Qantas is worried about us flying capital city routes, says Rex

written by Adam Thorn | January 19, 2021
Rex first’s 737 in its new livery, VH-RQC, lands in Sydney in December 2020 (@rexairlines)

Rex deputy chairman John Sharp has said Qantas is secretly “distressed” at his airline’s plans to fly capital city routes despite publically belittling its chances.

In a bullish newspaper column, Sharp appeared to compare the national carrier to the Titanic and said the real reason for chief executive Alan Joyce’s strong comments were to make customers think Rex and Virgin could collapse.

The tit-for-tat response comes after Joyce told Australian Aviation in December that the regional airline’s “limited network” and higher ticket prices would hold them back.

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Rex will start flying between Sydney and Melbourne on 1 March, with plans to expand flights to Brisbane by Easter.

It marks the first major new competitor for the so-called Golden Triangle in two decades.

“His prediction of failure for either Rex or Virgin is designed to undermine them by casting doubt over their survivability, steering passengers into the arms of Qantas because, according to Joyce, it’s the only airline guaranteed of longevity and the only safe place to book a ticket,” wrote Sharp in the AFR.

He went on to accuse Qantas, which he called a “600-pound gorilla”, of repeatedly getting lucky in its history, with Ansett’s collapse and Virgin’s poor financial performance.

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“Joyce was appointed CEO of Qantas in November 2008, at the same time the GFC struck,” wrote Sharp. “This could explain his nervousness today as he has presided over a 12-year period when Qantas lost cumulatively, arguably not entirely his fault, $300 million.

“It would have been a bigger bloodbath if Virgin Australia had not given Qantas a free kick by being the basket case it was during that period.”

He said Rex’s entry into the market was a wake-up call and defiantly said there is a “new game in town”.

“Joyce took comfort from history in his prediction. From the Titanic to Pan Am to Kodak to Nokia to General Motors, the world is littered with what was believed to be too-big-and-too iconic-to-fail,” wrote Sharp. “In today’s warp-speed world, those who constantly rely on history may soon find themselves being part of it.

Sharp’s thundering quotes come after Alan Joyce told Australian Aviation in December that he was “very confident” Qantas could hold its increased 70 per cent after the pandemic subsides.

“Rex are talking about a staged approach into the market,” said Joyce. “We’re very confident in our position, Jetstar will still have a significantly lower cost base because it has scale advantages over Rex.

“Jetstar is offering lower air fares than Rex, even today when they launched. And we do believe from the business market, Rex’s network is extremely limited and the business corporate market is going to be still very attractive to the proposition Qantas has.

“Qantas as an example is opening up 30 of its 35 lounges domestically, before Christmas. Our next major competitor has only six lounges and there’s question marks over some of them.

“Qantas loyalty program has been announcing a number of announcements in the last few weeks about maintaining people’s status, which is being well received, and matching status on other airlines, which we’ve had thousands of customers respond to.

“And we can see with Jetstar, certainly with Tiger removed from the market, that the low-cost market is moving towards Jetstar, too. So we also believe that there’s been a big strategic advantage for Qantas by having a bigger network of more frequencies.”

Last year, Rex confirmed it would initially operate nine return services a day between Sydney and Melbourne, with sale prices starting at $79. Economy tickets will include checked baggage, food and pre-assigned seating – indicating Rex will pursue a ‘mid-market’ hybrid strategy.

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27 Comments

  • Hammer

    says:

    I love that Rex is trying to expand its operations and taking advantage of a time when things are slow for everyone to do so, but some of the things you hear that come out of their camp, are some of the dumbest I think I’ve ever heard. Like can they really call Qantas scared when a couple weeks ago Rex was crying about Qantas taking them on with their regional routes? Who is really scared? More than likely it’s Rex. Who will benefit from the regional connections more? The airline only just starting to connect 3 of the big cities or the the well established airline with the well established national, low cost and international network? They can talk it up as much as they want, but in the end Qantas is not one bit scared of any competition in Australia right now, I honestly predict that in the not too distant future Rex will be demanding government money and demanding they try force Qantas out of certain routes.

