the travel agent for 80 per cent of Federal Government departments and therefore Qantas is determining which airline public servants fly, although cheaper fares are available.

Rex shareholder Bob Winnel told ABC radio in Canberra that Rex had presented government departments with the lowest flexible fare, but had received "almost a nil response".

He said it was an "appalling situation" that of 15,000 government passengers a week on the two routes, Rex was getting only 200, or less than 2 per cent.

Rex is a regional airline formed from the old Ansett subsidiaries Hazelton and Kendall. It flies to around 30 destinations in four states.

Virgin Blue, which stepped up its presence on Canberra routes last month and is offering sharply discounted fares, called on Mr Samuel to publish a final draft of a report last year on competition in the aviation industry, which highlighted the issue of Qantas Business Travel.

Virgin's head of commercial, David Huttner, said: "Clearly you can't have competition if Government only supports one airline and this has been an ongoing problem.

"The core issue is that the Government's travel agency is Qantas Business Travel and it recommends which airline to fly. It's a bit like the fox guarding the hen house."

Qantas said its travel arm recommended the "best fare of the day" and did book passengers on Rex flights.

However, Rex believes many public servants favour Qantas because they are Qantas Club members, even though the fare might be much more expensive than alternatives.

An ACCC spokeswoman said she was not aware of a complaint being filed but any complaint would be examined, as all complaints were.

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[apacau]

ABC news has just reported that Rex is cancelling its services from Canberra to Melbourne.

[DJ737]

from ABC News:

The dispute between regional airline Regional Express (REX) and the Federal Government has escalated, with the airline closing down services between Canberra and Melbourne.

REX and Virgin Blue together have the ability to take around 15 per cent of passenger numbers flying out of Canberra and claim to offer significantly cheaper fares than Qantas.

REX spokesman Bob Winnell says Government agencies, who are by far the biggest users of airline services, are meant to use the lowest cost fares available each day.

But he says the bulk of bookings continue to be directed to higher priced Qantas flights.

"We had 211 Government passengers on our Canberra routes last week out of a potential 16,000," he said.

Christine Tutty from the United Services Union says it is killing competition and threatening local jobs.

"I just don't [think] it's necessary to put these people through yet another round of pain about whether or not they are going to survive this and whether their jobs are going to be intact," she said.

Federal Transport Minister John Andersen says he has seen no evidence of market manipulation but is happy to discuss REX's concerns.

DJ737

[Wirraway]

AAP

Anderson denies government favouring Qantas
July 8 2003

Any claims of anti-competitive behaviour in the allocation of government flights should be referred to Australia's competition watchdog, Transport Minister John Anderson said today after Regional Express and Virgin Blue expressed concerns that Qantas Business Travel, which acts as the travel agent for most government departments, favours booking Qantas flights.

REX has threatened to stop flying into Canberra, due to a lack of business.

Mr Anderson said the airlines could voice their concerns to the Australian Competition and Consumer Commission (ACCC).

"If there is any anti-competitive behaviour than I need to see the crystallised evidence and it needs to be taken up with me and the government, or with the ACCC," Mr Anderson told ABC Radio.

Mr Anderson said the Transport Department would meet with REX and Virgin Blue to discuss concerns they were not getting enough government business.

"I will arrange a meeting between my department and both REX and Virgin to work through their claims again," Mr Anderson said.

He said the government did not favour Qantas when booking flights.

"Whilst I do acknowledge the importance of these issues, I do have to say it's a bit rough to get on the air and claim that a deal's been stitched up and the government won't give them the time of day," Mr Anderson said.

Mr Anderson said he had asked other ministers to make sure their departments considered using REX and Virgin Blue but the government had a policy of booking the cheapest flights available.

"I've repeatedly myself asked other ministers to make sure that their departments are giving the alternative airlines a fair go," he said.

AAP

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[oldhasbeen]

Whats pisses me off more is that the money the govt. departments use to buy these more expensive fares is not theirs in the first place.... it's "Joe Publics", and we expect the government cronies to sit in the cheapest seat available just like the rest of us :mad:

[Wirraway]

ABC News Online

Anderson blames competition for REX Airline cuts

The Deputy Prime Minister, John Anderson, has blamed the type of plane used by REX Airlines for its failure to attract passengers on its Victorian-Canberra runs.

