Rex leases ex-Virgin planes to fly east coast capitals

Rex will service the east coast capitals with a fleet of former Virgin Australia Boeing 737s.

Six Virgin Australia 737s are set to take to the skies with new livery after being leased by Rex. Picture: Cameron Spencer/Getty Images

Regional Express Airlines will take delivery of the first of six Boeing 737s in November, in preparation for the launch of Sydney-Melbourne flights next March.

The aircraft were formerly leased by Virgin Australia but have come on to the market as a result of the embattled carrier’s move to a reduced fleet.

With an average age of about 15 years, the 737 NGs are still considerably younger than Rex’s current fleet of 25-year-old Saab 340s.

Letters of intent were signed with two lessors on Wednesday as Rex moved ahead with its plan to take on Qantas and Virgin on capital city routes.

Rex deputy chairman John Sharp said the 737s would be painted in Rex livery at the airline’s Wagga Wagga depot but the interior would remain largely the same.

“The aircraft is fitted with eight business class seats which we’ll be retaining,” Mr Sharp said.

The six 737s would gradually be deployed into service from March 1, with tickets expected to go on sale from December.

Demand would then dictate whether Rex added another four 737s to its fleet by the end of 2021.

Mr Sharp said the expansion of Rex’s operations would create significant opportunities for ex-Qantas and Virgin Australia pilots, crew and support staff at a time when aviation jobs were hard to find.

“There’s never been a better time to start a domestic airline,” Mr Sharp said.

“There’s a plentiful supply of planes, a plentiful supply of crew and engineers and associated support staff. This is an opportunity where you can start small and grow as the market grows.”

Despite the shift to capital city routes, Mr Sharp said they would retain the Regional Express name.

“I think Rex is a name that’s known. It’s a brand that’s been known for 18 years and we have the best on-time departures, the lowest cancellation rate, we’re known to be a good operator,” he said.

A loyalty program was a longer term consideration as Rex broadened its network.

The Singaporean-owned airline recently announced a $150m deal with investment firm PAG Asia Capital to fund its domestic jet operations, which could see a change of ownership.

Under the agreement the funds could be converted to equity in Rex which would see PAG become the largest shareholder.

Trading in Rex shares was halted for the announcement of the lease agreement, and climbed 3 per cent following the resumption of trade, to $1.31.

The airline’s expansion has raised some eyebrows in the aviation industry following significant government assistance for Rex.

Government subsidies for regional routes were extended on Monday, until the end of March, which was warmly welcomed by Rex chairman Lim Kim Hai.