Rex - Australia's Outback Airline - Ken Donohue
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Rex – Australia’s
Outback Airline
Australia is vast. The largest island on Earth, the world’s sixth
largest country. The major cities are on the coasts, leaving PHOTO: PAUL MCCARTHY • SYD 1
much of the interior, known as the outback, sparsely inhabited
and gapingly empty.
STORY Ken Donohue PHOTOS As noted
Whereas Australians once relied REX EMERGED from the shocking to Melbourne (MEL), a route previously
2001 collapse of Ansett Australia operated by Ansett. In time, Kendell took
on the railway to connect their
(AN), the country’s second largest over from Ansett more routes that were
towns and cities, today they depend airline, after a 65-year history. But uneconomical for the larger airline’s
on air service. The largest of the the beginnings of the airline occurred bigger aircraft.
unknowingly decades before. In the
country’s independent regional
1970s, aviation veterans Max Hazelton In 1990, Don Kendell sold his remaining
airlines, serving 57 destinations, is and Don Kendell established two shares to Ansett, which put KD under
Regional Express Airlines (ZL). Or, separate passenger airlines that bore the latter’s umbrella. By 2000, KD had
their respective names. These small grown into the largest regional airline
as it is affectionately known, Rex.
carriers provided critical links between in the country, carrying more than one
small-town Australia and the country’s million passengers annually. Hazelton
larger centers. Airlines (ZL), also acquired by Ansett,
was no slouch itself. When Ansett went
Kendell Airlines’ (KD) first scheduled out of business, Hazelton was carrying
flight was from Wagga Wagga (WGA) 400,000 passengers a year.
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Both Hazelton and Kendell,
still operating under their
respective brands, were
profitable companies but, as they
were part of the Ansett group,
they too were placed under
bankruptcy administration.
Given their history of success
and the critical service they
provided, a Singaporean-
Australian business group
sought to revive the regional
operations of the two airlines
and purchased them. Hazelton
and Kendell were merged to
2 PHOTO: REX
form Regional Express. The new
airline’s executive chairman and
largest shareholder. The next
year, the airline made a profit of
AUD$1 million.
THE WORLD’S LARGEST
SAAB 340 OPERATOR
Rex began operations with
seven Fairchild Metroliner-23s
(which were phased out in 2006)
and 21 Saab 340s. Today, Rex is
the world’s largest operator of
Saab 340s. It has 55 of the type: 52
are owned and three have been
3 PHOTO: GRAHAME HUTCHISON • SYD
leased to fuel a recent service
expansion in Western Australia.
1 This Rex Saab
carrier’s first flight took place in drop in aircraft leasing costs, Warrick Lodge, the airline’s
340 is banking away
August 2002, from Wagga Wagga from Runway 16R at agreed to assume the employees’ General Manager, Network
to Sydney (SYD). Sydney’s Kingsford salary liabilities, and negotiated Strategy and Sales, told Airways
Smith Airport.
with 36 local councils in relation that Rex will keep operating the
History cannot guarantee 2 Following the to their airports. The airline Saab 340s for the next 10 to 15
collapse of Ansett
success, and getting Rex into the Australia, Rex was
also had to win over a skeptical years at least. “It’s an aircraft
air wasn’t as simple as merging born from the public that had been rocked by that is still well supported, and
what had been two prospering success of Hazleton the collapse of Ansett. the right one for the routes we
and Kendell Airlines
airlines. At the time, the airline’s seen here in their serve,” he said. “There are really
first CEO, Michael Jones, said respective liveries. Things did not look promising in limited options, because no one
that it had been the most 3 Rex inherited the first year. Rex burned through is producing 30-seat aircraft,
difficult undertaking of which he seven Fairchild its working capital and posted but we don’t spend time right
Metroliner-23s from
had been a part. Kendell Airlines.
a loss of AUD$30 million. Jones now debating different aircraft.”
These aircraft were was replaced, and a restructuring
Rex secured a AUD$47 million phased out in 2006. effort was led by Singapore Although the Saab 340s are out
Rex now operates 55
investment, negotiated a 50% Saab 340s. businessman Lim Kim Hai, the of production, maintenance costs
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/ airline review /
have flat-lined and will not increase
much as the fleet ages, Lodge noted.
Rex has its heavy maintenance base
in Kendall Airline’s old Wagga Wagga
base, 450km (280 miles) southwest of
Sydney. All the ‘C’ checks are performed
here. The facility’s 50 engineers
perform about 13 of these checks each
year. “There are decades of engineering
experience at the Wagga Wagga
maintenance facility,” says Lodge. “All
that expertise is valuable.”
