Regional Express, Deputy Chairman, Hon. John Sharp live in studio to talk new routes and Australia’s domestic market

Transcript

Peter Harbison:So a big welcome to CAPA Live for John Sharp, who's the Chairman of Rex Regional Airlines, Australian domestic operator, once regional but now very much a trunk operator. John, welcome to CAPA Live again. Thank you very much, Peter. Since we last talked, there have been some interesting developments. Things are moving in the market.

Hon. John Sharp AM:Yes, they certainly are. We've started our domestic service on the 1st of March between Sydney and Melbourne, and we're doing 7 returns a day Sydney-Melbourne and now doing it at $39, which is as low as you can ever go in that market. If you went any lower, Peter, you'd have to pay people to get on the plane. And we obviously expanded the network from Sydney-Melbourne up to the Gold Coast, from Melbourne and Sydney to Gold Coast, and Melbourne to Adelaide, and now just a couple of weeks ago from Sydney to Canberra.

Peter Harbison:So So the obvious question, John, is how's it going?

Hon. John Sharp AM:Peter, it's going surprisingly well. We, you know, I had expectations which were relatively low as to how we would go in the first, you know, 3 or 4 months, and I thought it would eventually, you know, block build its way up to something respectable, but we're doing better than that. The only route we want to do better on is Sydney-Melbourne. where our load factors, well, some flights were absolutely full, you know, beginning and end of the week, but in the middle of the week, middle of the day, our flights were not so full. And I read—

Peter Harbison:What does not so full mean?

Hon. John Sharp AM:Well, I've read Alan Joyce telling us that we've had as many as 20, or as few, I should say, as 20 passengers on some of our flights. But I say to people, well, I bet you can hop on a Qantas plane from time to time and you'll find 20 passengers on the flight as well. So it's not unique, but it's That's not what we want, and we want to fill those planes, and hence this new low, super low fare of $39, which also gives you a full-service, you know, experience for the passenger, is as good as you'll ever get.

Peter Harbison:Well, maybe not, who knows, the way things are going. But I mean, for that sort of price, you are getting a full-service operation. Right, which is encouraging. You don't have a frequent flyer program yet to sort of compare?

Hon. John Sharp AM:We don't. We have what some people might call a frequent flyer program, we call it Bizflyer, but it's inherited from our regional heritage and it's not really a proper frequent flyer program. We're developing one and we will have one, but it's probably the only thing that we miss when you offer a full-service experience for the passenger because We've got lounges, we've got, you know, free check-in luggage, 23 kilos for economy and obviously 32 for business. And we've got food on board, drink on board, all part of the ticket price. But we don't have a loyalty program that many passengers would expect.

Peter Harbison:Yeah. So that's coming?

Hon. John Sharp AM:It's coming. It's on its way.

Peter Harbison:So I guess I've actually checked online. There do seem to be quite a lot of these $39 fares around. How many are there? In the market, what sort of proportion?

Hon. John Sharp AM:I can't give you the exact proportion, but—

Peter Harbison:But you do know?

Hon. John Sharp AM:Well, I know enough to know that you can get a $39 fare on most seats on most flights. And we're not sort of, as I saw one commentator last night on the television who is an expert on what we do, I've never heard of the person before, but obviously know more about it than I do, telling us that there'd only be 2 or 3 seats on every plane that would be at $39. That's not the case. Most of the seats All of the flights, there'll be seats available at $39.

Peter Harbison:Yeah, I mean, I have checked that myself and I see that there are quite a lot of availability. What's interesting I find is that now you're doing a relatively large number of frequencies a day, 7 frequencies a day, you're starting to be matched on those services. And Virgin, for example, is matching your $39 fares at the same times you're flying, but not otherwise. They're doing $79 otherwise. And then in the background, we've got Jetstar who's Jetstar doesn't really even seem to be competing in that market. What's going on there? How do you see that from market dynamics?

