Opinion
Rex offered cheap and reliable flights. I knew it couldn’t last
David King
National Editor, The Age and The Sydney Morning Herald.Like many city folk, flying Rex wasn’t something I did terribly often. My trips to regional centres tended to involve family holidays and the standard, long, punishing drive.
But about 18 months ago, I read that Rex was moving into the intercity route – the so-called Golden Triangle of Melbourne-Sydney-Brisbane – and my ears pricked up.
Rex’s east coast city route offered cheap, no-frills flights.Credit: Sam Dagostino
They were buying bigger planes (737s) and would offer a cut-price, reliable, east-coast service. The Holy Grail of Australian domestic travel, no less.
I make a lot of trips between Melbourne and Sydney for family reasons and had sworn “never again” on Jetstar years ago. So I started booking Rex flights as an experiment.
The results were spectacular. Cheap flights, running on time. Good customer service. No dramas.
All right, it’s no frills. There isn’t an app and the electronic tickets never make it into your Apple Wallet. But who cares, I was saving hundreds of dollars every time I flew. I signed up for frequent fliers and once – just once – got a free upgrade into business class.
But alas, this is Australia and I should have known that this travel utopia couldn’t last. The first sign that something was wrong was talk of a boardroom coup. (How could a company that was doing so well not have a happy board?)
Then, in a more obvious red flag, reports emerged of restructuring consultants being called in, followed by a share trading halt on the Australian Stock Exchange. (Not usually a good sign.)
Not all the information is out publicly, but there is enough available to have a stab at what might have happened that caused the airline to run out of cash. And it’s a familiar tale for any upstart airline that’s had the courage (or folly) to take on the major players on Australia’s cut-throat east-coast routes.
The hurdles include price matching by the majors, allegations of anticompetitive behaviour, and difficulty getting crucial slots at Sydney Airport. These same areas of tension have been examined by government and regulators many times and the list of entrants who’ve failed to overcome them keeps growing – Bonza, which collapsed in April, being the most recent example.
Politicians are speaking about saving Rex, largely because of its crucial role in servicing regional Australia. The airline flies to 56 destinations and also provides flights for fly-in, fly-out workers.
The argument of looking after people who live and work in the bush is powerful and will likely buy Rex some time and government funding. It might be enough to get it through administration and out the other side.
But much will be made of whether Rex should have ventured into the competitive world of the Sydney to Melbourne route. It was a risky move that has proven too hard for just about every other airline that’s tried it since Ansett.
But it shouldn’t be such an impossible proposition. Customers deserve cheap and reliable flights. At some point, the government is going to have to do something about the competitive power of the Qantas- Virgin duopoly, which accounts for about 94 per cent of all domestic travel in Australia.
The government has thrown billions of dollars at Qantas and the airline still manages to deliver a service that is often expensive and substandard.
If the government wants to do better for consumers in a cost-of-living crisis it should talk less and act more and embark on reform of the airline industry that allows competition to flourish. The government knows that having more operators leads to lower prices. It needs to provide an environment where these companies can survive and thrive. Currently, we have an air-transport system that works for the big airlines, not the customers, and that’s not the way it’s supposed to be.
A year ago, Gina Cass-Gottlieb of the ACCC put out a press release spelling out the reality of the duopoly. “Without a real threat of losing passengers to other airlines, the Qantas and Virgin Australia airline groups have had less incentive to offer attractive airfares, develop more direct routes, operate more reliable services, and invest in systems to provide high levels of customer service.”
She praised the arrival of Rex and Bonza into the market for bringing much needed competition, but noted there were barriers to their growth. Now, one is gone, and the other is in strife.
If Rex goes bust, or if it has to give up flying the Sydney to Melbourne route to survive, customers will be the losers. We’ll end up paying more or putting up with lousy service. Probably both.
I’m glad I took advantage of those cheap, reliable fights when they were on offer. Even back then, I suspected it couldn’t last.
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