REX to transition to ATRs, start domestic jet ops
With Labor set to "turn off the tap" or 'tighten' requirements of cash handouts to REX, it'll be interesting see how'll Sharp will manage with only REX's Singaporean Private Equity owners to rely on for cash.
Without access to his tap from his LNP buddies, Sharp has got quite a job ahead of turning around RexJet's dismal loads due to the likely mentioned situation.
Without access to his tap from his LNP buddies, Sharp has got quite a job ahead of turning around RexJet's dismal loads due to the likely mentioned situation.
With Labor set to "turn off the tap" or 'tighten' requirements of cash handouts to REX, it'll be interesting see how'll Sharp will manage with only REX's Singaporean Private Equity owners to rely on for cash.
Without access to his tap from his LNP buddies, Sharp has got quite a job ahead of turning around RexJet's dismal loads due to the likely mentioned situation.
Without access to his tap from his LNP buddies, Sharp has got quite a job ahead of turning around RexJet's dismal loads due to the likely mentioned situation.
What funding are you talking about? everything we have discussed in this forum has already been handed out, there's no ongoing tap of funds. As far as the regulated routes or subsidised routes, that's state based agreements, nothing to do with federal politics.
The Saab operation generally stands on its own feet and does not require government life support to continue operations anymore. The Jet adventure is drawing down on a loan. When that runs out, its either they stump up more funds or that part ceases to exist.
The only funding at the moment is NSW who has given a confidential, and ongoing access to funds as part of the Job Plus program, they also get other benefits like Payroll Tax relief, rebates, and other misc grants, ie new 737 sim. That grant was based on forecasts put in front of the government, no word on what happens if they fail to hit those targets. Adelaide Government went after Tiger when they took a multi million dollar grant after they also flashed big plans to ministers, then closed the base and kept the cash. They had to pay the taxpayer dollars back, and rightly so.
The only funding at the moment is NSW who has given a confidential, and ongoing access to funds as part of the Job Plus program, they also get other benefits like Payroll Tax relief, rebates, and other misc grants, ie new 737 sim. That grant was based on forecasts put in front of the government, no word on what happens if they fail to hit those targets. Adelaide Government went after Tiger when they took a multi million dollar grant after they also flashed big plans to ministers, then closed the base and kept the cash. They had to pay the taxpayer dollars back, and rightly so.
Great article detailing how much Rex whinge and how their ‘geriatric’ fleet is in desperate need of renewal.
Full article here;
Rex axes routes as competition heats up
Independent analysts have backed Qantas in a dispute with regional airline Rex over alleged “illegal predatory behaviour”.Rex pulled two routes after accusing Qantas of dumping tens of thousands of excess seats onto regional routes in an attempt to drive the smaller airline out of the market.
But Qantas has denied the allegations and been supported by independent analysts and by consumer watchdog the ACCC.
Last week, Rex announced it would cease flights between Melbourne and Albury and, on Tuesday, it announced it would also drop its Sydney-Canberra route, which it said had become unviable “after the entrance of an additional operator”.
The new airline on that route was Virgin Australia.
Rex’s deputy chairman and former National Party transport minister John Sharp said Qantas was waging “a war of attrition”.
“Rex has no choice but to look after itself,” he said after Rex pulled out of the Melbourne-Albury route.
But aviation consultant Neil Hansford, chairman of Strategic Aviation Solutions, said Qantas was simply offering a better product with larger economies of scale.
“Rex has always gone on the mandate of whingeing,” he told The New Daily.
“Whingeing is the first part of their hymn book. It’s always everybody else’s problem.”
Mr Hansford said Qantas entered new regional routes in order to funnel passengers onto its busier jet routes across the country.
Qantas has, first and foremost, a much more modern, reliable aircraft,” Mr Hansford said.
“Secondly, the Qantas frequent flyer program is a great enhancement. Thirdly, the Qantas regional services connect seamlessly to their international and their interstate services.”
Rex has recently tried to compete on this third point by inking a deal with Delta Air Lines in the US.
A spokesperson pointed out that while Qantas added 31,200 new seats per year on the Melbourne-Albury route, Rex currently has 44,928 seats on the same route, and operated even more than that pre-COVID-19.
“Rex’s standard approach whenever it withdraws from a route is to blame Qantas,” the spokesperson said in a statement to TND.
“Rex’s idea of competition is that it’s something that happens to others, because they believe they have an enshrined right to be the only carrier on some regional routes.”
Mr Hansford, who has more than 40 years of experience in advising airlines, said Rex has a “geriatric” fleet of planes that can’t compete with Qantas.
For its new routes between capital cities, Rex leases six Boeing 737 jets.
But the backbone of its regional network is a fleet of 67 Saab 340s.
The small turboprop planes seat between 33 and 36 passengers, and went out of production in 1999.