Hon. John Sharp AM:Well, I think Jetstar sees itself as a different product to what we're offering. I mean, we're offering a full-service experience, they're not. You know, you've got to buy luggage to check in, you've got to buy food and drink on the plane, and almost just about everything you have to pay extra for. So I don't see them seeing themselves as a competitor to Rex, they see themselves as a a unique product in the marketplace, different to Virgin, different to Rex, and obviously different to the Qantas product. So I think they see themselves as riding above what we do. Virgin, of course, has come in and matched us at $39, but as you quite rightly point out, only on selected services, not on all. And Qantas has brought some of their prices down to try and get a better headline price so they can say, well, we're now $84, not Certainly not $39, but we're $84 and you should pay extra because we're Qantas and we're better. My proposition would be that Qantas is not actually better than us. I would suggest that our cabin product, Peter, is better than the Qantas product. I've been on— I've probably travelled thousands of times on a Qantas plane over the many years I've been flying and I know the Qantas product, I know our product and I would suggest to you that ours is better.

Peter Harbison:Are you still welcome in the Chairman's Club at Qantas?

Hon. John Sharp AM:Good question, actually, Peter, because I was kicked out some years ago. Years ago.

Peter Harbison:Misbehaviour?

Hon. John Sharp AM:Well, not so much misbehaviour in the Qantas Club, or the Chairman's Club, I should say, but outside of it. Because when Qantas was seeking to get the government to guarantee all of their debts, you remember when Joe Hockey was the Treasurer, Tony Abbott the Prime Minister, there was a suggestion that the Commonwealth would guarantee all of Qantas' debts. And I campaigned very heavily and aggressively against that and eventually persuaded the government that this was a really dumb idea. And in the end, Joe Hockey didn't agree with me, but Tony Abbott did. And thank goodness he was the Prime Minister, not Joe Hockey. So in the end, they didn't get their debts guaranteed. But at the end of that, I noticed that when I went to go to the Chairman's Club The next time that I was told my card had expired.

Peter Harbison:You really shot yourself in the foot.

Hon. John Sharp AM:Well, I did, I did. But to be fair to Alan, when I drew this to his attention a couple of years later, I was reinstated.

Peter Harbison:Oh, that's good to hear.

Hon. John Sharp AM:I was in the good books by that stage.

Peter Harbison:That's good to hear. Well, I hope you're staying there. Just in terms of market profile, I mean, your regional operations obviously had a lot of business and government travel. Are you seeing any of that coming across to your interstate routes, your jet routes?

Hon. John Sharp AM:Yeah, we are, Peter. We've, you know, we used to always say in the regional business, it's about a third, a third, a third. A third government business, a third medical, people travelling for medical reasons, be they doctors going out to the regions or people coming into the cities for doctors' appointments and hospital treatments. And the other third was sort of for friends and family leisure travel.

Peter Harbison:Yeah.

Hon. John Sharp AM:And so of that portion that is business, we see them connecting through because we now— so for example, if you live in Parkes or Bathurst or one of those places, you can get an absolutely fantastic price because we've actually reduced the price for travelling from both Parkes to Sydney where you connect into our Sydney-Melbourne flight. So you can get from Parkes to Melbourne at a really cheap price, and you only have to check in once and put your bag in once. And so that's now starting to feed into our domestic network, and that's quite a pleasing result. And we expect that to continue, and we expect it to grow as word of mouth gets around that, well, you know, hey, you can travel from Parkes to Melbourne with one check-in and one baggage check-in and at a really cheap price, cheaper than you can drive it.

Peter Harbison:Okay, so how's that working? You're actually selling one ticket or 2 tickets for those operations?

Hon. John Sharp AM:Well, we sell one ticket on 2 flights. So, you know, you check in at Parkes, check your bag in, and you go through Sydney, you stay in the sterile area, and you move across to another gate and you hop on our flight to Melbourne. And so, you know, it's only the one ticket, the one bag check-in. And we've tried to realign our flight schedules a bit so that the regionals come in in parallel or close to the domestic departures so that we can facilitate an easy transition from one to the other.