    • Warwick

      says:

      Oh! Hammer, how right you are about Rex probably going bleating to mate McCormack, ‘oh woe is us, we need more taxpayer money to survive!’…….’please push QF off the routes we want’….
      Yeah, right, the latter’s not going to happen!
      You’ve made some excellent points, & I fully concur.
      QANTAS could eat Rex for breakfast, with none left over for lunch!
      CEO Mr Alan Joyce has two Bachelor, & one Masters’ Degrees’. Bet Sharp hasn’t.
      And Mr Joyce isn’t ‘scared’ or ‘worried’, as he knows what his Company is doing, & always has.
      The diatribe by Sharp says much about him, & wow! He’s an ex-pollie, so that says it all!

  • Ian

    says:

    joyce should be worried, about the unions who seem to have no idea of economic reality.

    • Bill O'Really

      says:

      Oh come now Ian. A guy who pays himself $24 million per year while sacking and furloughing thousands of loyal employees, and you go on about unions and economic reality? Open your eyes and see who is the issue at Qantas, and it is not the unions who represent thousands of loyal Qantas employee. Many whom have been given loyal service before bovver boy came along to line his own pockets. Stop with the cliched trite and self serving nonsense wont you, Please?

  • Brogers

    says:

    Perhaps REX needs to reconsider its Regional Route commitments and stop gouging ticket prices for short notice travel. As for Qantas please take a good look at Port Lincoln Melbourne return on Q300

  • Steep Descent

    says:

    This is obviously a beat up to take the heat off the fact that Rex may employ foreign pilots.

  • Steve A

    says:

    Qantas actually, is in a very precarious position right now.
    Mr Joyce is constantly talking QF up and his competition down, but QF is nothing more than a hollowed out shell of its former self, thanks to Mr Joyce.
    12 years of Mr Joyce’s strategy has given shareholders zero profits over 12 years, in fact cumulative losses.
    The QF share price is less today than the $6.30 that it was back in 2007. And this is despite the billions of dollars spent on share buy backs to prop up the price and the cancelled 30% of shares. And if you add on what is required to make up for inflation during the last 12 years, then QF shares should be trading at $12 per share.
    Then allow for the severe asset-stripping and severe asset-ageing of the fleet, and Qantas has been seriously mis-managed.
    And add on the hocking up of all of the newish aircraft in the QF fleet , and you should be concerned.
    Then there is no longer any goodwill from QF staff anyone because of the abuse that they have suffered from management.
    Mr Joyce is scared. Scared that Qantas is no longer capable of surviving into the future after the damage that he has inflicted upon it.
    Time to do the right thing Mr Joyce. Save Qantas by falling on your sword.
    I have a better plan to take QF into the future if Mr Joyce goes. I gave former PM Malcolm Turnbull a plan to set up a Federally owned airline way back in 2016, because Australia could not allow its airline infrastructure and tourism industry to meander along aimlessly in the hands of QF and VA.
    When VA went south, I told the current PM that I had a plan to turn around both QF and VA if he would nationalise them, and sent him a small part of my plan to show him how differently things could look. I sent it to all Federal MP’s and Senators, to all Queensland MPs and to the Victorian Premier and his Finance minister.
    The QF management is bereft of ideas to bring QF though this and so that is why Mr Joyce talks up QF and talks down his competitors, but really, QF is the one in trouble.
    But unfortunately so many people see Mr Joyce as God’s gift to the airline industry.

  • Gary

    says:

    Would rather pay more $$$ to Fly Rex or Virgin than Qantas….. whilst ever they pay Joyce obscene cash for a mediocre performance then thinking Australians are not going to pay a premium to Qantas for any ticket

    • Vannus

      says:

      Why don’t you apply for Joyce’s job then, as you obviously perceive you can do a better job?
      Hope you’ve got his equal, or better, qualifications’.