The airline announced yesterday it was cutting services between Melbourne, Traralgon and Canberra, partly because of a failure to attract enough government business.

Mr Anderson says the use of small turbo prop planes on the runs was also a contributing factor to the lack of business.

"Of course I'm disappointed at the loss of any services, but I do obviously have to point to what I think was the real facts.

"I think particularly in the Canberra-Melbourne run the problem is it's hard to compete with the timeliness of jets," he said.

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Wed "Canberra Times"

Rex cuts Canberra services
By DAVID McLENNAN
Wednesday, 9 July 2003

Regional airline Rex has carried through with its threat to cut Canberra services, yesterday axing its Melbourne route, with flights to and from Sydney set to go in a week.

The airline blamed the decision on poor use by Commonwealth departments despite it having cheaper fares than rival Qantas, which carries the vast majority of public servants.

Local Rex investor Bob Winnel said a meeting with the Federal Government planned for Tuesday, July 15, would likely decide if the Canberra-Sydney route would continue, or if it, too, would be scrapped.

"If we get a substantive response [from Government] then we give it a bit more time," Mr Winnel said.

"We want it to work, we are willing it to work, we will work with Government if they have any queries about our service, but we have to get some proper responses and people on seats," he said.

In an effort to save the Canberra routes, federal Transport Minister John Anderson is trying to convene a separate meeting with his department, Rex and Virgin Blue, which is also up in arms about Qantas's dominance in the government sector.

Rex claims 80 per cent of government departments use Qantas Business Travel, which is owned by Qantas, to book their flights. It referred about 98 per cent of fares to Qantas, even when best-fare-of-the-day policies applied. Rex said it had the cheapest fares, but only flew about 200 of the 16,000 public-service-related flights a week.

A Qantas spokesman rejected this, saying Qantas Business Travel always honoured best-fare-of-the-day policies.

"That means that they refer customers to other carriers and book them to other carriers, but at the end of the day . . . the customer will make the final decision," he said.

Rex's Canberra-Melbourne and Canberra-Traralgon routes will stop operating on July 24, with the airline offering refunds to anyone with ticket for flights after then. Its 50 Canberra staff are not at risk from this decision, but some will be if the Sydney route also goes.

Mr Winnel said the decision was as much about making a point as cutting loose a loss-making route.

"The board had to decide how do we get this matter taken seriously. Do we leave it for several weeks and then find ourselves pulling all routes, or do we give them a jolt, let them know we are fair dinkum and pull the route that has the lowest traffic?" he said.

He welcomed the minister's offer of a meeting, but said there needed to be action on the ground to fix the problems.

"This is classic Yes Minister - all the right words from the pollies, all the right general directives, but the behaviour on the ground is identical," he said.

Acting Chief Minister Ted Quinlan said his Government had agreed to use Rex for at least 15 per cent of ACT public servants' flights and he was calling on the Federal Government to match this commitment.

But the Commonwealth says each department individually negotiates its own travel contracts.

Mr Anderson said he wanted Rex and Virgin Blue to be able to compete with Qantas on a level playing field.

He had asked other ministers to ensure their departments were giving the airlines a fair go. Departments were obliged to get value for money, and this was done through best-fare-of-the-day policies.

A Virgin Blue spokesman said best-fare-of-the-day contracts were worded so public servants could avoid taking the cheapest flight, some using 15-minute departure differences as an excuse to go with the more-expensive Qantas.

"And we have brought it to the attention of the ACCC and we will be doing it again, but at the end of the day the Government has got to really start addressing this as an issue and quit hiding behind outdated contracts that are not being enforced," he said.

Tenders required business- and economy-class travel and a national network, so the only way they could be competitive was if there was two major airlines.

"And so now we are realising that the old model is a dinosaur, but the Government is sticking by contracts that were made in a different era, and are clearly not delivering the results to the taxpayers and nor are they being enforced properly," he said, adding he did not know why contracts were focused on business-class travel.

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[apacau]

It is worth noting that Qantas also have twice daily Dash 8s on MEL-CBR and more on weekends.