Peter Harbison:Becoming a real hub carrier.

Hon. John Sharp AM:Well, we are. It's all new to us, so we're all new experiences, but we're learning fast, and as we learn from these things, we try to improve.

Peter Harbison:Just on that, I mean, obviously hub carriers are pretty greedy when it comes to slots. How are things going with Sydney, particularly? Particularly with slots. Is that working out in your favour?

Hon. John Sharp AM:Well, we've got slots for the current period, which finishes in the end of October of this year, and then we have to reapply. We all have to reapply for slots from the end of October through to the end of March 2022. And so we've got adequate slots for what we hope to do now. We will put our hat in the ring for the next round of slots. We're all awaiting the review by Peter Harris of the slot system at Sydney Airport, and that I think will be the guide to what happens in the period post the end of October of this year. Peter Harris— I was the minister at the time when we developed the slot system for Sydney Airport, so sort of gave birth to this thing, and Peter Harris was the Deputy Secretary of the Department who actually wrote the legislation and made, you know, concepts into realities. And so there's no better person to review it. And we're waiting for that. Peter handed his review into the department at the end of January of this year. So we believe— we haven't seen it. There's no sign of it, but which makes me wonder what's going on. But I understand we'll see it fairly soon, and that'll give us the guidance for the future.

Peter Harbison:That's going to be interesting, isn't it? Because So many of the slots at peak hours, particularly in the morning, are taken up by international operations which don't exist anymore and probably won't in any serious way for at least another year. I mean, obviously they'll start ramping up. So we're looking at perhaps having that opportunity to keep those aside for a year for regional, for domestic and regional use. That wouldn't really though be adequate for you, would it? Because you'd want to be able to plan for the long term.

Hon. John Sharp AM:Well, I think, you know, obviously we want to plan for the long term, but you have to take things as they come. But you're right, the international slots, with the early morning ones particularly, are not going to be used. And obviously Tiger, that had a lot of slots into Sydney Airport, is not going to be using them because they don't exist anymore. They've got no planes, no passengers, no pilots, no crew, nobody. So, you know, you would say to yourself, logic tells you that The Tiger slots should go into the pool for others to draw on, and the slots that internationals would occupy normally should also go into the pool for others to draw upon. And when we set up the slot system for Sydney Airport, we had some 3 basic principles, or 4 basic principles perhaps. One was that it not be a barrier to competition, so the slots should not block others from entering the market into Sydney. The second was that the Commonwealth owned those slots and wasn't the airport, wasn't the airline, wasn't the town or the city, it was the Commonwealth. And the Commonwealth would deploy those slots to the national advantage. And the third thing was that you either used the slot or you lost it. And those were the basic principles that we put around the establishment of the slot scheme. So if you keep those principles, which I think Peter Harris will do in his review, then, you know, the government will want to ensure that there are slots for new entrants. And we would describe ourselves as a new entrant to the domestic market, and therefore there should be slots for us ongoing into the future, for here to eternity. And so we would think in, in, in the sort of the principles of things to be a guide, we will be given slots for as long as we need.

Peter Harbison:Right. So you've got how many aircraft operational now?

Hon. John Sharp AM:Well, we have 62 aircraft in our regional fleet, and we have 6 Boeing 737-800s, all of them ex-Virgin. And we're planning to bring another 4 737s, probably ex-Virgins as well, into our system over the next few months. And we see the demand for that. We see the need for that. Because we see opportunities to develop more routes in our network, but we really can't do that without those extra aircraft.

Peter Harbison:So, well, perhaps it's a bit long-term thinking what happens after that, but if you are planning slots, you've obviously got to be thinking long-term about route networks and how many aircraft you're going to have. But at the moment, you're still stuck on sort of a roundup of 10 jet aircraft by the end of this year?

