Summary

  • Dreams shattered: Both Bonza and Rex failed to break into Australia’s airline duopoly, met with closure.
  • Rex administration: Domestic flights grounded, Virgin Australia offers rebooking for affected customers.
  • Uncompetitive duopoly: Qantas and Virgin Australia prices likely to remain high after Bonza and Rex exits.

In just three months, the two airlines that had the nerve to take on the Australian domestic market have failed, both unable to break into the powerful duopoly that has ruled the sector for close to 70 years. On April 30, ultra-low-cost carrier Bonza shut its doors, and today, it is the turn of Regional Express Holdings Limited (Rex) to enter voluntary administration.

The dream is over

The rumors of Rex’s demise have been swirling for a while, and it came to a head over the weekend after a particularly damaging piece appeared in the Australian newspaper. As Simple Flying reported yesterday, the Rex directors placed the company in a trading halt on the Australian Stock Exchange (ASX) “pending a material announcement in relation to a news article published on Saturday, 27th July 2024.”

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At 21:50 AEST (11:50 UTC), I received an email informing me that Regional Express Holdings Limited and a number of its subsidiaries have entered voluntary administration, now under the control of administrators from Ernst & Young Australia. The statement, authorized by the Joint and Several Voluntary Administrators, relates to the Domestic 737 services, which are now grounded, while the regional turboprop services are unaffected.

Rex Boeing 737-800

Photo: Rex

The administrators have been in discussions with Virgin Australia and confirmed that flights between major airports have been canceled, with the Rex group’s domestic fleet of Boeing 737 aircraft all grounded. Affected customers are being contacted directly by Rex.

“Virgin Australia has made an offer for Rex customers with an existing ticket on a flight cancelled due to the administration process the opportunity to transfer their ticket free of charge to the 13 overlapping Virgin Australia flights listed below. Eligible Rex customers who wish to take up Virgin Australia’s rebooking offer, must conatct the Virgin Australia Guest Contact Centre on 13 67 89 or visit www.virginaustralia.com by Wednesday 14 August 2024.”

Eligible customers will be re-accommodated on Virgin Australia flights as close as practicable to their original time of travel. Rex and Virgin Australia (VA) are exploring opportunities to support regional customers, including VA selling Rex’s regional services through codeshare or interline agreements, and making Velocity Frequent Flyer benefits available to Rex’s regional customers.

The eligible VA routes are:

  • Melbourne (MEL) to Adelaide (ADL), Canberra (CBR), Brisbane (BNE), Gold Coast (OOL), Hobart (HBA), Sydney (SYD) and Perth (PER).
  • Sydney (SYD) to Brisbane, Gold Coast, Adelaide.
  • Brisbane to Adelaide
  • Adelaide to Perth
  • Brisbane to Cairns (CNS).

Regional Saab 340 flights

Regional Saab 340 flights are currently unaffected by the administration and will continue to operate. Prepaid ticket holders will continue to have their tickets honored by the Rex Group on regional routes. Rex has its roots in serving regional and remote destinations around the country, and Australia’s Prime Minister has already spoken about that vital role and how it must be protected.

Rex Saab 340 flying

Photo: Steve Worner/Shutterstock

Pel-Air Ambulance Services and Australian Airline Pilot Academy remain outside of the administration and under the control of their respective directors. No mention is made of National Jet Express, which is a member of the Rex Group, but under a different ownership structure.

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Virgin Australia has already posted its support for Rex customers and staff on its website, advising those with travel in the next 48 hours to contact the VA Guest Contact Centre. It also said that any people whose employment is affected should visit the expression of interest form on Virgin Australia’s website to apply for open positions.

This is a bad day for Australian aviation and competition in the domestic sector. A few months back, the Australian competition regulator pointed out that when three airlines operate on a route the prices are halved. Now that Bonza and Rex are out of the picture, the high prices charged by Qantas and VA that have depressed domestic travel will remain as we fall back into the uncompetitive duopoly that has strangled competition for decades.

There will be some serious fallout emerging from the Rex administration, and the reality is that Australia has lost two customer-focused airlines full of good, hardworking people in a few months. It is ironic that the two airlines left standing could not claim that mantle coming out of the pandemic, and once again, the losers are the Australian public.

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