[tsnake]

Memo for Virgin Blue - you don't stand a chance of getting any Federal Government contract unless you
a. Do a decent lounge deal
b. Put together a decent route network that includes, amongst other things, more services BN-DN and and services AD-DN, especially in daylight
c. Cut connection times. There's nothing more precious than time and poor through connects really piss business off big time, and
d. Think hard about a business class. AN lost a good deal of business in the 80s not following TN on this route. The politicians expect it and some businesses still let senior executives fly commercially, in nice seats.
In case you haven't noticed the Defence contract is the big one and the army and the RAAF have large contingents in the Top End. One overnight horror ex BN and a daily SY-DN isn't enough.
And a second, larger fleet type for long haul might be a very good idea.
And two daily flights SY-CB-SY isn't going to endear you to all the public servants in Canberra. Old hands remember the tweedeldee/tweedeldum services TN/AN used to provide. Going back is not an option.
To be fair Virgin is faced with a Field of Dreams scenario - they have to spend their money and build up their fleet and network before they can hope to get the contract, and they may not. Such is life in business.

[Groaner]

Is Rex paying all its bills?

A route reduction doesn't do much for an airline's finances unless it is accompanied by either starting up substitute routes, returning aircraft, or large manpower layoffs (or all three). Don't see any of these, and Rex has been losing money, so when does it run out?

[Raider1]

The problem for Rex is that under the Ansett arrangement the SAAB service CBR/SYD was marketed as an AN flight so often people didnt realise that they were booked on a SAAB.
Under todays arrangents many Joe publics are electing to select QF or DJ because of their jets. Yes I appreciate QF has Dash 8's on some services.
I think that Rex could do more to help themselves by having more competative through fares to their regional destinations ex CBR.
For travellers to the North Coast from Canberra the cheapest Canberra Balina fare is usually about $450 each way. The smarties fly QF or DJ non stop to Brisbane for around $150 and then drive down

[scran]

And we are not "forced" to fly QANTAS.

If a VB or Rex flight timing suits you better, you can specify that flight.


I always get to do my own flight preferences, so can choose what flight/when it suits.

Guess the problem for a lot is that BigWigs (or those that cant be bothered too, or are too lazy to do, their own bookings/preferences for travel will end up on QF).

[Icarus2001]

A route reduction doesn't do much for an airline's finances

It does if the airline withdraws from a route causing 80% of their losses.


tsnake I think you are losing sight of the Virgin business model. They do not wish to be two class full service and it appears that they do not need to be.

REX is suffering simply because of no lounges and frequent flyer points for the public servants to use. Remember that the department they work for pays the fare but the employee usually gets to keep the FF points. Good system huh? So there is no incentive for the employee to chase down the lowest fare.

As for Andersons comment on timeliness..can anyone give me the definitive time difference between say a 737 ML-CB and a SAAB?

Torres that would be 15,000 bums on seats. Over 2000 a day?? Imagine if REX were able to grab 2000 a week instead of the 200-250 they claim to be getting.

[tsnake]

Icarus,
You can have all the business models you want but if the customer wants business class and lounges then the customer gets business class and lounges.
If Virgin wants the Govt business then to have a crack at it business class and lounges will be a must.
As Godfrey and Branson are begining to discover this isn't Europe.

[apacau]

Rex DOES have lounges and FF program.

True the Rex FF program isn't as great as the Qantas one (eg: won't get you to LAX or Gold Coast or Fiji), but for public servants it shouldn't matter - they can't use them for personal gain anyway

As for time difference MEL-CBR, add another 15-20mins.

[Icarus2001]

but for public servants it shouldn't matter - they can't use them for personal gain anyway

My information is that they can use them for personal travel.

[kim_AdAstra]

Hmmm, difficult one for Virgin Blue to attack admittedly.
But, I work for defence which does have one of the "big" contracts with Qantas Business Travel. Their contract policy is to book the cheapest fare available, whilst having to accomodate time or date requirements of the customer.
I have now on three seperate occasions asked directly for filghts / times that mean that Virgin Blue would have to have been the cheapest option by up to $300. On each occasion I was only offered the closest timed Qantas flight. On the last two occasions I asked outright " But there is a Virgin flight at that time for only $49- or $89-." On both occasions I was told point blank that QBT does not make bookings for travel on non QF domestic carriers.
That seems pretty plain to me!

As a tax payer, and defence personnel do have to pay tax, I am outraged, and have written to both the Air Force news paper and sent my concerns in writing to the Chief of Air Force.