Hon. John Sharp AM:Yeah, 10's the target for this year, but we've always said that we'll read it as it comes, and, you know, if we need to bring more in, we will. If we don't need to bring more in, we won't. We will grow as the market grows, and that's where our business model is much better than, say, Qantas or Virgin's, because they've already got a capacity, they've already got X number of aircraft, X number of people, and an infrastructure behind that. which the market hasn't grown to yet. And so we have that luxury of being able to grow as the market grows. So we'll never have a top-heavy operation. We'll always have just enough to do what's required, and we won't have that dead weight of cost to carry through our business. And of course, the other great advantage we have, Peter, is that we, we go to this without debt. We go to this having always been profitable. We're even profitable in the first half of this financial year. We We made a profit. Qantas made a loss of $1.47 billion statutory loss. Virgin, we expect, has made a loss. We saw what they did last financial year just the other day. We expect that's not going to change in a hurry, so they'll be making a loss. So we think we come into this in a much better position than Qantas or Virgin because we don't have a debt. We own everything. You know, we own all our buildings and everything. So we're in a really strong position financially. Because we don't have those extra costs that all the others have. I mean, Qantas has got a debt of around $7 billion gross debt. Virgin's got a debt, I read in the paper today, of $1.2 billion. So, you know, they've got a lot of lead weight in their saddlebags. We don't have any of that in our saddlebags.

Peter Harbison:But you're still the David against the Goliath and sort of the offspin of Goliath too. I mean, you're— it's even though you are in a strong position in your own little bubble, as it were, you are a much smaller player and therefore easier to be stamped on by the big guys.

Hon. John Sharp AM:Well, very true, very true. We are literally the underdog in this race. You know, we're obviously a lot smaller than Qantas, we're a lot smaller than Virgin. We are, you know, we always describe it being a bit like an ant dancing with an elephant, you know, one false step and you're squashed. So it's a little bit like that. But, you know, we've got this extraordinary advantage of having a low cost base, no debt, always been profitable. And as we like to say, just to stir things up a little bit, we like to say, if you compare Rex's accumulated profits over the last 12 years, they're greater than Qantas's accumulated profits. In fact, Qantas's accumulated profits over the last 12 years are actually a negative. They're at negative $1.8 billion.

Peter Harbison:Wow.

Hon. John Sharp AM:Billion. And so, you know, we, we would, we would say we've got this long history of being profitable. We're a low-cost base. We're pretty good at what we do. I mean, you know, without blowing our trumpet too much, you know, we've been a good operator. We know how to operate aircraft. We know how to run an airline. We know how to do it well and at a lower cost. So I think, you know, in this environment, Rex, whilst we are small, We're probably as best positioned as anybody could be to move into a market where you've— it's sort of David versus Goliath.

Peter Harbison:Yeah, you certainly— and timing obviously too is very good given all the array of different external features in aviation. What about the Saabs? I mean, they're pretty elderly. Are they a fixture in Australia for a long time? And let me just sort of add a rider to that too. You remember, and you certainly do remember because you were very much there, back when Jetstar and I think probably maybe even Virgin started operating Sydney to the Northern Rivers. This was a route that Rex Regional Express, as it was back then, was operating. And there was a lot of talk about, oh, they're going to send these 737s over the top and you'll be ruined. But in fact, what happened was it was leisure market stuff. It was coming in at lunchtime and going out at lunchtime, not business hours. And I remember from talking to Kim Hyatt way back then, it was actually very good for Rex. What— long, long, long preamble question— what sort of prospects are there of replacing some of your regional routes with the jet aircraft in the long term?

Hon. John Sharp AM:Well, we've got that opportunity to do so now. For example, if you treat Sydney to Canberra as a regional route, we're doing it with the Saab 340B. And the opportunity to bring a jet onto that service exists today. And so there's a good example of where we could do that. We're now flying Sydney-Coffs Harbour, Sydney-Port Macquarie, which we've done in the last 3 or 4 weeks. And you can see, particularly in the Coffs Harbour market, it's a big enough market where you could put a jet on at some point in the future. As to the question of the Saabs, I mean, we get asked this a lot because—

Peter Harbison:Of course.

