Rex suspends all Queensland flights amid contract impasse

Days after a $298m rescue package for regional aviation, Regional Express says it will withdraw all services from Queensland.

Rex is now pulling out of government-subsidised flights in Queensland. Picture: AAP

Days after the federal government announced a $298m rescue package for regional aviation, Regional Express Airlines says it will withdraw all services from Queensland.

Affected flights will include five routes subsidised by the Queensland government to ensure connections for remote communities like Mornington Island, Windorah, Thargomindah and Boulia.

The airline’s move comes after Rex announced last week it would suspend all domestic services other than the government-sub­sidised Queensland flights, and indicated that regional airlines could collapse because of plunging demand amid the crippling coronavirus pandemic.

A statement to the ASX said Rex had made numerous appeals to the state government for further financial assistance, but none had been forthcoming.

“In the meantime, Rex’s financial position and cash flow has seen a further sharp degradation to the spectacular drop in patronage arising from travel being limited to essential travel only, as well as border control measures being implemented,” the statement said.

“While the federal government has announced several financial assistance packages for airlines, no concrete details have been forthcoming and, more importantly, not a single cent has been disbursed.”

On Monday, Rex applauded the regional aviation assistance package announced by Transport Minister Michael McCormack on Saturday. But on Tuesday Rex said a reduced schedule proposal had been rejected by Queensland.

The airline would therefore indefinitely cut flights to destinations such as Brisbane, Cairns, Longreach, Mount Isa, Townsville, Toowoomba and a host of smaller locations.

“With cash fast running out and no immediate prospect of a workable solution … Rex has no choice but to declare a force majeure event for the contract and suspend all services on Queensland regulated routes indefinitely until it has the ability to service the contract in a commercially viable manner,” it told the ASX.

Queensland Transport Minister Mark Bailey said the state already subsidised Rex flights to the value of more than $10m a year.

“We have been discussing options with Rex and other airlines over the past fortnight to keep services running in the face of near zero passenger demand,” he said. “I have asked the head of TransLink to reach out to Rex again today to urgently understand their position. I understand the Australian government has done the same.”

He said the state government would “co-ordinate char­ter flights as required to ensure food, medical supplies and travel for essential workers is maintained”.

Rex shares, which have almost halved since the COVID-19 onset, fell 19 per cent to 53.5c on Tuesday.