REX to transition to ATRs, start domestic jet ops
What is a acceptable level of return for a 10 jet operation? It wouldn’t be much. A couple of million tops?
OPERATING STATS & REVENUE PROJECTIONS
The best way to have a good handle on the revenue projections is to consider the following (using the Syd-Mel route as a guide) ▪ One aircraft carries about 300,000 pax a year at 80% load factor
▪ Average ticket price is $200 (pre-Covid)
▪ If Rex’s cost advantage is 30% then that means $60 per ticket
▪ Giving up $20 as fare discount and assuming the $40 as profits would translate to $12M profits per aircraft
▪ 10 aircraft would translate to $120M profits
▪ In reality, the average cost per passenger (crew, fuel, engineering, lease etc) for typical carrier would be about $50 ▪ Depending on where the average ticket price will land, the profits per aircraft could be very significant”
The best way to have a good handle on the revenue projections is to consider the following (using the Syd-Mel route as a guide) ▪ One aircraft carries about 300,000 pax a year at 80% load factor
▪ Average ticket price is $200 (pre-Covid)
▪ If Rex’s cost advantage is 30% then that means $60 per ticket
▪ Giving up $20 as fare discount and assuming the $40 as profits would translate to $12M profits per aircraft
▪ 10 aircraft would translate to $120M profits
▪ In reality, the average cost per passenger (crew, fuel, engineering, lease etc) for typical carrier would be about $50 ▪ Depending on where the average ticket price will land, the profits per aircraft could be very significant”
Sounds like an airline planning students submission at RMIT with incredibly basic and overly optimistic assumptions. surely that's not legit??
Do a search on “Rex Operation Mother”, the whole strategy was leaked some time ago and yes it reads like it was put together by either an overly enthusiastic cadet looking for motivational points or the work experience kid 😂
So essentially, they have burnt through the 20 mil that the QLD Gov gifted them last year to keep the regional sectors running.
Nice!
That was our tax money well spent!
What a bunch of pricks!
Nice!
That was our tax money well spent!
What a bunch of pricks!
- Nowhere near 80%LF, they rarely made 40%
- $200 average fare They were flogging Business Class for $200 and couldn't attract passengers, Economy was $39 with similarly disastrous results
- No idea about their cost advantage but scale brings benefits so it is hard to believe they were significantly cheaper than the main players
- Giving up $20 as discount, let's try $160!!
- Cost per pax of $50 is based on 80% LF which means costs per flight was estimated at $7200 (seems low given gov't and airport charges but whatever??) If you only have 50 pax paying $39, it would mean gross revenue of $3120 which would be a loss of over $4000 on every flight!!! Admittedly whilst most costs are fixed, some, like airport charges, do flex according to pax.
Share price is similar to pre covid levels. 737 op is precarious, saab operation was hoing gangbusters before the gladys outbreak
Join Date: Jul 2020
Location: New Zealand
Posts: 37
Likes: 0
Received 0 Likes
on
0 Posts
As you rightly point out, the share price is back where it was pre pandemic and Rex were supposedly going gangbusters yet the shares have not headed for the basement with what is going on now and the enormous uncertainty surrounding the company. In fairness not of all their doing but the share price doesn't make sense. You will note minimal volume seems to support the price as it bounces around 1.20 and it has been like that for the last 3 or so months.
Might all be legit. Irrespective, my view has always been that I already have too much at risk in aviation just by working in it and buying airline shares is a step too far and that goes for any of them.
Will Sharpie go to ACCC for predatory behavior by Virgin?? article from the Australian belowVirgin Australia is venturing into budget airline territory with a new “seat only” fare in its economy cabin.
The “economy lite” fare comes with a seat of the airline’s choosing, and up to 7kg of carry-on luggage but anything else is extra.
Starting from a lead-in price of $59, the fare represents a 33 per cent reduction on Virgin’s cheapest pre-Covid economy seats in an apparent effort to compete with Qantas’s low fares partner Jetstar.
Economy passengers will also have the option of two other fares – flex and choice – which include 23kg of checked baggage as well as 7kg of carry-on, plus seat selection.
As the name suggests, flex fares come with greater flexibility for last-minute flight and name changes, while the choice option has some booking flexibility plus extra Velocity frequent flyer points and status credits.
A Virgin spokesman said the fare changes followed an extensive review of the airline’s fare pricing and structure.
“We discovered that one in every three Virgin Australia customers don’t bring a checked bag when they travel despite a bag allowance built in to their airfare,” he said.
“On flights between Melbourne, Sydney and Brisbane, that number is even higher.”
He said the new options aimed to “put the power back in the hands of customers by leaving it up to them to choose what they want”.
“If they don’t want a checked bag or seat selection, they won’t have to pay for it – it’s that simple, If they prefer to keep the extras, there are great value inclusive fare options available,” said the spokesman.
New & improved business newsletter. Get the edge with AM and PM briefings, plus breaking news alerts in your inbox.
“Every customer is unique and has different needs and budgets and we want to welcome all of them on-board to experience our award-winning service, in the way that best suits them.”
The Qantas Group noted the announcement by Virgin Australia and dismissed any suggestion the airline would rival Jetstar’s low fares.
A spokesman said the airline was the “leading low cost carrier” in the country, and travellers could be confident they will always get the lowest fares with Jetstar.
It’s the latest in a string of changes to Virgin’s in-flight experience since the airline was brought out of administration by new owners Bain Capital.
Free snacks were removed earlier this year in favour of a buy on board menu for economy passengers while the business class offering was revamped to be “more contemporary” with a selection of crowd pleasers like avocado smash and lamb pies.
In-flight Wi-Fi remained unavailable but an announcement was expected by the end of the year.
The carrier repositioned itself as a “mid-market” airline under Bain Capital, in an effort to appeal to budget-conscious leisure travellers as well as price-sensitive business passengers.
