Question everyone asking about this airline

If the airline scraps its routes to these parts of Australia, the country’s aviation and tourism industry won’t be the same.

Rex Airlines scrapped flights between major cities using the Boeing 737 after it entered voluntary administration amid financial difficulties earlier this week.

However, while regional flights using Saab 340 planes are continuing to operate, a Queensland mayor has asked the question: “For how long?”.

“I’m pleased that Rex Airlines has today confirmed that we will have continuation of our regional service, but you have to ask: for how long?” Flinders Shire Mayor Kate Peddle said in a statement on Wednesday.

She said the timing of the potential closure of the regional airline came at a “crucial juncture” for northwest Queensland.

Rex’s fleet of Boeing 737 jets, which provide services between the major capital city airports, have all been grounded. Picture: Picture Ryan Pierse/Getty Images

Rex Airlines destinations from Townsville include Cairns, Doomadgee, Hughenden and Julia Creek.

“As we prepare to welcome a significant influx of workers for the CopperString transmission line project, our community faces an alarming challenge – the potential closure of a vital regional airline service,” Ms Peddle said.

She said the project was poised to transform the region, with significant investment in airport expansions and accommodation for the influx of workers.

“Now we are confronted with the prospect of losing our only air service – a critical lifeline for our growing community,” she said.

Its Saab 340B aircraft continue to service regional Australia – but some, including Flinders Shire Mayor Kate Peddle, have questioned ‘for how long’. Picture: William WEST / AFP

Ms Peddle said it was crucial for the government to support regional Queensland, saying the loss of Rex Airlines across regional communities “would be astronomical”.

“The adage ‘build it and they will come’ has rung true – we’re building the infrastructure and the workers are arriving (but) now face the stark reality of potentially having no planes to bring them here.”

She wants the government to provide sustainable support for a regional airline service.

“Our community’s growth and self-sufficiency depend on it. It’s time for decisive action to ensure our region’s progress and prosperity.”

Tourism experts say the risk of an Australian airline duopoly is a real one for regional tourism – and agreed additional government support will be essential for operators should flights wind up completely.

Dr Paul Strickland, senior lecturer of tourism, hospitality and event management at La Trobe business school, described the situation as “devastating” should Rex have to pull the plug on its regional services.

While regional flights are continuing to operate for now, David Anderson, CEO of Big Red Group, argues that the risk of an Australian airline duopoly is a real one for regional tourism.

“I don’t think the government will allow that to happen – they will bail them out … it’s in the best interest of everyone to keep them flying to regional and rural areas.”

He said not only from a tourism standpoint but to also to allow for access to education facilities and hospitals.

“We might have to look at other ways – trains need to be more invested in and making driving more affordable as well.”

David Anderson, CEO at Big Red Group, said Rex’s downfall could significantly impact Australia’s regional tourism industry.

He told news.com.au regional tourism economies rely heavily on visitor spending, and the reduction in tourist numbers can deprive these regions of essential revenue and diminish opportunities for cultural exchange.

“If flights wind up completely, additional government support will be crucial for regional operators,” he said.

“Many regional governments are investing in tourism to boost local economies, but if domestic travellers are unable to access these regions due to reduced flight options or high airfares, these investments could go to waste.”

The Australian regional airline Rex cancelled flights as it entered voluntary administration on July 31, leaving the fate of the country's third-largest carrier in serious doubt. Picture: William WEST / AFP

He explained the solution is in targeted support from the government, such as subsidies for regional airlines or incentives to maintain flight routes.

Mr Anderson said while it’s reassuring that Virgin and Qantas are stepping in to cover some of Rex’s routes, this short-term solution may not be sustainable in the long run.

“With demand likely to exceed the availability of flights, we can expect a significant increase in airfares across the board.”

He said for regional operators, this situation would be particularly detrimental.

“Higher airfares could lead to a decrease in travel spending, as many travellers may prioritise covering the cost of their flight over spending money at regional businesses.”

He said some potential visitors might forgo their trips altogether due to the increased cost or reduced flight options.

“This decline in tourism could result in diminished or extinguished business for regional operators, which are typically family-owned or small in nature.”

A map of the airline’s routes with the orange line representing regional routes.

Rex beat big hitters in reliability

Rex is the third largest airline in Australia and just two months before it entered voluntary administration with the grounding of its larger Boeing 737 aircraft, it toppled both Qantas and Virgin to be the most reliable major airline in Australia.

According to the latest Bureau of Infrastructure and Transport Research Economics (BITRE) figures, it had a near perfect cancellation rate, and beat the major two in on-time performance.

Data showed more than 99 per cent of all Rex scheduled domestic flights took to the skies in May, with the airline cancelling just 0.6 per cent of its Boeing 737 services during the latest reporting period.

Just two months before entering voluntary administration, the latest BITRE figures revealed more than 99 per cent of all Rex scheduled domestic flights took to the skies in May, beating Qantas and Virgin. Picture: NewsWire / Jeremy Piper

It was the same for its on time departure rate of 85.5 per cent, ahead of Virgin on 79.2 per cent and Qantas on 81.1 per cent.

Close to 83 per cent of Rex domestic flights arrived on time, compared to 77.9 per cent at Virgin and 79.5 per cent at Qantas.

When Australia was still in the midst of the pandemic and Virgin’s future was looking shaky, Rex made a bold attempt to expand.

It entered the most profitable – and most competitive – markets for air travel launching flights between the major capital cities.

With only smaller turboprop planes, Rex leased former Virgin Australia 737s to take on both Virgin and Qantas.

But with fewer frequencies, lower brand recognition and two formidable competitors, Rex struggled.

PM hits out at Rex

Prime Minister Anthony Albanese hit out at endangered airline Rex, saying the regional carrier should not have tried to break into the lucrative city routes.

He also deflected criticism that his government’s perceived lack of action on improved access to slots at Sydney airport was part of the problem for Rex.

PM Anthony Albanese hit out at the regional carrier saying it should not have tried to break into the lucrative city routes. Picture: NewsWire / Jeremy Piper

“There are a range of issues relating to Rex. One is that a regional airline made decisions to invest in routes that they hadn’t previously gone in,” Mr Albanese told reporters on Thursday.

“Sydney to Melbourne is not a regional route. It is one of the top-10 routes in the world and at various stages has been literally No. 1 in the world.

“It is a tough industry, aviation.”

Speaking in Sydney on Wednesday, TWU National Secretary Michael Kaine took aim at Qantas – saying the “vicious, hyper-competitive and unregulated market” has allowed “an immoral Qantas to dominate at the expense of workers and the community”.

“This is a cut throat industry,” Mr Kaine said.

“We know the perpetrator of that cutthroat competition in large measure is Qantas. If any company tries to do the right thing by the Australian community, and enter in to any of these more profitable lines in our community … we know what happens.”

He said Qantas exerts commercial pressure, deploys commercial pressure on these companies to get their heads pulled in.

“We saw that with Bonza and we have seen it again here with Rex.”

Meanwhile, a spokesperson for Ernst and Young who have been appointed as administrators, said “the aim was to restructure the business so it can continue to service regional Australia”.

The spokesman said in the coming days there would be “further statements made about who is impacted and what it is going to take to turn things around”.