Rex Airlines believes Virgin Australia will be in no rush to return to the Sydney-Canberra run, and that its cheap fares for the new link will stop travellers being gouged and attract a fair chunk of government travel.
Today (24 March), Rex announced it is entering the Qantas-monopoly market between Sydney and Canberra from 19 April with $99 one-way fares on a corridor in which nearly a million travellers flew annually before the COVID-19 pandemic hit.
Stepping into the vacuum left by struggling Virgin, Rex will initially commence with seven return flights a day with its 35-seat Saab 340 turboprop aircraft, but says this could exceed 10 a day if the response is strong.
Rex believes the route is large enough to sustain two competing carriers, but that Virgin won’t be back any time soon.
Rex deputy chairman John Sharp said Virgin had closed its discount carrier Tigerair and discarded its turboprop fleet, which he said was the perfect aircraft to fly a short route such as this one.
“I think it will be very difficult economically for Virgin to operate between Sydney and Canberra without its turboprop fleet,” he said.
“It will be very difficult for them to compete in that market space with only jet aircraft.”
Mr Sharp said Qantas is gouging air travellers with fares on the Canberra route, which are twice as much as their average ticket on the Sydney-Melbourne run. He even admitted he had driven to Canberra for the announcement because the airfare was too high.
“We will change that dynamic,” he said.
Mr Sharp is also optimistic Rex’s low fares will snare it a great deal of the notoriously elusive Commonwealth government market.
“Rex expects to get a lot of public service business because the public service theoretically works on best fare of the day,” he said.
At present, the average Qantas fare on the Sydney-Canberra route is four times what Rex can offer.
Mr Sharp said the estimated annual savings of $60-$100 million to commuters when numbers return to pre-COVID-19 levels would go back to businesses, and the commute will be a jobs generator.
Rex is expanding its operations across the board and Mr Sharp said a low-fare Melbourne link is “on the map and something we’re prepared to discuss”.
ACT Chief Minister and Minister for Tourism Andrew Barr, whose government has been heavily involved in boosting aviation links to the national capital, said Rex is throwing down the gauntlet to all transport types.
But he stressed it is the connectivity with the Rex regional network that is important.
“It connects us in a really positive way with a whole range of communities, towns and cities, and tourism experiences,” said Chief Minister Barr.
“The investment Rex is making is a vote of confidence in this city and we are delighted to be working closely with the airline and Canberra Airport through Visit Canberra to widely promote the new services and contribute to the growth of the route.”
Canberra Airport CEO Stephen Byron said Rex’s move is a positive sign its making an investment in a growing and expanding region.
“This new Canberra-Sydney route will offer more choice for our travellers, stimulate jobs and grow the air travel market, which is a win-win for us all.”
Canberra Airport is still recovering from the depths of the COVID-19 pandemic shutdowns, but is now operating at 48 per cent capacity.
Rex will have a lounge at Canberra Airport, complementing the airline’s existing lounge in Sydney, which will give way to a new, much larger lounge opposite Gate 49 in the coming months.
The new Sydney-Canberra flights are on sale from later this week.