Rex is also negotiating with Douglas
Aerospace for the purchase of a paint
hangar at Wagga Wagga Airport, which
would create more efficiencies for the
“
PHOTO: KEN DONOHUE 5
4 airline.
COPING WITH PILOT SHORTAGE
In 2008, with the demand for air
Given that good Pilots can travel growing both in Australia and
usually transition to Captain at
globally, Rex lost 115 Pilots—half its
total complement—to other airlines.
Rex within seven years, they “This created a significant operational
challenge for us,” says Lodge. “It was
wouldn’t lose anything if they the most intense period for the airline.”
choose to stay, or go elsewhere The carrier discontinued only one
for a First Officer position. route during this time, but its long-
term survival demanded a creative
solution to stem future Pilot attrition.
PHOTO: KEN DONOHUE 5 6 PHOTO: KEN DONOHUE
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/ airline review / REX
7 PHOTO: DAVID MORRELL, AVID CREATIONS
The solution? Rex established that good Pilots can usually for our own survival, but we are
the Australian Airline Pilot transition to Captain at Rex also providing a great benefit to
Academy, a wholly owned within seven years, they wouldn’t the industry.”
subsidiary located in Wagga lose anything if they choose to
Wagga. The residential campus stay, or go elsewhere for a First Captain Andrew Robertson,
opened in 2010, with the Officer position.” who has been with Rex for
4 Captain Andrew
academy training about 35 Robertson, F/O
eight years and is based in
cadets each year. Although it Herrick Chan, and The Academy has recently Wagga Wagga, cannot see
does accept cadets with some F/A Stephanie diversified by collaborating himself anywhere else. “I love
Brennan.
piloting experience, Rex prefers with other airlines for Pilot the lifestyle that flying for Rex
5 Rex has a Saab
students with none, so it can training. Currently, 13 Pilots offers,” he said. “I wouldn’t want
340 flight simulator
train them to its high standards at its wholly-owned destined for Vietnam Airlines to live in a big city and, here, I am
and operating procedures. Australian Airline (VN) are studying at the school. home every night.”
Pilot Academy.
Tan said that both Qantas (QF)
Rex offers scholarships to 6 Rex performs and Tigerair Australia (TT) STRETCHING THE REACH
cadets in exchange for a seven- all of its heavy
maintenance,
aggressively recruit Rex Pilots. ON THE OUTBACK
year employment commitment. including C checks, Rex is the only Australian airline
“We understand that some Pilots at its Wagga Wagga that has its own Pilot academy With nearly 60 destinations
base.
will have bigger aspirations and cadet program. “It’s pleasing in its network, Rex flies to all
and may want to fly for larger 7 The Saab 340 is to look back at all of our First six states across Australia, most
perfectly suited for
airlines, and so we think that a Rex’s operations.
Officers that have gone through of which depend on the airline.
seven-year commitment is fair,” With 55 in the fleet, the cadet program and see many “We operate to a lot of dots
said Ivan Tan, the Academy’s Rex is the world’s of them now as Captains,” Lodge on the map, and if we didn’t
largest operator of
Chief Operating Officer. “Given the type. told Airways. “We are doing this operate to many of these places,
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/ airline review /
they wouldn’t have air service,”
said Lodge. “Some communities
have become so accustomed to
air service that, if they were in
other parts of the world, they
wouldn’t get it because of their
small size. We don’t have the
deep pockets that other airlines
have, so we have a responsibility
to make the business work.”
Last year, the airline expanded
its reach into Western Australia,
with two routes from Perth
(PER) to Albany (ALH) and
Esperance (EPR). This is a region
that Rex had long sought to add
to its network. The airline was
given a five-year license to
be the sole operator of these
routes. “We felt that this would
8 PHOTO: KEN DONOHUE
give us the perfect opportunity
to establish a base in Perth that
would then allow us to expand
further in the state.”
Western Australia base in Perth Fiscally, Rex has been flying
Four aircraft are based in would be the biggest drawback. high but, in recent years,
Perth—two used to operate the But Lodge says that the greatest there has been a softening of
service to ALH and EPR, one a challenge is having a small base profits. “We have seen declining
dedicated spare, and the fourth in Perth without the economies passenger numbers because of
enabling the airline to respond of scale that come with larger instability in the mining industry
quickly to ad hoc opportunities. operations elsewhere in the and, more broadly, economic
The economy of Western network. Aircraft are cycled conditions throughout Australia
Australia depends heavily on through Adelaide (ADL) in South have been poor,” Lodge said.