On the other hand, Qantas operates a Dash-8 on the Melbourne-Albury route that can seat up to 74 passengers.
“Now by putting a bigger aircraft on, you’ve still got the same number of pilots, you’re still using the same fuel, but you’re carrying potentially another 30 passengers,” Mr Hansford said.
He believes Rex will be uncompetitive if it does not upgrade its fleet with larger, more modern planes.
The regional airline did not respond to an inquiry about its future fleet plans.
—————————————————————————————————————————————————————-
The question is with so much invested into the 737 operation how are Rex going to replace the ageing ‘backbone’ Saab fleet?
Full article here;
Rex axes routes as competition heats up
Independent analysts have backed Qantas in a dispute with regional airline Rex over alleged “illegal predatory behaviour”.Rex pulled two routes after accusing Qantas of dumping tens of thousands of excess seats onto regional routes in an attempt to drive the smaller airline out of the market.
But Qantas has denied the allegations and been supported by independent analysts and by consumer watchdog the ACCC.
Last week, Rex announced it would cease flights between Melbourne and Albury and, on Tuesday, it announced it would also drop its Sydney-Canberra route, which it said had become unviable “after the entrance of an additional operator”.
The new airline on that route was Virgin Australia.
Rex’s deputy chairman and former National Party transport minister John Sharp said Qantas was waging “a war of attrition”.
“Rex has no choice but to look after itself,” he said after Rex pulled out of the Melbourne-Albury route.
But aviation consultant Neil Hansford, chairman of Strategic Aviation Solutions, said Qantas was simply offering a better product with larger economies of scale.
“Rex has always gone on the mandate of whingeing,” he told The New Daily.
“Whingeing is the first part of their hymn book. It’s always everybody else’s problem.”
Mr Hansford said Qantas entered new regional routes in order to funnel passengers onto its busier jet routes across the country.
Qantas has, first and foremost, a much more modern, reliable aircraft,” Mr Hansford said.
“Secondly, the Qantas frequent flyer program is a great enhancement. Thirdly, the Qantas regional services connect seamlessly to their international and their interstate services.”
Rex has recently tried to compete on this third point by inking a deal with Delta Air Lines in the US.
Qantas hits back
Qantas has taken a similar line of defence after Mr Sharp accused the company of dumping tens of thousands of excess seats onto regional seats.A spokesperson pointed out that while Qantas added 31,200 new seats per year on the Melbourne-Albury route, Rex currently has 44,928 seats on the same route, and operated even more than that pre-COVID-19.
“Rex’s standard approach whenever it withdraws from a route is to blame Qantas,” the spokesperson said in a statement to TND.
“Rex’s idea of competition is that it’s something that happens to others, because they believe they have an enshrined right to be the only carrier on some regional routes.”
Mr Hansford, who has more than 40 years of experience in advising airlines, said Rex has a “geriatric” fleet of planes that can’t compete with Qantas.
For its new routes between capital cities, Rex leases six Boeing 737 jets.
But the backbone of its regional network is a fleet of 67 Saab 340s.
The small turboprop planes seat between 33 and 36 passengers, and went out of production in 1999.
On the other hand, Qantas operates a Dash-8 on the Melbourne-Albury route that can seat up to 74 passengers.
“Now by putting a bigger aircraft on, you’ve still got the same number of pilots, you’re still using the same fuel, but you’re carrying potentially another 30 passengers,” Mr Hansford said.
He believes Rex will be uncompetitive if it does not upgrade its fleet with larger, more modern planes.
The regional airline did not respond to an inquiry about its future fleet plans.
—————————————————————————————————————————————————————-
The question is with so much invested into the 737 operation how are Rex going to replace the ageing ‘backbone’ Saab fleet?
Isn't it a Dash 300 on the Albury - Melbourne route, max 50 seats and about the same age as the SAAB fleet? They are definitely slower than the SAAB.
From what I understand the -400 burns slightly more than double the SAAB does on a sector and requires an extra flight attendant, that and the pilots are paid about 20% more. Shows a lack of understanding of the economics going on. There's also the small difference in acquisition cost of $30million for 74 seats vs around $1million for 34 seats. My money for ROI would still be on the SAAB, there's also a bigger spares market due to retired airframes, mothballed fleets and parts commonalities with other types. The Q400 can be quite expensive to operate unless it does jet type schedules to take advantage of the extra sector per day, that's how it's economics were sold. It basically has too have very high utilisation to make it's economics work.
“Now by putting a bigger aircraft on, you’ve still got the same number of pilots, you’re still using the same fuel, but you’re carrying potentially another 30 passengers,” Mr Hansford said.
Last edited by 43Inches; 29th May 2022 at 12:05.
Average age of the QF -300 fleet is about 3 years younger than Rex's Saabs. Unlike the Saab fleet, most of the QF -300s were built this century.
