Government accused of creating uneven playing field by throwing millions of dollars at Rex

Federal government help for Rex is creating an ‘uneven playing field’ for other regional operators struggling to have their voice heard.

Regional airlines have accused the federal government of creating an uneven playing field with its support for Rex, which continues to fly despite running up debts of $500m.

Since sinking into administration on July 30, Rex’s regional services have been maintained with the help of a government guarantee for passengers, and an $80m injection.

There have since been reports the government is also stepping into buy out creditor PAG Asia Capital, handing Canberra control over Rex and its fleet of ageing Saab 340s.

The extraordinary level of support for Rex has angered other regional carriers including Skytrans and Sharp Airlines, which have struggled to be heard by the government and Transport Minister Catherine King, despite offering to take over the failed airline’s routes.

Skytrans chief executive Alan Milne said it appeared the government was simply throwing “good money after bad”.

“Obviously most regional airlines are very worried as to what that means,” Mr Milne said.

“Will we be competing on a level playing field or will we be competing against a government owned entity?”

He said the Cairns-based Skytrans was in a “great position to expand and grow very quickly” with the availability of both aircraft and crew but Ms King appeared disinterested in discussing other options.

“We are in a position to help and to jump in and to just be ignored is a little strange,” Mr Milne said.

Skytrans CEO Alan Milne says they have the capacity to take over some of Rex’s routes. Picture: Brendan Radke

Regional Aviation Association of Australia CEO Rob Walker echoed those sentiments, describing the current situation as “extremely challenging”.

“There are other airlines out there that operate a similar type of aircraft (to Rex) and run a similar type of service in different parts of the country, and can offer a viable alternative on many of these routes,” Mr Walker said.

“It’s important our government engage with us, so we can put our case forward.”

He said it was encouraging the government had realised how valuable air services were to regional and remote communities and warned everyone was doing it tough.

“At this point the RAAA would like to remind government it needs to be a level playing field and all regional operators need to be given the same opportunity for financial assistance, if we’re going to continue to provide these regional services,” Mr Walker said.

As well as the financial help being provided to Rex in administration, there were concerns among other regional operators about how the airline’s poor behaviour would affect them in future.

Malcolm Sharp of Sharp Airlines said Rex had left a lot of regional airports out of pocket — which would ultimately come back to bite the airlines that continued to service them.

“All that money they haven’t paid to somewhere like King Island for landing taxes and fees, these small councils are going to come back in the next year or two and say we have insufficient funds for our CAPEX and then ramp up fees for other regional carriers,” Mr Sharp predicted.

Sharp Airlines owner and chief pilot Malcolm Sharp believes government support for Rex has created an uneven playing field. Picture: Stuart McEvoy

“We’re going to be the ones paying that debt back so whichever way you turn, there’s no easy way out of this.”

He also questioned the accountability for significant taxpayer support provided to Rex during the pandemic.

In mid-2020, the previous government gifted Rex a no-strings-attached payment of $52.9m in addition to various subsidies for continuing to fly.

The funds were believed to have helped Rex establish its major city operation — which ultimately led to the airline’s demise.

“I don’t know what they did with that money but it’s gone,” Mr Sharp said.

“We certainly didn’t get that balance sheet support.”

Ms King’s office did not respond to questions from The Australian.

It’s understood Mr Walker will meet with Ms King’s department on Friday after three previous meetings were rescheduled.

Originally published as Government accused of creating uneven playing field by throwing millions of dollars at Rex