Rex Airlines collapse would cut off regional NSW communities

The collapse of Rex Airlines would be “catastrophic” for regional NSW with towns isolated and others at the mercy of skyrocketing ticket prices.

The collapse of Rex Airlines would be “catastrophic” for regional NSW with towns isolated and others at the mercy of skyrocketing ticket prices.

Rex called in administrators from Ernst & Young who moved quickly to wind up its capital city routes including between Sydney and Melbourne and axe more than 600 staff.

EY partner Sam Freeman said the “priority” was to keep regional routes flying.

“[We’ve] been able to secure funding to enable us to see those regional operations continue through the period of administration, while we undertake a restructure and seek interest in the company to take that forward,” he said.

Federal Transport Minister Catherine King has vowed the government will work closely with administrators “to ensure a strong regional aviation presence in the future.”

Rex Airlines called in administrators earlier this week. Picture: William West/AFP

Federal opposition transport spokeswoman Bridget McKenzie warned failure to keep Rex in the air would cut off vital services including for medical specialists and patients who rely on the regional carrier.

“Local communities are concerned because if Rex fails it will be catastrophic for the regions,” she said.

And she warned that losing Rex would pave the way for Qantas to have a monopoly in many towns and pump up ticket prices.

“Everybody knows that when Rex enters a market and provides an opposition for Qantas prices go down,” she said.

About 600 staff will lose their jobs.

NSW Nationals leader Dugald Saunders said that although regional flights were continuing as normal people across regional NSW were “very concerned” about the future of the airline.

“There are several places such as Parkes, Moruya, Broken Hill and Narrandera who have no alternative airline and would be forced to drive for hours if it fails,” he said.

Virgin Australia quickly stepped in to offer seats to passengers whose flights were cancelled by the immediate grounding of Rex’s three capital city route Boeing 737’s. It is expected to take over the three jets.

Virgin’s chief executive Jayne Hrdlicka the airline was doing everything it could to support the regional business into the future.

“We are keen to make sure that Rex is successful,” she said. “Their regional business has such a vital role to play in regional communities across this country. It has for a long, long time.”

But she ruled out taking on Rex’s regional operations. “We are very efficient in operating our 737s, and we intend to stick to our knitting,” Ms Hrdlicka said.

The collapse of Rex Airlines has been described as “catastrophic” for regional communities. Picture: NewsWire / Jeremy Piper

One of the biggest hurdles the administrators face in keeping Rex running and finding more cash from existing investors and other parties is its ageing fleet of Saab 340 turboprop planes.

Currently, 25 of the 57 Saabs used to provide vital connections throughout Australia, are parked at airports, awaiting engine or other parts and maintenance.

Any buyer will have to be prepared to fork out for extensive maintenance on the more than 30-year-old Saabs or invest in replacement aircraft.

Central Queensland University aviation lecturer Doug Drury said to have so many aircraft parked was an unsustainable situation.

“Twenty-five aeroplanes on the ground is money out the window,” said Professor Drury.

“If they’re taking parts off one to keep another floating, something is definitely amiss.”

He said maintenance on turboprops was expensive, and the conditions involved in regional flying typically meant more work was needed on aircraft than jets operating city routes.

“Flying to regional airports is challenging because the landing areas are a bit shorter so you’re harder on the brakes, and you can get a lot of sand particles, dust blowing in from the Simpson that can get into the engine,” Professor Drury said.

“They’re hard to maintain in those environments, but it makes more financial sense to spend the money and get them back in the sky which is the only place they’re going to generate revenue.”