REX Airlines (ASX:REX) share price flies as promotional fares go on sale

The Regional Express Holdings Ltd (ASX: REX) share price is soaring today on news the airline will start its Sydney-Melbourne route in March 2021, with promotional fares going on sale starting today. 

At the time of writing, the Rex share price has risen 3.25% to $1.595.

Rex opens up Golden Triangle route

Rex announced yesterday that its first 3 Boeing 737-800s would take off between Sydney and Melbourne on 1 March 2021.

To celebrate the launch of that route, the company is offering 100,000 promotional fares, available today. The special fare price for the Sydney-Melbourne service will start at $79 from 2 December 2020, for travel within 12 months.

The regional airline is also expanding its service to include Brisbane, taking on the major airlines head-to-head on the so-called ‘golden triangle’ of Sydney-Melbourne-Brisbane. The routes are collectively known as ‘the golden triangle’ as they are the busiest domestic routes in Australia. 

Rex plans to deploy its other two Boeing 737-800 jets to expand that service to Brisbane by Easter.

The airline says it will offer all the usual perks of a full service carrier including 8 business class seats. All fares include checked baggage allowance, food, pre-assigned seating and online check-in.

Lounge access and on-board Wi-Fi will be free for business class, whilst economy passengers can access these options for a small fee.

Competition heats up for low-cost carriers

The new routes will pit Rex’s business head-to-head with other low-cost airlines operating the domestic route.

Rex’s prices are cheaper than a Virgin Airlines (which is currently delisted from the ASX) flight at a similar time slot. The prices are more in line with Qantas Airways Limited (ASX: QAN)’s budget offshoot Jetstar, which  announced ‘the biggest airfare sale of the year’ two weeks ago. Jetstar’s popular ‘Return for Free’ sale went live on 17 November, with 400,000 return trips across 51 domestic routes up for grabs.

Rex’s new routes will also compete with the post-administration Virgin 2.0, which plans to target ‘value-conscious’ customers after a strategic review of its business-class offering, inflight Wi-Fi and entertainment.

About the Rex share price in 2020

The Rex share price has gained 35% this year. In March, the share price dropped more than 60% after the COVID-19 lockdown closed most of Australia’s state borders. The share price has since recovered to today’s level.

Rex was severely affected by the lockdowns and received $62 million in government aid. It also signed a deal with the private Asian investment company PAG for $150 million to fund its expansion, which could see PAG eventually own half of Rex.

Rex currently commands a market cap of $170 million.

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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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