Regional Express says it can break Qantas and Virgin Australia's stranglehold over the domestic aviation market by offering full-service travel at budget airline prices when it starts flying between capital cities next year.
In what's slated to be the biggest shake up in Australian aviation since the launch of Virgin Blue 20 years ago, Regional Express (Rex) on Wednesday will start selling tickets for flights between Sydney and Melbourne commencing March 1, 2021.
Regional Express will start running flights between Sydney and Melbourne from March 1, 2021.
The regional carrier's deputy chairman John Sharp said all fares will come with the same perks as flying with Qantas, such as checked baggage, food, pre-assigned seating and online check-in.
Eight business class seats on Rex's Boeing 737s will come with Wi-Fi and airport lounge access, with those add-ons and seats with "Rextra" leg room available to other passengers for a fee.
"We’re a Qantas with a Jetstar price," Mr Sharp said. "We [will] make it work because we’ve over the years developed a business that runs at a very low cost."
Rex will launch in March with three leased Boeing 737s, which Virgin flew before it went into administration in April, and will initially operate nine return Sydney-Melbourne services daily.
Two more jets will arrive by Easter, allowing Rex to add Brisbane to its domestic network in the first half of 2021 followed by other capital cities if all goes well. The group said it plans to grow its fleet to eight to 10 jets by the end of the year and wants to be flying on Australia's 10 busiest domestic routes within 18 months.
Mr Sharp said he expected Virgin, Qantas and its budget arm Jetstar to respond aggressively to Rex's arrival, but said the group had gone toe-to-toe with the larger airlines on regional routes for 20 years.
"It’s a very competitive, aggressive market and our entry onto the capital city routes will add a bit more competitiveness to it," Mr Sharp said.
"We think we can manage to attract people with a competitive offering."
"Many people who live in the cities have flown with us in the past so they’ll know what our country hospitality is like on board and what the personal experience is."
Rex was born out of the 2001 Ansett collapse and before COVID-19 operated a fleet of 60 Saab 340 turboprop aircraft to 59 regional and remote destinations across all Australian states.
One of the few airlines in the world to make it through the pandemic with its finances intact, Rex pounced on the crisis and collapse of Virgin to try to grow into a major player in domestic aviation with the backing of private equity group PAG Asia Capital.
Matthew Findlay, a director at Ailevon Pacific Aviation Consulting, said brand awareness will be one of Rex’s biggest challenges if it wants to claw passengers away from the dominant domestic airlines.
"There will be a large volume of people who just don’t have any idea what Rex offers," he said. "They’ll need to put some very keen prices out in the market to encourage people to think about moving away from what they’re used to experiencing with Qantas, Virgin and even Jetstar."
Qantas is still recovering from the COVID-19 pandemic that forced it to ground almost its entire fleet and stand down most of its staff. Meanwhile, Virgin is relaunching from administration with a smaller fleet under the ownership of Bain Capital.
While Qantas' revenue tumbled 20 per cent last financial year and it fell to a $1.9 billion loss, Rex's revenue was flat thanks to $38 million in government aid to maintain its regional network and other financial support.
There are promising signs of a domestic recovery as the virus is brought under control locally and states re-open their borders. Qantas last week revised its expectations for Christmas flying from 50 per cent of its pre-COVID domestic capacity to 60 per cent. Virgin said on Tuesday it would reach 60 per cent capacity by January.
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