sign in sign up
<<
Home , Brisbane, Kendell Airlines, Max Hazelton, Wagga Wagga Airport

Rex – ’s Outback 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 once relied REX EMERGED from the shocking to (MEL), a route previously on the railway to connect their 2001 collapse of operated by Ansett. In time, Kendell took (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. country’s independent regional unknowingly decades before. In the 1970s, aviation veterans In 1990, Don Kendell sold his remaining , 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 as it is affectionately known, Rex. their respective names. These small grown into the largest 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 ’ (KD) first scheduled out of business, Hazelton was carrying flight was from (WGA) 400,000 passengers a year.

20 | AIRWAYS | JUNE 2017 www.airwaysmag.com 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 form Regional Express. The new 2 PHOTO: REX

airline’s executive chairman and largest shareholder. The next year, the airline made a profit of AUD$1 million.

THE WORLD’S LARGEST 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 . carrier’s first flight took place in 1 This Rex Saab 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 (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 also had to win over a skeptical success, and getting Rex into the Australia, Rex was 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 the first year. Rex burned through 3 Rex inherited is producing 30-seat aircraft, difficult undertaking of which he seven Fairchild its working capital and posted but we don’t spend time right had been a part. Metroliner-23s from a loss of AUD$30 million. Jones Kendell Airlines. 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 www.airwaysmag.com JUNE 2017 | AIRWAYS | 21 / 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 , which would create more efficiencies for the PHOTO: KEN DONOHUE 54 airline.

COPING WITH PILOT SHORTAGE

In 2008, with the demand for air Given that good Pilots can travel growing both in Australia and globally, Rex lost 115 Pilots—half its usually transition to Captain at 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 route during this time, but its long- for a First Officer position. term survival demanded a creative “ solution to stem future Pilot attrition.

PHOTO: KEN DONOHUE 5 6 PHOTO: KEN DONOHUE

22 | AIRWAYS | JUNE 2017 www.airwaysmag.com / 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 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 students with none, so it can 5 Rex has a Saab 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 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 (QF) Rex offers scholarships to 6 Rex performs and (TT) STRETCHING THE REACH cadets in exchange for a seven- all of its heavy aggressively recruit Rex Pilots. maintenance, 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, www.airwaysmag.com JUNE 2017 | AIRWAYS | 23 / 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 (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 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 (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 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 in 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

24 | AIRWAYS | JUNE 2017 www.airwaysmag.com / 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 , the ADDRESS: the communities it serves. historical home of the country’s 81-83 Baxter Rd. Mascot, 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 efficiently as possible, so we destinations in the state, with PARENT COMPANY: Regional Express Holdings 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 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 . Flights depart from Brisbane on Mondays DESTINATIONS: Adelaide, Albany, , Armidale, Ballina, Many passengers rely on and Thursdays and return the 8 On approach , Bathurst, Bedourie, , Boulia, the airline to get to business following day. Rex’s management to Wagga Wagga, Brisbane, , , Burnie, , appointments or healthcare knows as much as anyone how home of Rex’s Ceduna, Charleville, Coober Pedy, Cooma, operations base and , Doomadgee, , 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, , 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, , Quilpie, Richmond, St George, Sydney, , , , , Wagga Wagga, , , 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 www.airwaysmag.com JUNE 2017 | AIRWAYS | 25