As for the quality of Virgin, Rex or Alliances service, under the defence contract with QBT, the meals that are served in flight, regardless of what they are, are not considered substantial enough. Therefore when travelling over a specified meal period defence travellers still receive an allowance to allow them to purchase a more suitable / substantial meal when on the ground.

This allowance would more than cover a meal on a Virgin flight if you happen to be on a longer haul sector of 3 or more hours.

Defence contract is worth aprox $80 mil a year to QBT, if the cheapest fare of the day were used that could translate into as much as a 50% or more saving.

Mel - Syd for me with Qantas $426- (Rtn)with Qantas' 25% contract rebate that comes down to $319-50
With Virgin it would have been $168(Rtn)

Additionally, if you are a corporate customer with Virgin booking more than 400 sectors per year, you qualify for fare discounts.

Defence in particular along with other Govt departments need to be a bit more savvy in their approach to air travel.

I'm unbiased to which airline I travel with, I just love flying, but why pay more than you need to. Especially in these financially constrained times.

[Wirraway]

Wed "The Canberra Times"

Rex gives route a week to improve
Peter Brewer
Wednesday, 16 July 2003

Canberra regional airline Rex will make a decision within one week whether to axe its loss-making flights to Sydney and close its ACT operations.

In a crisis meeting with Finance Minister Nick Minchin and his departmental Secretary Dr Ian Watt yesterday morning, Regional Express investor Bob Winnel was given an undertaking that all efforts would be taken to redirect a proportion of public-sector travel to the regional airline.

The assurance came too late for Rex's other Canberra connections to Melbourne and Traralgon, in Victoria, which were scheduled to be shut down on July 24.

Mr Winnel said the fate of the Sydney-Canberra flights and the jobs of 50 Rex employees in the ACT now relied on public servants using the airline on that busy air route.

"I am preparing a report to the board members [of Rex] which will suggest that they exercise patience but to put the route on a careful and daily watch into next week," Mr Winnel said.

"If no gradual improvement is seen in passenger numbers in the days ahead on the route, then we will have no choice but to close it down.

"We make no bones about this; the trend upward [in passenger numbers] would have to be quite apparent to convince us that public-sector travel habits are changing.

"They [public servants travelling by air] could fix this in two days, if they had a will.

"If individual public servants wanted to give one of their home-town public companies - not do it a favour, just give it a fair go - then the service between Sydney and Canberra will flourish and it will be our mainstay route."

Rex, with 45 per cent of its capital sourced from Canberra-based investors, has lost $9 million in the past 11 months, or more than $200,000 a week, on its Canberra runs.

The airline has calculated that an increase from the current 1 or 2 per cent of the public-sector market to around 10 per cent would make the route viable and may even lead to more flights being added.

Mr Winnel said he felt "a lot more positive" after yesterday's meeting with Senator Minchin.

"But we are by no means out of the woods in sustaining a Canberra-Sydney service," he said.

Late last week, Department of Prime Minister and Cabinet head Peter Shergold wrote to Transport and Regional Services Department secretary Ken Mathews, pointing out that "few agencies have pursued with sufficient vigour the special rates and discounted offers from smaller airlines where they are the best value for money".

Mr Shergold requested a "greater commitment by departments and agencies to the Commonwealth Procurement Guidelines".

The letter said that "weekly reporting [on flight sectors] . . . may be required for the foreseeable future . . . and I expect you to put in place the necessary systems and arrangements to provide that data in a timely fashion."

Rex claims that 80 per cent of government departments use Qantas Business Travel, which is owned by Qantas, to book its flights.

It says the travel agency refers about 98 per cent of its business to Qantas, even when the Government's best-fare-of-the-day policy is applied.

The ACT Government has agreed to use Rex for at least 15 per cent of ACT public servants' flights and has called on the Federal Government to do the same.

"It was said [at yesterday's meeting] . . . that there is a culture within the Public Service which makes it sometimes hard to change some issues in a hurry," Mr Winnel said.

"We accept that, but we are a commercial operation.

"When individuals can flout a [Federal] Government directive which says you must take best fare of the day . . . on really spurious grounds, then I would say the directives are too imprecise."

Mr Winnel said he understood the Federal Government was legally restricted in the amount of market share it could direct to Rex.

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