Now that Bonza has announced its planned entry into the market, questions have once again popped up about Regional Express (REX).

Although it has been discussed in the past, I think now is more relevant than ever in regards to the survival over the next 5-10 years.

The key points to be highlighted in my case are the following:

Saab 340 fleet renewal - some aircraft are over 30 years old now and are showing their age big time. What replaces them, where do they get the funds, did they make a mistake prioritising 737s?

Managment - John Sharp has a history of making comments that could pose a risk to the airline if any of their competitors bite back. His attitude has also developed into a company-wide mindset.

Advertising - quite frankly, Rex sucks at it. They may be known around the country but their advertising for domestic services was awful and they're left in the dust compared to QF, VA, JQ and Bonza.

Security requirements - As we move forward, greater security requirements will be implemented, removing ZLs security-free out port operations.

Passenger satisfaction - as planes get older, performance lacks and in-flight product is left behind, they're ultimately going to seek others such as QF, even at a higher price.

In fairness to Rex, I'm not convinced Bonza will last. I don't believe the MAX 8 will offer much in Australia for touristy/semi-regional routes as many airports are space limited unless you're sticking to major hubs, which they're borderline doing.

QF on the other hand is picking away at ZLs network, offering faster, newer and more comfortable aircraft. Specifically, at my airport (WGA), QF begins direct WGA-BNE flights next month to complement their ABX-BNE flights already operating. This already will be far more attractive to passengers as it is a 90 minute plus saving compared to connecting along with other benefits such as frequent flyers - something ZL doesn't have to offer.

I work around the REX network daily as a contractor and I've seen first hand how the morale is. I think it is evident that communication from upper management and staff is not the greatest and I think a bit of worry is present, especially with big news events such as ZLs now-famous full-page newspaper advert slamming their competition.

Rex is a fantastic airline but I worry about its future based on current decisions. Attacking the golden triangle perhaps was not the right idea after all. I do wonder if Rex would have been more of a hit had they have up-gauged to something like Embraer's instead of 737s, allowing them to conduct semi-regional routes that Bonza is attempting.

Interesting. Would the best replacement be an ATR-42 maybe? That's what Silver Airways is doing.

IceCream wrote:

Interesting. Would the best replacement be an ATR-42 maybe? That's what Silver Airways is doing.

They did sign an MOU for ATR discussions a couple of years ago, however nothing has progressed with it. I understand COVID got in the way but they got 737s instead and decided to launch domestic ops.

The ATR would be a massive capacity upgrade too, but there is not much else out there to choose from.

https://australianaviation.com.au/2022/ ... m-6-to-30/

Quite timely for this discussion

I wonder where are REX going to get the money (apart from their Singapore/Private Equity co-owners) to expand the 737 fleet from 6 to 30.

Like with Virgin and Bonza, the Private Equity owners of all QF Group rivals (777, PAG, Bain) are definitely going to get their patience tested when it comes to CapEx over the next 2 years.

jrfspa320 wrote:

https://australianaviation.com.au/2022/02/rex-seeks-to-drastically-expand-737-fleet-from-6-to-30/

Quite timely for this discussion

I really cannot see 30 737s being possible, let alone 6 once QF, VA and Bonza are operating their new variants.

LoganTheBogan wrote:

jrfspa320 wrote:

https://australianaviation.com.au/2022/02/rex-seeks-to-drastically-expand-737-fleet-from-6-to-30/

Quite timely for this discussion

I really cannot see 30 737s being possible, let alone 6 once QF, VA and Bonza are operating their new variants.

Considering QF hasn’t even placed an order for new variants and Rex’s goal is medium term, I don’t think that will matter. Moreover, even when QF does place its order, both it and VA will have substantial 738 fleets still.

Also, REXs current 737 slots at SYD are just temporary? What will happen when they have to release them. Rex's 737 operation was based on the premise of VA ceasing to exist....this hasnt happened.

I personally think they should stick to the regional operation. Ive always thought that they should have explored Saab 2000s to supplement the S340s which would have allowed them to compete on denser routes such as CBR or longer regional routes (such as WGA-BNE) with speeds and range similar to the Q400s, but i think the ship has sailed on S2000s now.

LoganTheBogan wrote:

Now that Bonza has announced its planned entry into the market, questions have once again popped up about Regional Express (REX).

Although it has been discussed in the past, I think now is more relevant than ever in regards to the survival over the next 5-10 years.

