Virgin Australia has announced its intent take over three Boeing 737 aircraft from struggling regional carrier Rex Airlines. The move comes as Rex entered voluntary administration yesterday, grounding its entire fleet of nine Boeing 737s.
Under the announced move, Virgin Australia would take over the leases for three of the ground Rex fleet of 737-800 aircraft.
Rex’s regional operations using smaller Saab 340 turboprops will continue, according to the administrators.
However, the airline has suspended all domestic flights between major airports. Thousands of passengers have been left scrambling for alternative travel arrangements.
A Move to Alleviate Delivery Delays
The acquisition of three Boeing 737-800s is a strategic move for Virgin Australia. The airline, like others, has been experiencing delays in the delivery of its new 737 MAX 8 aircraft.
The move to acquire additional readily available aircraft will help Virgin to alleviate its current capacity constraints.
To ease the disruption for affected travelers, Virgin Australia is offering free re-bookings for Rex customers on equivalent Virgin Australia flights. The airline advises passengers with upcoming travel plans to contact them for assistance.
Domestic Wings Clipped
Rex Group had originally acquired the single aisle Boeing 737s in 2021, with a bold plan to capture 30% of the domestic market share.
Up to present date, Rex had established its jet fleet on 13 domestic routes, however load factors were low, with reports of 50-55% rates.
Many will argue of the woes of a duopoly in Australia’s domestic market. However, the fact is that, despite being a massively big continent, Australia has a relatively small population.
In very broad terms, the Australian domestic market just isn’t that big. Rex Airlines’ financial difficulties highlight the challenges faced in the Australian aviation industry.
The airline’s collapse comes just months after the demise of low-cost carrier Bonza. Industry experts are now raising concerns about the potential impact on airfares as competition diminishes.
As administrators Ernst & Young work to restructure Rex Airlines, the future of the regional carrier remains uncertain.
While the airline’s Saab 340 regional operations are expected to continue, the fate of at least part of its Boeing 737 fleet is now in the hands of Virgin Australia.
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