  • Vannus

    says:

    The one who’s ‘scared’ is Sharpe, certainly not QANTAS CEO, Alan Joyce.
    Sharpe’s just using intimidating, & wrong tactics against QF, & its’ boss. Not a good idea at all.
    He knows that QF is by far the bigger, better, & more favoured airline, & he doesn’t like that.
    The proof of this will come once Rex starts taking on QF.
    Can Rex match QF/JQ’s cheap fare base over BNE SYD MEL & return? No!
    Rex hasn’t even got a FF scheme as yet, so why would QF’s FF Membership of 13 MILLION, fly on them, with no gain?
    Have Rex got airport lounges comparable to QF? No!
    Has Rex got QF FF points ability to purchase flights, upgrades, & goods? No!
    So this rant by Sharpe is total bs. He’s a former pollie, so that speaks volumes to his ‘weasel’ words against QF.
    He will learn to his detriment of taking on QF on the ‘golden triangle’.

  • Rodney L

    says:

    Luck because of Virgin’s poor financial performance?
    Does he not grasp that their demise was brought on by taking on Qantas, just as he is about to do.

  • Firstly, my view is that the Federal Minister for Transport should not have permitted Rex to cherry-pick at the worst time for existing airlines in living memory. Time is needed for all airlines to recover and profitability is required as part of that. Importantly, any profit impacts on existing airlines due to the Rex cherry pick will impact on regional areas – have no doubt about that. How will they be able to offer more competitive fares on intrastate WA routes in for example, when they have to fend of the challenge from Rex on the Golden Triangle? Secondly, VA is often criticized for it’s financial situation previous to collapse in 2020. Mr Sharp mentions this here using the term “basket case.” Sure, when Ansett collapsed, Virgin Blue had a free kick and benefited from that. However, the growth from being a LCC to a full-service airline required vision and came with some definite risks – having a huge established, aggressive competitor did not make it easy either. John Borghetti took advantage of the mining boom years, was innovative and made a great success of the airline – it became second to none. The LA Route with the 777 equipment was highly regarded as was the introduction of the A330s East West. Clearly routes to Hong Kong and Japan foundered in 2019/20 due to unforeseen circumstances. Covid was also unforeseeable but the Company still had a sound backbone – the 737 fleet (plus the former Skywest F100s in WA) and Bain were able to pare back to that and can build from there. The Aviation business is not easy, competition can be good and verbal stoushes make for good publicity – but give credit where credit s due!

  • Rod Pickin

    says:

    Seriously, if anyone out there in aviation world believes that OZ can support 4 main line/triangle airline ops they should seek urgent help. I feel sorry for Rex, I believe that they committed themselves far too early and I wonder just how much their friends and bankers in high places can tolerate that situation. Their published schedule will make interesting study and you can expect that QFA and JST will smother the routes with aircraft galore; – based on their performance to date, I would expect VOZ to adopt a more conservative strategy but unfortunately, I feel that there will be a victim here feeding another frenzy amongst the financial administration fraternity. Its great having a free market etc etc etc but if ever there was a case for serious regulation in business, look no further than aviation. The complete industry needs to be managed to best serve all parties and for once, what about the customer?, in particular the masses down the back of the bus; – without them you don’t have a business.

  • Peter

    says:

    So Sharp thinks QF is a ‘600 pound gorilla? Very stupid of him to talk of our National Carrier & its’ CEO, in such a way.
    Just wait until Rex starts on the ‘golden triangle’, & QF will probably come down on Rex like a ton of bricks!
    Then Sharp will know of QF’s real weight!

  • Hugh jackman

    says:

    Rex seem to be offering full service so you have to add plenty of $$ to the jetstar prices to compare.
    Their product seems to be more like Qantas or Virgin. I can see why Joyce is agitated.