The key points to be highlighted in my case are the following:

Saab 340 fleet renewal - some aircraft are over 30 years old now and are showing their age big time. What replaces them, where do they get the funds, did they make a mistake prioritising 737s?

Managment - John Sharp has a history of making comments that could pose a risk to the airline if any of their competitors bite back. His attitude has also developed into a company-wide mindset.

Advertising - quite frankly, Rex sucks at it. They may be known around the country but their advertising for domestic services was awful and they're left in the dust compared to QF, VA, JQ and Bonza.

Security requirements - As we move forward, greater security requirements will be implemented, removing ZLs security-free out port operations.

Passenger satisfaction - as planes get older, performance lacks and in-flight product is left behind, they're ultimately going to seek others such as QF, even at a higher price.

In fairness to Rex, I'm not convinced Bonza will last. I don't believe the MAX 8 will offer much in Australia for touristy/semi-regional routes as many airports are space limited unless you're sticking to major hubs, which they're borderline doing.

QF on the other hand is picking away at ZLs network, offering faster, newer and more comfortable aircraft. Specifically, at my airport (WGA), QF begins direct WGA-BNE flights next month to complement their ABX-BNE flights already operating. This already will be far more attractive to passengers as it is a 90 minute plus saving compared to connecting along with other benefits such as frequent flyers - something ZL doesn't have to offer.

I work around the REX network daily as a contractor and I've seen first hand how the morale is. I think it is evident that communication from upper management and staff is not the greatest and I think a bit of worry is present, especially with big news events such as ZLs now-famous full-page newspaper advert slamming their competition.

Rex is a fantastic airline but I worry about its future based on current decisions. Attacking the golden triangle perhaps was not the right idea after all. I do wonder if Rex would have been more of a hit had they have up-gauged to something like Embraer's instead of 737s, allowing them to conduct semi-regional routes that Bonza is attempting.

I think we have discussed ZL alot before and agree with all your points! Especially brand awareness/advertisig. "Our heart is in the country' means nothing if you live in a capital city. I told friends recently I flew SYD-OOL on Rex, they all teased me as being cheap as they thought it would have been a prop!!

Others I think to add:
- Rex has minimal/zero loyalty partners - be that airlines or other industry, major weakness compared to VA/QF
- Rex flags they hired ex-VA/QF staff.... I would assume now VA and QF are hiring many will return to their previous carrier.
- 30 new 737! They need to work on massive increase in load factors and revenue before they increase the fleet!
- Get basics right, sort our aircraft interiors (still VA), pokey lounges, real brand/PR, loyalty proposition.

Only one I'd add (as a mute point!) Is I think ZL missed a step, ZL should be doing what Bonza is connecting secondary low frequency services. Not taking on the big boys on MEL/SYD/BNE if they really want to do that, should have built a brand first. Bonza is also doing it wrong, they should have done what REX did and get cheap 737s on lease, not brand new max! Just need to mix the two, which is what I suspect will happen, Rex will go bust to have pieces bought by Bonza, who will later go bust, and be bought by VA to replace Tiger and take on JQ - and we are back to the start!! lol

I'm very critical of ZL - only because I think through ego, and poor strategy have they squandered their potential. I could see a niche for a nice simple Jetblue style airline, great branding, simple product, low costs. But VA have come out the other side of administration and are inching towards that carrier. Such a shame

I agree with those who say that Rex’s 737 business plan was predicated on VA going bust. Obviously that hasn’t happened. I suspect their back-up plan was to be bought out by VA to remove a competitor. To be blunt, though, why would VA bother? Despite offering sub-Jetstar fares, ZL are still attracting horrific load factors and are more of a slight nuisance than genuine threat.

The move into jet operations, and no obvious contender for Saab replacement, makes me wonder if they don’t see a future for their regional operations. They don’t have the capital to purchase new ATRs, and even if they did it isn’t clear that the revenue potential would deliver meaningful ROIC. It’s almost like they need 30 small props in the 10-15 year range to fall out of the sky, but there really aren’t any going. Over the past decade or so the ATR-72 and Q400 were the only props built in any significant numbers which are far too big for their purposes. Air New Zealand have some Q300s which might suit them, but that would still entail a rationalisation of their regional routes as NZ don’t have enough to replace the Saabs 1-for-1 and the capacity bump to 50 seats would almost certainly make some routes unviable.

