Australia's Rex considers launching mainline ops by 1Q21

Rex - Regional Express (ZL, Wagga Wagga) has unveiled plans to rival Qantas and a reborn Virgin Australia by expanding its network to service Australian state capital cities by early next year and in the process, create a three-airline market in the country. In the air by the end of 1Q 2021, the carrier intends to utilise up to ten B737s or A320s.

In its announcement issued on May 13, the regional carrier disclosed "that it has been approached by several parties interested in providing the equity needed for Rex to start domestic operations in Australia." The regional carrier believes that its war chest to mount its foray should be in the order of AUD200 million dollars (USD129 million).

The next step for the airline is that its board "is exploring the feasibility of this endeavour" and is in talks with the equity partners. At this stage, with a sufficient capital injection and the current market conditions, the airline's board believes that the expansion of domestic operations would be "a particularly compelling proposition." Rex's board anticipates making a decision in the next eight weeks, and should the decision to proceed be made, the enhanced network would be operational from March 1, 2021.

Rex would target the so-called 'Golden Boomerang' routes linking Brisbane International, Sydney Kingsford Smith, and Melbourne Tullamarine as well as the coast-to-coast transcontinental routes and services to Adelaide International and Perth International. These types of services would be operated in addition to its existing regional services, which are flown by its turboprop fleet. According to the ch-aviation fleets module, the airline's current fleet is made up of 57 aircraft consisting of one Saab 340A, thirty Saab 340Bs, and twenty-six Saab 340(Plus).

In terms of business model, Rex deputy chairman John Sharp told The Australian Financial Review that the new service would be a hybrid carrier between Qantas and Jetstar Airways (JQ, Melbourne Tullamarine) but with a lower cost base, saying "this will be halfway between a full-service airline and a low-cost airline."

According to the ch-aviation capacities module for the week commencing August 17, Qantas commands 42% of weekly capacity, Virgin Australia has 33%, and Jetstar controls 21%. Rex is way back in seventh, with just 0.32%. Looking at the same period, Australia's top domestic routes in terms of weekly seats are: