Rex requested NSW re-regulate the state’s regional routes

Regional Express has already been the recipient of significant public assistance during the pandemic. The NSW government turned down its request last month.

Rex has recently abandoned some regional routes – as it pivots to competing with Qantas and Virgin on the highly-competitive Sydney, Melbourne and Brisbane flights. Picture: NCA NewsWire / Jeremy Piper

Regional Express, the recipient of significant public assistance during the Covid-19 pandemic, asked the NSW government to re-regulate country routes in the state.

But the airline – known as Rex – was ultimately knocked back by the government. The move would have required Rex, larger rival Qantas and other carriers to tender for various regional routes.

Rex has recently abandoned some regional routes – as it pivots to competing with Qantas and Virgin on the highly-competitive Sydney, Melbourne and Brisbane flights. It has also accused Qantas over anti-competitive behaviour, although the regulator last week found this was not the case.

The Australian has confirmed Rex deputy chairman John Sharp first approached the NSW Transport Minister, David Elliott, and later met with Regional Transport Minister Sam Farraway.

Rex deputy chairman John Sharp. Picture: Britta Campion

Mr Farraway said Rex had asked for the re-regulation of regional routes across NSW but he believed that was unnecessary.

“We have always supported our regional airlines which is why earlier this year we announced a multimillion-dollar assistance package for Rex airlines through our Jobs Plus program,” he said.

“(In addition) the government and Transport for NSW have offered support to Rex airlines to assist them with delivering key services in regional NSW to ensure frontline public services continue in those areas.”

The NSW government deregulated its intrastate air network in 2018 to “enable local councils to engage directly with airlines to help regional communities access the services they need”, Mr Farraway said.

However a Rex spokesman noted that two routes remained regulated, including Sydney to Lord Howe Island, and to Moree.

“The only airline that enjoys the benefit of regulated routes in NSW is Qantas,” he said.

Rex has received some $175m in government support through the pandemic, although much of that subsidy will end on June 30.

The discussions with NSW officials last month came as Rex explored ways to save a number of loss-making routes including Sydney to Bathurst, Lismore, Grafton, Cooma and Ballina.

In late May, Rex confirmed services to four of those routes would end by June 30, and flights to Ballina would cease on July 2.

NSW Regional Transport Minister Sam Farraway. Picture: NCA NewsWire / Christian Gilles

Although Rex previously blamed Qantas for unfairly adding capacity to the routes, the larger airline only flies one route being axed – Sydney-Ballina – along with Virgin Australia.

An Australian Competition and Consumer Commission investigation into allegations of “predatory behaviour” by Qantas found them to be baseless.

Rex operates six of seven regulated routes in Queensland. QantasLink operates one.

Despite the planned withdrawal from at least five regional routes in NSW, Rex is increasing frequency on nine others, including Sydney to Broken Hill, Wagga Wagga, Orange, Dubbo and Port Macquarie.

In a statement to the ASX on June 15, Rex general manager of network strategy Warwick Lodge said the airline would only operate to “densely patronised regional routes where the load factor and yields would be more favourable”.

At the height of the pandemic, Rex made the decision to expand into major city routes in competition with Qantas, Jetstar and Virgin Australia. A $150m investment by PAG Asia Capital funded the expansion that saw Rex lease ex-Virgin Boeing 737s to fly between Sydney, Melbourne and Brisbane as well as to the Gold Coast and Adelaide.

In February, the airline posted a $36.7m net loss for the first half of the 2022 financial year, 370 per cent worse than the previous corresponding period.

Rex has not offered guidance on the second half of the year.