LoganTheBogan wrote:

Saab 340 fleet renewal - some aircraft are over 30 years old now and are showing their age big time. What replaces them, where do they get the funds, did they make a mistake prioritising 737s?

With respect to showing age...
Paint/cleaning works for the outside.
Cabin upgrade for the interior works. https://www.saab.com/products/saab-340 They say seats, carpet, lighting are available.
Don't know about replacement panels, bins, etc.

The typical passenger won't know or care about the aircraft age if it's clean and modern looking.
Delta here in the USA knows how that works and it works quite well.

Economical and/or the correct decision to make is a good question.

DaveMetroD wrote:

LoganTheBogan wrote:

Saab 340 fleet renewal - some aircraft are over 30 years old now and are showing their age big time. What replaces them, where do they get the funds, did they make a mistake prioritising 737s?

With respect to showing age...
Paint/cleaning works for the outside.
Cabin upgrade for the interior works. https://www.saab.com/products/saab-340 They say seats, carpet, lighting are available.
Don't know about replacement panels, bins, etc.

The typical passenger won't know or care about the aircraft age if it's clean and modern looking.
Delta here in the USA knows how that works and it works quite well.

Economical and/or the correct decision to make is a good question.

Believe me, when you work around Rex Saabs daily, you’ll quickly realise there’s no intention to clean them. Most of them have faded and cracked paint and the select few they do choose to paint end up being done so as cheap as possible.

As for the interior, whilst they have started installing new seats, their roll-out is about 1 aircraft per millennium…..

LoganTheBogan wrote:

IceCream wrote:

Interesting. Would the best replacement be an ATR-42 maybe? That's what Silver Airways is doing.

They did sign an MOU for ATR discussions a couple of years ago, however nothing has progressed with it. I understand COVID got in the way but they got 737s instead and decided to launch domestic ops.

The ATR would be a massive capacity upgrade too, but there is not much else out there to choose from.

That's a tough situation to be in. Unfortunately, it seems like other airlines are having this problem as well (since there isn't really a replacement for Saab 340/Beech 1900 planes). I'm not sure if Rex's 737 idea will pay off.

Maybe REX should be talking with Embraer about their new turboprop - it supposedly will be 50=ish seats (I know a bit big for most of Rex’s routes), but they might get a good deal as a launch customer - interior width is supposedly with the same fuselage cross section as the E-Jets.

IceCream wrote:

LoganTheBogan wrote:

IceCream wrote:

Interesting. Would the best replacement be an ATR-42 maybe? That's what Silver Airways is doing.

They did sign an MOU for ATR discussions a couple of years ago, however nothing has progressed with it. I understand COVID got in the way but they got 737s instead and decided to launch domestic ops.

The ATR would be a massive capacity upgrade too, but there is not much else out there to choose from.

That's a tough situation to be in. Unfortunately, it seems like other airlines are having this problem as well (since there isn't really a replacement for Saab 340/Beech 1900 planes). I'm not sure if Rex's 737 idea will pay off.

The D328eco from Deutsche Aircraft as suitor to the Do328TP will be in the same size class as the SF340B+ with close to 40 seats, and will be looking for a major launch customer, too. It would be pretty much a 1:1 replacement, albeit as higher speed, and thus offer a bit more dynamic capacity (= more rotations per day). Looking at the distances covered higher speed might be a tempting argument.

Flying-Tiger wrote:

IceCream wrote:

LoganTheBogan wrote:

They did sign an MOU for ATR discussions a couple of years ago, however nothing has progressed with it. I understand COVID got in the way but they got 737s instead and decided to launch domestic ops.

The ATR would be a massive capacity upgrade too, but there is not much else out there to choose from.

That's a tough situation to be in. Unfortunately, it seems like other airlines are having this problem as well (since there isn't really a replacement for Saab 340/Beech 1900 planes). I'm not sure if Rex's 737 idea will pay off.

The D328eco from Deutsche Aircraft as suitor to the Do328TP will be in the same size class as the SF340B+ with close to 40 seats, and will be looking for a major launch customer, too. It would be pretty much a 1:1 replacement, albeit as higher speed, and thus offer a bit more dynamic capacity (= more rotations per day). Looking at the distances covered higher speed might be a tempting argument.

Dornier seems like a good option then. The seating seems to be so important for Rex's ability to profit and fly into smaller markets. It would be a shame if they left.