What next for Rex?

For Rex’s new owners, the choice is clear. Stay in your lane and what you’re good at. Namely, moving folks cheaply and frequently from regional hubs to major cities and towns.

One Australian airline has been in the headlines for all the wrong reasons.

Rex (Regional Express) hit turbulence not long after resuming normal flight operations after the pandemic. While the airline did initially use the disruption of Covid to its advantage, the smooth conditions did not last for long.

Midway through last year, Rex ceased all bookings and went into voluntary administration. Thankfully, the airline avoided the fate of Bonza, which went into liquidation.

However, at the time of writing, Rex is relying on financial assistance from the federal government, given no white knight is on the horizon.

What if no buyer is found for Rex? The government – be it an Albanese-led Labor government or a Dutton-led Coalition government – will be faced with a difficult choice. Let Rex go the way of Bonza and stand idly by as the Rex brand disappears and its fleet is either sold off or its leased planes are returned to their owners? Alternatively, we may see something that hasn’t occurred in this country since 1995. The federal government could step in and nationalise Rex. Prior to 1995, the government owned Qantas as its national carrier along with TAA (Trans Australian Airways), which served as the government’s domestic carrier.

Given the recent improved profitability for Qantas and Virgin Australia, it’s growing increasingly likely that a private consortium will acquire Rex, but don’t hold your breath. Any likely suitor will keep their cards close to their chest throughout the negotiations to extract the lowest possible price for the airline.

Typically, when a brand goes into financial distress, a makeover is needed. Viewed through the lens of brand, relevance to the customer has faded, points of differentiation are in freefall and trust is eroded. Yet here’s what makes the curious case of Regional Express.

The root of most of the airline’s problems can be traced to a decision by the airline’s Singaporean owner in 2020 to acquire a fleet of Boeing 737s and start flying between the major capitals.

For an airline with the tag-line ‘‘Our heart is in the country’’, the inter-capital routes never seemed to be ‘‘on-brand’’.

The allure of the Sydney to Melbourne flight path has caught many airlines off-guard since the deregulation of the domestic aviation sector in 1990. Sure, it is the fifth busiest flight path in the world, but as Compass Airlines, Ansett, Impulse, OzJet, Virgin Blue and Tiger Airways can all attest to, making money out of flying it is tough. Despite the list of airline brands strewn along the runway, Rex went ahead with its new jet fleet in late 2020. Unsurprisingly, the airline failed to make money on its 737 routes. To make matters worse, this then put undue pressure on its regional turbo-prop fleet and, in July last year, Rex entered voluntary administration.

Hulsbosch has worked on the Qantas brand for over 25 years and we are also responsible for the repositioning and rebranding of Virgin Blue to Virgin Australia, and while it may seem highly irregular for us not to propose a re-branding for Rex, in this circumstance that’s precisely what I’m recommending. The way the Rex brand is positioned to its target audience – based in regional Australia – is sound. No substantial change required. Likewise, its brand expression – having its heart in the country – is also a savvy representation of what the brand holds dear. For Rex’s new owners, the choice is clear. Stay in your lane; double down on what you’re good at. Namely, moving folks cheaply and frequently from regional hubs to major cities and towns.

Done well, the airline would benefit from bringing its affinity with regional Australians to life. A campaign that recognised and celebrated some of Australia’s most unique regions would boost relevance while also putting a wedge between Rex and its biggest competitor, QantasLink. Closer links to regional tourism authorities is also something that may augur well for the airline. Put simply, how should the Rex brand act so it is palpably obvious that its heart really is in the country?

In a homogenous industry like domestic aviation, the ‘‘customer journey’’ is everything. Airline marketing executives get forensic when it comes to analysing the points at which a potential customer will engage with an airline. This provides a useful insight into why both airline reward and recognition programs feature so prominently in an airline’s marketing arsenal.

For the reborn Rex, consideration may be given to how greater loyalty can be extracted from its regular customers. A more comprehensive reward and recognition program could be an option. Likewise, lounges in its major hubs may drive greater loyalty, enabling the airline to yield a greater premium from its flights.

In the immediate term, the airline needs to demonstrate it can stick to what it’s good at and make a reasonable profit from doing so. Looking ahead, the airline’s future is assured. Either it will be bought by a private buyer or given financial assistance from whichever party wins the May election. After all, it would be a foolhardy government that folded a regional airline and ripped the heart out of the country!

Jaid Hulsbosch is the managing director of Hulsbosch.