But the latest move would appear to target Jetstar’s market, following the demise of Tigerair.
Other airlines that also offer a low cost carrier product like economy lite, include Delta, American Airlines, JetBlue, Air New Zealand and Lufthansa.
The new economy lite fares will not be available until September 20 and then only through the Virgin website.
The “economy lite” fare comes with a seat of the airline’s choosing, and up to 7kg of carry-on luggage but anything else is extra.
Starting from a lead-in price of $59, the fare represents a 33 per cent reduction on Virgin’s cheapest pre-Covid economy seats in an apparent effort to compete with Qantas’s low fares partner Jetstar.
Economy passengers will also have the option of two other fares – flex and choice – which include 23kg of checked baggage as well as 7kg of carry-on, plus seat selection.
As the name suggests, flex fares come with greater flexibility for last-minute flight and name changes, while the choice option has some booking flexibility plus extra Velocity frequent flyer points and status credits.
A Virgin spokesman said the fare changes followed an extensive review of the airline’s fare pricing and structure.
“We discovered that one in every three Virgin Australia customers don’t bring a checked bag when they travel despite a bag allowance built in to their airfare,” he said.
“On flights between Melbourne, Sydney and Brisbane, that number is even higher.”
He said the new options aimed to “put the power back in the hands of customers by leaving it up to them to choose what they want”.
“If they don’t want a checked bag or seat selection, they won’t have to pay for it – it’s that simple, If they prefer to keep the extras, there are great value inclusive fare options available,” said the spokesman.
New & improved business newsletter. Get the edge with AM and PM briefings, plus breaking news alerts in your inbox.
“Every customer is unique and has different needs and budgets and we want to welcome all of them on-board to experience our award-winning service, in the way that best suits them.”
The Qantas Group noted the announcement by Virgin Australia and dismissed any suggestion the airline would rival Jetstar’s low fares.
A spokesman said the airline was the “leading low cost carrier” in the country, and travellers could be confident they will always get the lowest fares with Jetstar.
It’s the latest in a string of changes to Virgin’s in-flight experience since the airline was brought out of administration by new owners Bain Capital.
Free snacks were removed earlier this year in favour of a buy on board menu for economy passengers while the business class offering was revamped to be “more contemporary” with a selection of crowd pleasers like avocado smash and lamb pies.
In-flight Wi-Fi remained unavailable but an announcement was expected by the end of the year.
The carrier repositioned itself as a “mid-market” airline under Bain Capital, in an effort to appeal to budget-conscious leisure travellers as well as price-sensitive business passengers.
But the latest move would appear to target Jetstar’s market, following the demise of Tigerair.
Other airlines that also offer a low cost carrier product like economy lite, include Delta, American Airlines, JetBlue, Air New Zealand and Lufthansa.
The new economy lite fares will not be available until September 20 and then only through the Virgin website.
It seems rather moronic to me that they are apparently willing to use precious money on litigation against their competitors.
Litigation that has no certain chance of success.
Litigation that has no certain chance of success.
While Virgin and Qantas are planning for the eventual reopening of borders (with ideas and incentives like the Virgin ‘economy lite fare’) Rex are a rudderless ship with no clear strategy on how to drive the business when widespread travel picks up.
The ‘disciplined’ Rex management team (composed of nothing more than turboprop pilots with no business experience) are doing nothing but taking the odd pot shot at the competitors while keeping their eyes firmly closed hoping for a miracle.
The ‘disciplined’ Rex management team (composed of nothing more than turboprop pilots with no business experience) are doing nothing but taking the odd pot shot at the competitors while keeping their eyes firmly closed hoping for a miracle.
They also refunded the entire forward revenue they had. The other two have hundreds of millions in credits.
Essentially they need to start again early next year when border closures cease. Meanwhile Virgin is continuing to sharpen its pencil.
Rex will have no choice but to match Virgin’s lite fare offer. Expect some generous Frequent Flyer offers around the time Rex Mark 2 tries it again next Summer.
Essentially they need to start again early next year when border closures cease. Meanwhile Virgin is continuing to sharpen its pencil.
Rex will have no choice but to match Virgin’s lite fare offer. Expect some generous Frequent Flyer offers around the time Rex Mark 2 tries it again next Summer.
While Virgin and Qantas are planning for the eventual reopening of borders (with ideas and incentives like the Virgin ‘economy lite fare’) Rex are a rudderless ship with no clear strategy on how to drive the business when widespread travel picks up.
The ‘disciplined’ Rex management team (composed of nothing more than turboprop pilots with no business experience) are doing nothing but taking the odd pot shot at the competitors while keeping their eyes firmly closed hoping for a miracle.
The ‘disciplined’ Rex management team (composed of nothing more than turboprop pilots with no business experience) are doing nothing but taking the odd pot shot at the competitors while keeping their eyes firmly closed hoping for a miracle.
Do you have a source for that, by any chance?
You wouldn't be thinking of Flight Centre by any chance, would you?
You wouldn't be thinking of Flight Centre by any chance, would you?
Last edited by MickG0105; 20th Aug 2021 at 03:23. Reason: Reference Flight Centre deal
Considering Rex just entered a major agreement with Webjet, I feel that is rather significant forward planning. Furthermore, wifi is activated on almost all 737's now. Seats are being altered to differentiate the Rex product from Virgin. But of course, we all missed that because we only post negative Rex comments on this forum.
Join Date: Jul 2020
Location: New Zealand
Posts: 37
Likes: 0
Received 0 Likes
on
0 Posts
Rex annual results are out. Haven't looked right through them but essentially saying a $4M loss after an $83M government handout. That $4m Loss is after reporting an expected $19M loss just a few weeks ago. Great few weeks!