    • Murray

      says:

      Rex is going to operate as a ‘hybrid’, same model as Virgin.
      QANTAS is a Full Service airline, & there’s a ‘chalk & cheese’ difference between the two types.

      • shfgh

        says:

        ‘chalk and cheese’?

        Where’s the big difference? When I’ve flown on economy it’s the same sort of terminal and waiting area. The same sort of plane. The same sort of seat. The same sort of service. The only difference I’ve noticed is that with Qantas you get given a tiny hot meal that is comparable to a microwave dinner and some tiny drinks and snacks comparable to what you could grab in the ‘free food for kids’ section in Coles/Woolworths. Worth basically nothing and definitely not worth the premium price for Qantas fares.

        If it were a ‘chalk and cheese’ difference, it’d be something like a luxury armchair seat with stacks of space, personal butler, multiple course banquet meal, limo transfers etc.

        • Murray

          says:

          Oh dear! I’ve obviously been ‘spoilt’ in my travels’ on QANTAS!
          Enjoying J or P class, with very comfy seating, heaps of legroom, important when one is 6’5” tall, being attended by an FSD or Head Purser, fabulous quality multi-choice in-flight menu, & chauffeur driven to/from Airports’.
          You should try it sometime!

  • Peter

    says:

    So sad for all the anti Rex contingent.
    I knew they could and would. Go Rex .

  • Chris

    says:

    John Sharp is all bluster. REX will be up against it and he knows it. History proves that 3 full service airlines won’t work in Australia in the long term.

  • Ben

    says:

    John Sharp needs to work out which story he’s actually using and stick to it! How is it that when it comes to QLink competing with Rex they are a bully that is trying to capacity dump… But when you are entering the most competative route triangle in the country you are all too keen to take on the big guy??

    Joyce isn’t scared mate… you have three aircraft and one route (maybe two soon)… all that is required is for another outbreak at either end and the border closures that follow and bye bye. QF has their entire network to help keep the lights on in that scenario.

    Getting tired of Rex crying wolf at every turn…. did John Sharp not read that story?

  • BANKS

    says:

    Rex better factor in the cost of leasing a seventh aircraft to fly their ego around…

    • Vannus

      says:

      Touché, Banks! 💖 it!

  • Warwick

    says:

    Sharp, being an ex-pollie, doesn’t realise that EVERY time he opens his mouth, & especially to denigrate QANTAS & its’ CEO, Mr Alan Joyce, he’s losing customers’.
    The QF supporters’ in this Country, of which there’re millions’, has lost interest in Rex since last March, when he said he wouldn’t fly covid tests, unless he got multi $$$$$$ from the Fed Govt. With that money he bought second-hand aircraft.
    This guy’s certainly not the ‘sharpest’ tool in the shed, by his latest temper-tantrums’, & he’s dancing to his Singaporean owners’.
    Quite a few airlines’ have taken on QANTAS, & lost.
    The same will probably happen to Sharp, & Rex.

  • Chris

    says:

    Funny that John Sharp when he was transport minister sat on his hands for years while Bryan Greys Aussie airlines fought tooth and nail against Qantas and ansett to get terminal access, but now he can cash in he is very keen to get access, unbelievable . He should be ashamed

  • Fiona

    says:

    QF will start by placing Dash 8 aircraft on REX routes to show its dominance. Rex will pull out just like with the Merimbula service.
    Then Qf will drop Jetstar fares to wipe out REX.
    Sharp will cry for more help but unfortunately won’t be heard. I give REX 6 months to a year before ending the jet routes

    • Warwick

      says:

      Hi Fiona……
      I agree with your ‘prophetic’ words, that’s for sure!
      Rex/Sharp haven’t done any homework on QF, or they’d stay well away from trying to take them on.
      Australia is littered with ‘dead’ airlines’, who’ve tried, & failed.
      Rex will be the next one, even with all the multi-millions’$$$$ Mc Cormack gave them.

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