Regional towns fear loss of Rex flights as airline goes into administration
Regional towns fear they will lose services, tourists and workers if Rex Airlines is grounded, as the nation’s third biggest airline went into voluntary administration on Tuesday night.
Regional towns fear they will lose services, tourists and workers if Rex Airlines is grounded, as the nation’s third biggest airline went into voluntary administration on Tuesday night.
Ernst and Young were brought as administrators of parent group Regional Express Holdings late on Tuesday night, after a Rex trading holt on Monday shook the aviation sector.
Regional flights will still operate, but Rex’s capital cities flights will be cancelled and Virgin has offered to cover flights for those passengers affected.
“Virgin Australia has made an offer for Rex customers with an existing ticket on a flight cancelled due to the administration process the opportunity to transfer their ticket free of charge to the 13 overlapping Virgin Australia services,” EY said in a statement late on Tuesday.
“Rex and Virgin Australia are also exploring opportunities to support regional customers, which include Virgin Australia selling Rex’s regional services through codeshare or interline arrangements, and making Velocity Frequent Flyer benefits available to Rex’s regional customers.”
The airline flies dozens of routes across the continent that are not serviced by other carriers, piggybacking freight on to passenger flights and delivering an essential service to towns scattered throughout outback Australia.
ASX-listed Rex was put into a trading halt until Wednesday amid concerns the airline is on the brink of collapse after its costly expansion into major city routes. The board met on Tuesday and agreed to go into administration.
Customers were still able to book flights on Rex services for regional destinations on Tuesday, but community leaders were anxious about what the carrier’s future would hold.
Shaun Radnedge, mayor of Murweh Shire in southwestern Queensland, said Rex played a vital role in providing connectivity with the rest of the country.
About 12 Rex flights touch down in Charleville every week on a milk run from Brisbane to Birdsville, bringing locals returning from a trip to the city, workers, government agents, tourists, mail and supplies.
Many of the passengers rely on the airline, which operates subsidised trips in partnership with the Queensland government, to take them to medical appointments in Brisbane or Toowoomba.
Like many councils in western Queensland, Murweh Shire has a partnership with Rex to provide cheaper fares for residents and guarantee regular flights.
The council itself relies on the airline to bring in accountants and other key workers who are not based in Charleville.
“As far as our rural communities go, this air contract to bring people to communities is our lifeblood,” Mr Radnedge said.
“It offers us opportunities not only for work, but medical transport and things like that. It is a vital service.
“There are definitely concerns, especially when it’s a company that has a very important contract that runs into our communities.
“We’ve had conversations with the contractor and we’ve got to sit and hold and see how things play out.”
It’s a similar story in the central West Australian town of Carnarvon, 900km north of Perth, where a nine-hour drive can be shortened to a flight of one hour and 45 minutes.
Merome Beard, who represents the electoral district of North West Central for the Liberal Party in the West Australian parliament, said her office had been inundated with calls from community members worried about the fate of the airline.
“It’s critical, absolutely crucial for lots of reasons,” Ms Beard said.
“With limited health services locally, people travel all the time for health, business meetings and also for family and socialising. Not everyone is in a state where they can travel (by car).”
Ms Beard said Rex’s troubles had highlighted vulnerabilities in regional areas that had been subjected to years of diminishing access to important services, including healthcare.
“Regional health services have been depleted and that has exacerbated the need for air services,” she said.
“It’s connectivity. It’s a necessity in the regions. It affects future economic development as well. Without air services it makes it hard to bring new people and businesses to the area.”
Tourism towns around Shark Bay are also reliant on Rex services to carry visitors, while agricultural businesses around Carnarvon need the flights to bring in agronomists, valuers and other specialist workers not based in the region.
Rex flights also deliver boarding students to and from school in the south.
“It would be catastrophic without an air service,” Ms Beard said.
“We need the government to have a plan in place to provide continuity of service.
“There’s a lot of anxiety in the community at the moment and they're looking for certainty around services going forward.”
Rex flights are a mainstay of Mornington Island, in the Gulf of Carpentaria, where planes arrive daily from Cairns and Mount Isa. They’re so popular, that locals book travel weeks in advance to make sure they get a seat. Aside from chartering a private boat or plane, the Rex flights are the only way on or off the island, which is home to about 1100 people, and services are regularly booked out.
Doctors, nurses, school teachers, police officers, government agents and construction workers rely on Rex flights to get to and from the island.
Mornington Island resident Kyle Yanner said the loss of subsidised routes would be a “massive” blow to the community.
“Rex have done well for many years now,” Mr Yanner said.
“They’re reliable and on-time and have offered a great service. The only criticism was that they didn’t have enough flights.
“I think the government should further support Rex. I don’t know how the government would roll out its (subsidised) fare scheme if Rex does go bust.”
Mount Isa-based crossbench MP Robbie Katter said the potential loss of the carrier was a “scary” prospect.
“There are other providers who could potentially do that job in the long term, but in the short term it’s a bit scary because we critically rely on connectivity for so many services that have been removed from remote areas, which is why they have subsidised, regulated routes,” the Katter’s Australian Party MP said.
Rex is expected to make an announcement on Wednesday and the Albanese government has “contingencies in place” to ensure airlines continued to service regional areas.
Transport Minister Catherine King told the ABC: “We think Rex is a pretty important part of the Australian aviation industry and stand ready to work with them to see whether there’s any assistance or anything the Government needs to do. “We think very clearly it’s important to keep regional aviation and regional connectivity.”
Starting out as a purely regional airline, Rex expanded into domestic services in competition with Qantas, Virgin and Jetstar during the Covid pandemic when it leased nine Boeing 737s.
The expansion has been blamed for the company’s decline.
Rex’s most recent results for the six months to December 2023, showed its regular public transport operations had lost more than $25m, or almost $1m a week.
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