Hon. John Sharp AM:Well, they're younger than you and I, Peter, but they've got a lot of life left in them like you and I. But they've been around a while, but they are the most brilliant aircraft at regional operations. They are very cost-effective. They're very strong, robust aircraft. You know, they'll put up with a lot, and they're brilliant for this regional operation, you know.

Peter Harbison:Yeah.

Hon. John Sharp AM:flights from 1 hour to 2 hours, sort of, you know, they're really good at that.

Peter Harbison:Mm-hmm.

Hon. John Sharp AM:And we're good at maintaining them and operating them. So probably we've got the largest fleet of these in the world, and we're probably the best people at operating and maintaining them. So theoretically, we could go another 10 or 15 years with the Saab because they've got enough life, legal life left in them to do that. But like all these things, it will come down to 2 things. It'll come down to the cost of maintaining them versus the cost of buying new ones. And the second part of it will be demand. If we actually find that these routes grow so much that we need to put on larger jet aircraft, then we will. But where, say, you'd mentioned the Northern Rivers, I mean, where the Saab works really well is we can do frequencies because it's a 34-seat aircraft.

Peter Harbison:Mm-hmm.

Hon. John Sharp AM:And a lot of these regional markets want frequencies. They want 3 return services a day so that a businessman can get the early flight in the morning—

Peter Harbison:Or woman.

Hon. John Sharp AM:Or woman, yes, correct. I'm sorry. And so you can get the 6:30 flight out of Grafton, for example, into Sydney and be in your business meeting by 8:30 in the morning in the city. And you can hop on the 1 o'clock departure back to Grafton and still put 2 or 3 hours into your office or your business at the end of that day. So it's a— that frequency is a real drawcard for the business market, not so much for the leisure market. And that's what the Saab offers, small, cost-effective flights that give frequency, and frequency gives convenience, and convenience brings more passengers.

Peter Harbison:Yeah. So if you can then aggregate that with the connectivity over the main— some of the main airports on the jet aircraft to go interstate, All those things sort of start to add up. Obviously, your yields are a whole lot higher, as are your costs on those routes. Are you getting enough support from the regional councils, the regional airports at a time like this?

Hon. John Sharp AM:Well, the regional airports are probably the biggest problem we have in all the things that we do, whether it be dealing with customers who are unhappy, dealing with different difficult staff, dealing with difficult unions, dealing with all sorts of other, you know, supply—

Peter Harbison:CASA.

Hon. John Sharp AM:CASA. Although I have to say CASA's, you know, got a lot better. You know, I've been involved with CASA for, you know, 35 years in different forms, and I have to say it's got a lot better, and we've got a new director, Pip Spence, who's moving in. But all of those pale into insignificance when compared with dealing with some of the local councils who own the airports that we fly to. Some of the councils are brilliant, and I always use Parks Council as the gold standard for councils who own regional airports. Absolutely brilliant council, do a great job. And others would drive you mad, completely insane. And in the past, you may have heard me complain about, say, Dubbo Council, for example, who sees the airport as a way of making super profits and funding other things that are the You know, the fancy of the mayor at the time, and because at the moment they've been talking about extending the runway, buying some more land, and putting in a longer runway so they can take Boeing 777s or aircraft of that type. Because as you would know, there's a long line of people wishing to fly direct from Abu Dhabi to Dubbo. But they seem to think that's the case, and so their charges that they impose on us are. And the future costs of what they do by gold-plating. And of course, when they gold-plate, they realise that nobody's going to fly internationally to Dubbo. So all that cost and infrastructure that they're putting in place ends up being carried by us as the only operator, or in the case of Dubbo, Qantas and ourselves, because we're the only 2 operators there.

Peter Harbison:At the same time, I mean, without taking those extremes, a lot of these airports as part of the The federal government's divestiture to local councils going back— was that under your watch or before you?

