If Regional Express chairman Lim Kim Hai could wind back the clock to August 2002, he doesn’t know if he’d make the same choice to invest in the then fledgling carrier.
When the Singaporean executive was approached with an opportunity to purchase a hefty stake in Australia’s newest airline, he’d been weighing up retirement. Nearly 20 years later, he’s busier than ever chairing the carrier challenging Qantas and Virgin for market dominance.
Rex chairman Lim Kim Hai.Credit: Louie Douvis
Rex was born after the Ansett receivership of 2002 and was owned and operated by Australiawide Airlines, a consortium resulting from the merger of regional carriers Hazleton and Kendell. Lim and eight other Singaporean investors purchased a 30 per cent stake. Assets associated with Lim now own more than 60 per cent of the airline.
“I think if I knew what I know today, I wouldn’t have gone in, that’s for sure,” he says with a laugh, referencing Richard Branson’s famous line “if you want to be a millionaire, start with one billion dollars and launch an airline”.
He says the downfall of the aviation industry lies with those most passionate about it.
“Most people who run airlines are aviation buffs. They have kerosene in their blood. I think they can be the downfall of airlines because with a huge amount of passion comes a huge amount of ego. They can’t be critical and analytical,” he says.
Lim doesn’t particularly care for planes. When he and business partner Lee Thian Soo became major shareholders of Rex in 2002, he didn’t know the first thing about aviation. He says his only passion is “doing things well”.
Preferring to stay out of the spotlight, Lim rarely does interviews. He says it’s because whenever he does, the airline faces an onslaught of criticism about his nationality and concerns about foreign ownership.
“Aviation is at the heart of Australia and the public feel it has got to be led by Australians,” he says, quick to point out that Qantas chief Alan Joyce is from Ireland. Virgin boss Jayne Hrdlicka is American and so is Bain Capital, the private equity group who plucked Virgin out of voluntary admission in 2020.
Lim says his initial hesitations in investing in Rex were not based on his lack of industry knowledge but how unionised the Australian aviation industry was, acknowledging it’s not a “fashionable” thing to admit.
“It’s funny now because the very problems we were afraid of — the unions and staff — ended up being the source of a lot of assistance for us during the pandemic. They helped us pull through.”
Rex has come a long way since Lim became chairman of the airline in July 2003. Last March, it flew its first service between Melbourne and Sydney, disrupting the Qantas-Virgin duopoly on one of the world’s busiest airline routes. Since then, the airline has been gradually expanding its domestic footprint and now flies between Sydney, Melbourne, Brisbane, Adelaide, Canberra and the Gold Coast.
Asked whether Rex’s recent tie-up partnership with US giant Delta signalled international expansion for the regional company, Lim says he’s taught his staff to “stick to their knitting”.
“It would be utterly foolish. International flying is a totally different ballgame that I don’t think any Australian airline is equipped for at this stage, including Qantas,” he says, adding that international expansion contributed to Virgin’s collapse in 2020.
Rex chairman Lim Kim Hai.Credit: Louie Douvis
Last week, Rex added a seventh Boeing 737-800NG to its fleet, bolstering its capacity to fly between Sydney, Brisbane and Melbourne (dubbed the Golden Triangle).
Lim hopes to expand the fleet to 10 and is cautiously optimistic when talking about Rex’s growth. He argues that if you accumulate Rex’s profits over the past 18 years, the smaller carrier outperforms Qantas in gross terms.
“There’s no reason why you can’t keep growing if you’re a good operator but we’ve seen how the competitors have tried to use their market power to squash us before,” he said.
Lim regularly accuses Qantas and Virgin of deliberately running at a loss on particular routes to stifle the smaller carriers’ growth while making up for it by hiking prices on routes Rex cannot access. It’s a claim the major carriers deny.
Rex routinely faces criticism over close ties to the former Coalition government and allegations of unfair financial support. Rex’s deputy chairman is John Sharp, former National Party MP and close friend of former deputy prime minister and minister for transport Michael McCormack. Two weeks ago, the airline named their newest Boeing-737 in his honour.
The carrier pocketed close to $81 million from three federal government grant schemes in 2020. Qantas and Virgin were eligible only for one despite operating a significant percentage of Australia’s regional seat capacity.
At the time, then opposition transport spokesperson Catherine King accused the Morrison government of denying assistance to Virgin that would have helped it avoid voluntary administration while buoying Rex for the same reason.
Rex dismissed these allegations, pointing to the former federal government’s tender data which revealed Virgin and Qantas received further support to break even on government mandated routes during the pandemic.
“We didn’t receive more than our fair share of assistance — we’re the biggest regional carrier,” Lim says.
Rex managed to avoid redundancies during COVID-19 and wasn’t plagued by the staff shortages and absenteeism that has recently marred other airlines. Lim says Rex’s staff were instrumental in allowing him to keep the full headcount.
“The staff were willing to continue with whatever assistance the government gave,” he said. “They came together to say we prefer to keep everyone employed rather than keeping 40 per cent at full capacity.”
Rex chairman Lim Kim Hai says he doesn’t believe in long-term strategies for aviation.Credit: Louie Douvis
Lim doesn’t have a long-term strategy for Rex. He argues other carriers have been let down by complicated bureaucracy and red tape: “when you have a long-term plan you can be locked in and filter out things that don’t coincide with your plan.”
Rex recently celebrated its 20th birthday in Sydney. Among revellers was a sea of Coalition members McCormack and deputy liberal leader Sussan Ley. Prime Minister Anthony Albanese couldn’t attend but sent a video message with good wishes.
Despite Rex servicing many National Party electorates, Lim says he wasn’t upset when Labor won the federal election on May 21.
“I may make some National Party enemies for saying this, but the country needed a change. I’m not saying that just because Labor won,” he says with a wry smile.
Lim says Albanese knows more about aviation than any other member on Labor’s front bench, and the former transport minister has “grown” a lot since the pair first met in 2010.
“There were things in the last two years that made me feel Australia deserves better,” Lim says. “Even though emotionally it may seem I’m for the Coalition, I don’t think they’d get better results right now. Australia deserves better.”
As for the future of the carrier, Lim says he’s focused on doing things well.
“I take great pleasure in doing things well, making it efficient and cost-effective while providing good service. You ask who I am — that is who I was when I joined Rex, and who I’m still today.”
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