REX to transition to ATRs, start domestic jet ops
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Was this a case of Corporate Shiny Jet Syndrome where the eye of the Execs was firmly taken off the ball - where the core business wasn’t focussed on?
Or is there something fundamentally wrong with the core (Regional) business and the company will have to consolidate further and move to focussing even more on the jet / fifo market? Time will tell….
The smart/devious part to QFs plan was that they manged to turn a liability into a capacity constraint and resell already sold seats, that is credits used on the exact same flight had to pay extra for the same service. Plus use that pre booked capcity to charge higher prices for new passengers.
VA is possibly profitable because they had all their debt wiped and started from scratch with pre existing customers, established network and a workforce on effectively 20% less.
Alliance is a Fifo operator that basically cant loose money.
Rex is expanding a new fleet and dealing with its management sins of the past, both dragging on the company.
PS in regard to how weak Australian consumer law is, our travel plans in the US when disrupted were offered 3 different options, full refund, re booking on like for like service no cost at a future date at the companies direction or credits to the value of 125% of paid for future use. QF group and VA had one choice of credits to only the value paid, Rex offered full refunds for Covid disrupted flights and so on.
As a result there are numerous calls out there to change the consumer laws, and QF group is in the news every second day with disaffected passengers who have lost credits, been charged double for flights, cancellations that have incurred change of flight charges etc etc.... Fine if you have choice, but when one company runs 60%+ of the market there's not much choice out there.
Alan might be a dick, but he knows how to generate profit from a stone, and still by the law, even if it does lack morality and compassion.
Last edited by 43Inches; 21st Jun 2023 at 00:47.
[QUOTE=MickG0105;
[i]"If Rex can't turn a profit under the current conditions, then there is something fundamentally wrong with their business model."
The REX business model, as per their original submission to ASIC, cited the upcoming demise of VA as an opportunity to get into a domestic Jet Operation.
Draw your own conclusions on that!
[i]"If Rex can't turn a profit under the current conditions, then there is something fundamentally wrong with their business model."
The REX business model, as per their original submission to ASIC, cited the upcoming demise of VA as an opportunity to get into a domestic Jet Operation.
Draw your own conclusions on that!
Alliance is a Fifo operator that basically cant loose money.
Rex is expanding a new fleet and dealing with its management sins of the past
Totally agree with you 43inches about consumer law in Australia. We are poorly served by both flavours of government in this regard. Just look at the EU rules on delayed flights etc. We need much better in Australia. Our government cannot even keep the lights on.
Did you mean lose? You forgot about the thirty Ejets operating “RPT” for QantasLink.
REX are bigger grifters than Donald Trump; it is only a matter of time before they cry poor and say to governments, both state and federal, that regional services will be cut unless assistance is provided. They do not have the balance sheet to finance a replacement of the SAAB fleet any other way.
Alliance is at least staying away from what Skywest did, and that is move heavily into RPT rather than stick to its FiFo base.
My recollection back to the Jetstream and Fokker 50 days was that RPT was the BASE for Skywest, not FIFO. That came later. There was only ONE jet charter operator at Perth airport and that was NJS. Alliance started with one F100 to Mt Keith. Skywest were late to the FIFO party.
That aside, if you are not making money doing FIFO, you're doing it wrong. RPT is much harder as the operator bears all the risk. Rex are buggered because they haven't kept up with the market when it comes to pay, and now whine about losing pilots and engineers to those who are willing to pay more. If they couldn't see that coming a few months ago and did something about it, then it is their own damn fault. And with Qantas moving onto the Rex network they should have done something about it rather than just whine and cut routes. That's what management should be paid for, you would think.
Pay is only a small part of the problem wrt to Rex pilots leaving, its more about treatment and lifestyle. Economics will never allow a SAAB operator to compete for crew on a 'pay' basis with 737+ operators. But for a long time now they have been squeezing what was a fairly part time job into full time pilot hours, doing 6 hours a day for 4 days a week would be fine for current pay. Do jet job hours and rosters for turboprop pay, and the proof is in the pudding, mass exodus whenever the opportunity presents itself... I used to think the management there had some idea, turns out they just ran what was left of Ansett into the ground sucking whatever was left from the stone. That is they took something most anyone could have profit from and just cut costs to keep it afloat until the wheels fall off, the last ten years have seen pitiful management, and that is mostly in the role of staff management and retention. I remember hearing when they slashed the pay of a sim instructor, and thought, these guys want to run a high flow, through training airline, and are stupid enough that they don't recognize they have to pay the training staff more to keep up the rates.... It's like somebody within management there is actively working against the airline now.
Pay is only a small part of the problem wrt to Rex pilots leaving, its more about treatment and lifestyle. Economics will never allow a SAAB operator to compete for crew on a 'pay' basis with 737+ operators. But for a long time now they have been squeezing what was a fairly part time job into full time pilot hours, doing 6 hours a day for 4 days a week would be fine for current pay. Do jet job hours and rosters for turboprop pay, and the proof is in the pudding, mass exodus whenever the opportunity presents itself... I used to think the management there had some idea, turns out they just ran what was left of Ansett into the ground sucking whatever was left from the stone. That is they took something most anyone could have profit from and just cut costs to keep it afloat until the wheels fall off, the last ten years have seen pitiful management, and that is mostly in the role of staff management and retention. I remember hearing when they slashed the pay of a sim instructor, and thought, these guys want to run a high flow, through training airline, and are stupid enough that they don't recognize they have to pay the training staff more to keep up the rates.... It's like somebody within management there is actively working against the airline now.
They will struggle to find willing participants.
Well that is what the market thought of REX yesterday. Around a 13% drop in the share price. The graph shows five years of activity.
There is no question that their jet plan relied on Virgin being out of the market. I am not sure they had a contingency for if Virgin continued to operate.
Pay will be a huge issue going forward. The bew cadetship agreement is 9 years, 150k loan and 50k balloon payment at the end. How does a cadet survive on 50k while paying a cadet loan and expected to live in a capital city?
They will struggle to find willing participants.
They will struggle to find willing participants.
Well that is what the market thought of REX yesterday. Around a 13% drop in the share price. The graph shows five years of activity.
There is no question that their jet plan relied on Virgin being out of the market. I am not sure they had a contingency for if Virgin continued to operate.
1) Covid impact would not last forever
2) Big chance VA were history
3) Even if VA were saver it was looking like the revived airline would resemble Ansett Mark 2
3) Plenty of cheap 737s available, along with crew
Very few people counted on what Bain managed to achieve with VA though
This obviously left REX in a dilemma as to which way to go forward
Rather than a rapid growth to 30+ frames, they slowed growth way down and seem to be doing ok thus far
Where did they go wrong ?
They took a punt on VA going busto
That said, I have thought all along that their disconnected regional network was too reliant on their interline deal with VA in the first place
Even without the VA potential collapse, they could likely have put 30-40 pax on their 737s just from connecting pax they gave to VA, eg Wagga to Brisbane, add another 70-80 walk ups and you at least break even
Now REX will open new routes and add frequencies gradually topping up their fleet with 2-4 frames per year
As far as I am concerned, they have adapted well
They will have to change their name to 'NAG' if they want to continue to back these kind of horses...Sorry, had to say it.
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