Hon. John Sharp AM:It started in 1989 under the Labor government. It was called the ALOP, and we supported it at the time. I was the shadow minister for transport at the time. And then when the coalition government got elected in 1996, we continued with it. So, for example, I think Wagga Airport was handed over during the coalition period. given to the council along with, I think, about $9 million in cash. All these airports were handed to local governments with a lump of cash to, if you like, put in trust to look after them. And of course, the local council took the money and spent it on something else and then went back to the Commonwealth.

Peter Harbison:Sorry, but is it time to go back and have a look at that? Because obviously a lot of councils are genuinely struggling.

Hon. John Sharp AM:Yes, they are. And look, some councils like, like, you know, Parkes, it's a, it's a loss leader for a council like Parkes, as it is for a lot of councils who own airports and they take a sensible view that, you know, they really have to have this as a loss leader like you have, you know, the local swimming pool or the library or the road into town. I mean, they don't put a toll on the road into town because they need people to come.

Peter Harbison:Yeah.

Hon. John Sharp AM:So they don't put a toll and just like the airport has to be one of those same sort of pieces of infrastructure essential to the local economy. So some of them genuinely do need help and, you know, I'd urge the Commonwealth to do that and to be fair to this government, They are helping some of these councils with their airports, but there are others like a Dubbo council who just see it as an opportunity to rape and pillage the airlines to try and get money for whatever other activities they have. And they even make profit, substantial profit, on the security charge that they impose on us, so that it's not just a cost recovery exercise, it's a profit-making exercise for them.

Peter Harbison:Right, well, we've bashed Dubbo to death, I think. And what about So we've talked about Sydney-Melbourne. What about Melbourne-Adelaide as a jet route? Which of the jet routes are performing best? The Gold Coast?

Hon. John Sharp AM:Well, Melbourne-Adelaide is performing really, really well, surprisingly well, I have to say. Our load factors are extraordinarily high. I was talking to—

Peter Harbison:What does that mean?

Hon. John Sharp AM:Well, without giving away information that I will get into trouble with ASIC if I do, but let me just I was talking to one of our pilots earlier this morning who says he's never done a flight between Melbourne and Adelaide or back the other way without 160 passengers on board the aircraft. It takes 165. So it gives you an idea of the load factors that we're getting on that from his anecdotal evidence that he gave me this morning when I was chatting to him in our gym in a feigned and failed attempt to lose weight.

Peter Harbison:Well, that's pretty encouraging. What about the other routes? I mean, Gold Coast, that's a competitive route.

Hon. John Sharp AM:Melbourne-Gold Coast is equally so. I mean, one thing about Melbourne is everyone seems to want to get out of it, and Melbourne-Gold Coast is going really, really well. Sydney-Gold Coast is doing not quite as well, but nearly as well. And, you know, in a way, the Sydney-Melbourne route for us is probably the one that doesn't give us the same load factors average load factors that we would like, and hence the $39 fare to try and fill those seats that we carry that are vacant.

Peter Harbison:Is the market coming back? I mean, these are really cheap fares. The only really cheaper fare you get is a free one, and then you have to sell out on ancillaries and so forth, which is not really where you're at at the moment. But is the demand overall, not just talking about Rex, is the demand overall as positive From talking to the other airlines, as you, I'm sure you do, is it as positive as you'd hoped, or is it still being held back by the fear of quarantining and this sort of issue? We've got one in Sydney at the moment.

Hon. John Sharp AM:Yeah, well, we have a body called Airlines for Australia and New Zealand, which Qantas, Virgin, Rex, and Air New Zealand are a part of, and we had our meeting just during the last couple of days, and each of us gives a little report on where the market's at, and all of us gave a report that says The market's growing and growing really strongly. Our experience is that that's definitely the case, both in our— well, we've really got very little history in the domestic market, but we've got a lot of history in the regional market, and the regional network is growing really strongly for us. So it's not back to pre-COVID, but it's not far off pre-COVID.

Peter Harbison:Still, what, 30%, 40% down though on pre-COVID?

