Qantas, Virgin challenger Rex gets clear runway for major city expansion

Regional airline Rex has a clear runway to challenge Qantas and Virgin on big city routes from March and is offering cheap flights to promote it.

Regional airline Rex has a clear runway to challenge Qantas and Virgin on big city routes. Picture: NCA NewsWire/Jeremy Piper

The runway is clear for ambitious airline Regional Express to tackle Qantas and Virgin on big city routes, with the company securing permission to use bigger planes.

Rex, Australia’s largest independent regional airline born from the ashes of Ansett, announced in June its plan to service the “golden triangle” of Sydney-Melbourne-Brisbane.

The Civil Aviation Safety Authority has now issued Rex a high capacity air operator’s certificate, which means it can use the Boeing 737-800NG.

The company is leasing six of the aircraft and recently completed test flights as part of the certification process.

They will seat up to 176 people – a huge leap from the Saab 340s Rex usually operates that seat up to 36 passengers.

“The way is now clear for Rex to commence domestic operations between Sydney and Melbourne from 1 March 2021 and thereafter to other major cities,” the company announced on Wednesday.

Regional Express has described itself as ‘Qantas with a Jetstar price’. Picture: Supplied

Rex has launched sales for its nine daily return flights between Sydney and Melbourne with a special promotion of 100,000 tickets priced at $79.

“Travellers for the first time do not have to choose between cheap fares with minimal service or more reliable service with premium pricing,” the company said.

Rex said in September it would continue to expand its domestic fleet in line with an anticipated return of passenger demand and hoped to have 10 737-800NGs in its fleet by the end of next year.

It wasn’t all good news for Rex on Wednesday, with the corporate watchdog ASIC lashing the company for telling a journalist about the major city plan in May before announcing it to the market.

As a result, ASIC has restricted Rex from using exemptions for reduced disclosure in fundraising documents until mid-December 2021.

That means Rex must issue a full prospectus in order to raise funds from investors.

Regional Express chairman Kim Hai Lim praised CASA for its support during the pandemic ‘when all airlines were fighting for survival’. Picture: Justin Brierty

“ASIC considers the ability to use a reduced-disclosure prospectus a privilege that is dependent on compliance with other aspects of the law, including that companies meet their ongoing disclosure obligations,” the watchdog said.

“Where a company fails to comply with its disclosure obligations in a full, accurate and timely manner, ASIC will intervene to ensure that investors are protected.”

ASIC said its investigation into the conduct was ongoing, while Rex has the right to appeal the decision to the Administrative Appeals Tribunal.

Shares in the airline, which said it was offering employment to some of the thousands of workers made redundant by other carriers during the pandemic, jumped more than 8 per cent in morning trade before being placed in a trading halt.

It was implemented so Rex could prepare its response to the ASIC announcement.