the mining industry, which is Australia for maintenance, so “There is a lot of untapped
currently in a downturn, but this the ferry flight to get Western opportunity when economic
doesn’t deter Rex. “It says a lot Australia-based aircraft to and conditions become as strong as
that we can still open new routes from Adelaide is just 800 miles they were a decade ago. What
in a challenging time without by way of Rex’s two ports in Port makes me optimistic is that 10
losing money,” Lodge said. Warrick Lodge, Lincoln (PLO) and Esperance. years ago, we were carrying 1.4
General Manager,
“There will always be booms Network Strategy
million passengers annually with
and busts in the resource sector, and Sales. In the last fiscal year, Rex a 70% load factor, and, today,
and this gives us an orderly way recorded an operating profit of our yearly passenger numbers
to move into the region.” Rex AUD$4.3 million, but posted an are not far off that with a load
expects almost 10% of its total overall loss of over AUD$9 million factor of 55% to 60%.”
passengers to come from the because of non-cash write-
Western Australia routes over downs caused by the cessation Agriculture is second only
the coming year. of a defense contract. This was to mining for importance to
only Rex’s second loss, and the the Australian economy and, in
One would think that the first since 2003. In a disarming recent years, severe droughts in
2,000 miles and three-hour act of transparency, the airline’s much of the country have had
time difference between Rex’s fiscal performance was outlined a huge impact on the sector.
headquarters in Sydney and its in its inflight magazine. However, the fortunes of farmers
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/ airline review / REX
and of the regional towns linked evening. In a few cases, the focus
to the agricultural industry are is reversed, with specialists flying
changing for the better. National out to smaller communities for Fast Facts
farm production is at an all- the day to provide critical health
time high. This is good for Rex, services. REX REGIONAL AIRLINES
but illustrates the challenge of ZL / RXA / RADIO: REX
remaining profitable despite the In 2009, Rex didn’t serve
ups and downs of conditions in any routes in Queensland, the ADDRESS:
81-83 Baxter Rd. Mascot, New South Wales
the communities it serves. historical home of the country’s 2020. Australia
largest airline, Qantas, but, TELEPHONE: +02 9023 3555
“We need to operate as today, Rex operates to 24 WEB: www.rex.com.au
PARENT COMPANY: Regional Express Holdings
efficiently as possible, so we destinations in the state, with
EXECUTIVE CHAIRMAN: Lim Kim Hai
can keep fares at an attractive just five receiving a government CHIEF OPERATING OFFICER: Neville Howell
level and continue to offer subsidy as they are considered FOUNDED: 2002
the capacity and frequencies public service routes. These FFP: Rex Business Flyer
PASSENGERS: 1.1 million (2016)
our customers expect,” Lodge small towns require air service SUBSIDIARIES:
said. “This is something we are for mail, freight, and medicine Air Link
always monitoring because, the delivery. Australian Airline Pilot Academy
Pel-Air
moment we lose frequencies, FLEET:
we may start losing passengers.” Queensland is also where Rex Type Current Configuration
Because Rex is the sole operator operates the ultimate outback Saab 340 55 Y33
on 90% of the routes it serves, he milk-run: a nine-hour, seven-
added, the airline’s competition sector route between Brisbane Total: 55
is the car. and Mount Isa. Flights depart
DESTINATIONS:
from Brisbane on Mondays
Adelaide, Albany, Albury, Armidale, Ballina,
Many passengers rely on and Thursdays and return the 8 On approach Bamaga, Bathurst, Bedourie, Birdsville, Boulia,
the airline to get to business following day. Rex’s management to Wagga Wagga, Brisbane, Broken Hill, Burketown, Burnie, Cairns,
appointments or healthcare knows as much as anyone how home of Rex’s Ceduna, Charleville, Coober Pedy, Cooma,
operations base and Cunnamulla, Doomadgee, Dubbo, Esperance,
services in the larger cities. Most fickle the airline business can the Australian Airline Grafton, Griffith, Hughenden, Julia Creek,
flights leave the smaller regional be. “We provide a critical service Pilot Academy. King Island, Kingscote, Lismore, Longreach,
centers in the morning and to regional Australia. That’s what Melbourne, Merimbula, Mildura, Mornington
9 A Saab 340 at
Island, Moruya, Mount Gambier, Mount Isa,
return in the late afternoon or drives us,” Lodge said. Wagga Wagga.
Narrandera, Newcastle, Normanton, Orange,
Parkes, Perth, Port Lincoln, Quilpie, Richmond,
St George, Sydney, Taree, Thargomindah,
Toowoomba, Townsville, Wagga Wagga,
Whyalla, Windorah, Winton.
“Not having air service, for
many communities throughout
the country, has a huge impact,
and one small error in this
business can result in significant
loss. We’re very aware that 16
regional airlines have gone out of
business in Australia since 2002.”
Rex was formed out of
passionate determination. The
same spirit that keeps the airline
flying 15 years on.
9 PHOTO: KEN DONOHUE
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