Hon. John Sharp AM:It's still 30% to 40% down. In some states, it's not so in other states. I mean, for example, West Australia is amazing. It is nearly back to 100% of pre-COVID. Queensland is actually not quite as good as West Australia, but it's nearly as good. South Australia has really picked up in the last little while, and New South Wales and our Melbourne base, Victorian base, are probably on a par. Probably the the poorer performers of the various states. But, you know, we are seeing a substantial ramp-up in passenger numbers and our bookings are really growing. And obviously when we announced our $39 fare, it was the biggest day of sales we've ever had in the airline's nearly 70 years of history. It went berserk. So that was very pleasing. And interestingly enough, Peter, it didn't just go berserk on the Sydney-Melbourne, it actually had a knock-on effect on, you know, Melbourne to Gold Coast, Sydney to Gold Coast, Melbourne to Adelaide, Sydney to Canberra. All of them just increased the bookings in multiples. So it's been quite a pleasing result.

Peter Harbison:Well, I was going to ask you about that just in closing too. I mean, that when the low-cost carriers first burst on the scene, they didn't spend much on marketing. Their marketing was to throw cheap fares out in the market and suddenly everybody comes.

Hon. John Sharp AM:That's right.

Peter Harbison:So you're experiencing that same phenomenon because I think, I mean, outside of the regional routes, Rex really wasn't very well known. And, you know, they're going to be unreliable and new, they're not as good a product, all that sort of thing. But this has actually been very positive for you across the system.

Hon. John Sharp AM:It has, Peter. And, you know, Rex's brand is not a Qantas or a Virgin. It's not a household word. And but obviously it's very well known in the bush where, you know, we're as well known there as any other airline is, but not in the domestic capital city marketplace. So our way of marketing ourselves is just to give people a really good competitive price and a great experience in the cabin. And we're doing that. We're giving people a wonderful experience. I mean, we get so many compliments of our crews. So that's going very well. Even the food gets compliments.

Peter Harbison:Mm-hmm.

Hon. John Sharp AM:Because we've tried to put a lot of effort into that. You know, we've borrowed the CWA scone recipe and we're providing scones in business class, you'll be pleased to know.

Peter Harbison:Lamingtons?

Hon. John Sharp AM:No, but we're coming around to the lamingtons at some point, but we're using the CWA scone recipe for our business class passengers who come and get their morning tea or their afternoon tea on the flight. So we're trying to put a lot of effort into that side of it, and I think that's paying a dividend, but the experience is great, and we think that the best way to market Our main objective for ourselves is to do a good job in the cabin, give people a reliable, good experience, and have really good prices and let the word of mouth do the marketing for us. That's our main plan at this stage.

Peter Harbison:And the price.

Hon. John Sharp AM:And the price. The price is—

Peter Harbison:To get out there.

Hon. John Sharp AM:The price gets out there and once people— you know, you've got a lot of people, they're like my mother. My mother, you know, had the television station welded to the ABC. I don't think she was aware that there was a thing called Channel 7 or Channel 9 or Channel 10 or even the SBS. She always watched the ABC, and there are people like that with Qantas. I mean, some people, you know, if Qantas charged 100 times more than we did, they'd still fly Qantas because that's just the nature of that person. So we'll never attract those people, but there are people who will be attracted by low price, people who want to go on a bit of adventure, see what something is, see a new thing, see if it's different, see if it's better. And for those people, I think We'll capture them with these low prices, and I think we'll capture them forever because of our good cabin experience.

Peter Harbison:Well, I have to confess I haven't flown on Rex yet, but I shall certainly maybe even just pop down to Melbourne to try them out and come back straight away.

Hon. John Sharp AM:You should, Peter, because, you know, the frequencies are good, so the schedule's great, and the experience is good, so, and our prices are better than everybody else, and we don't charge anything extra once you get on the flight. So you should come with us, and I hope that we'll see you many times.

Peter Harbison:I hope so too, John, and hope to see you here with us again in the very near future. Thanks very much for coming on CAPA Live. Thank you very much. Great to see you and great talking. Thank you, John. Thank you.

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