I'm sure the machines noted that they passed an arbitrary human year marker. That being said 3 years is nothing, I also heard a rumor that the 300 fleet is not doing so well reliability wise either.
Melbourne Airport showing 4 cancelled Qlink flights tonight, Mt Gambier, Launceston, Mildura and Devonport, all Q300's.
Assuming 3 of these are overnighting, not a great start to the week tomorrow for the punters.
Clearly they may not be aircraft related, but it certainly doesn't support Mr Hansfords claims of needing newer aircraft to remain competitive.
Assuming 3 of these are overnighting, not a great start to the week tomorrow for the punters.
Clearly they may not be aircraft related, but it certainly doesn't support Mr Hansfords claims of needing newer aircraft to remain competitive.
Ballina, Lismore, Kangaroo Island, Bathurst and Grafton all gone.
Why are taxpayers propping up this route? It’s not like Rex is serving some remote community that is in dire need of flights. Is 3/4 flights a day across all carriers with a 737/320. Pointless route for Rex to operate on and complete waste of our cash. The others are not whinging, they are not getting a cent for this route, while Rex is.
Ballina - Sydney was a DANS and RANS route, which means the jet operators also got subsidised for at least 9 flights a week vs Rexs 2 per week. Again fir whatever reason the recipients of DANS did not have to listed as who gets paid for it. Not sure why it got so much assisstance relative other destinations.
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How long can REX really survive? …. like this.
As reported today, now pulling out of more routes and the 737s flying around almost empty, how long can this can go on? you would only start pulling out of all these routes if you are really bleeding cash.
As reported today, now pulling out of more routes and the 737s flying around almost empty, how long can this can go on? you would only start pulling out of all these routes if you are really bleeding cash.
So REX can't staff their ****ty old aircraft, the subsidies are being removed for some of their routes and they have ****** up royally on the jet ops,
So it's Qantas fault?
So it's Qantas fault?
When REX started
Port Maq, Coffs, Roma, Canberra-Syd
I was wondering how they could cover all these with no additional 340s
Now that numbers are coming back, I guess we have the answer
One can only assume they are getting fair numbers on their new routes, except Canberra to Sydney, to justify dropping a few that now have been whacked by QF
Port Maq, Coffs, Roma, Canberra-Syd
I was wondering how they could cover all these with no additional 340s
Now that numbers are coming back, I guess we have the answer
One can only assume they are getting fair numbers on their new routes, except Canberra to Sydney, to justify dropping a few that now have been whacked by QF
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Last edited by Paragraph377; 31st May 2022 at 23:26.
Too true. Does anybody know percentage of their fuel is hedged, and at what dollar value? That will be having a big impact on their bottom line. In years gone by, when the cost of oil passed $100 per barrel, many airlines would break even. Any price even further above that, they operate at a loss. Mick or 43 inches might have some better knowledge about this, not sure?
MANAGING HIGHER FUEL PRICES
The Group’s hedging position has provided significant protection from the recent spike in oil prices, giving time to adjust its capacity, schedule and fares in response. Ninety per cent of the Group’s fuel needs are hedged for the second half of FY22 at levels below current prices.
The Group’s hedging position has provided significant protection from the recent spike in oil prices, giving time to adjust its capacity, schedule and fares in response. Ninety per cent of the Group’s fuel needs are hedged for the second half of FY22 at levels below current prices.
The other factor that has got to be hurting Rex is the appallingly poor asset utilisation. By my numbers they have a six jet fleet flying no more than about 230 flying hours a week. That's simply terrible. It pushes all of the fixed leasing and maintenance costs into fewer opportunities for recovery. If you are pitching the sort of low fares that Rex are then you need to flying the paint off your jets with as full a load as possible on every flight.
And add to that all of their leases will now be out of the initial first year sweetheart start-up price. At the barest of bare minima, Rex has to be now shelling out at least $660,000 a month in leasing costs for their jet fleet. Because of the terrible utilisation rate that translates to about $660 per hour to cover leasing. Or 6-7 seats on each and every SYD-MEL flight.
So we're now up to around 33 seats on every SYD-MEL flight needing to be sold just to cover fuel and leasing - and that's probably the bestest of best cases for Rex. Then add crew costs, landing charges and maintenance. I suspect that jet ops are bleeding Rex white. Any other publicly listed business would almost certainly have released updated profit guidance by now.
I see how you did the math, but a SYD-MEL flight chews up 3,600 kgs, 1185 gallons. At $3.50 per, thats 41 passengers tickets for fuel. Even poorly paid crew would cost Rex another 9 passenger tickets.
The 1.4 hour block time SYD-MEL means about 10 tickets for leasing. Your quoted rate seems very low though.
We are in furious agreement about their cash bleed, but I am less optimistic.
The 1.4 hour block time SYD-MEL means about 10 tickets for leasing. Your quoted rate seems very low though.
We are in furious agreement about their cash bleed, but I am less optimistic.