By Natassia Chrysanthos and Mike Foley
The Albanese government is preparing to buy beleaguered Rex Airlines if it cannot entice private buyers to resuscitate the regional carrier’s services, potentially saddling taxpayers with the company’s $500 million debt.
The move would make it the first Australian government to own an airline since Qantas was privatised in the 1990s, and follows the $80 million lifeline that Labor gave Rex last November to keep it operating regional flights until July 2025.
While the airline’s woes are largely of its own making, regional Australia’s reliance on Rex makes it a politically sensitive issue coming into this year’s election.Credit: Jeremy Piper
“Regional Australians deserve access to quality and crucial regional aviation services,” Prime Minister Anthony Albanese said in a statement on Tuesday night. “Regional Australians can be assured that our government will continue to fight to ensure these regional airfares remain available.”
Rex is a crucial service for many regional and remote Australians, operating routes that other commercial airlines don’t fly, such as Parkes to Sydney in NSW, Mildura to Melbourne in Victoria, and Mount Isa to Cairns in Queensland.
But the airline entered administration in July 2024 following its botched attempt to expand into capital city routes during 2021. Rex and four directors are also being sued by ASIC for misleading and deceiving investors about its profitability.
The company’s administrators have revealed Rex has a $500 million debt to its 4800 creditors. The government already bought $50 million of this debt back from Rex’s largest creditor in January.
While the airline’s woes are largely of its own making, regional Australia’s reliance on Rex makes it a politically sensitive issue coming into this year’s election. The Albanese government will spruik its lifeline to Rex as evidence of its commitment to regional Australians, challenging Peter Dutton’s Coalition to back its plan.
Dutton in January said the Coalition “would be happy to support the government [in] a bipartisan way to see Rex Airlines fly again”, while Nationals leader David Littleproud in November welcomed “anything that’s going to keep Rex in the air and give confidence until it’s sorted in totality”.
The Albanese government says it wants to help Rex’s administrators secure a sale, and is negotiating with shortlisted bidders on how the Commonwealth could support them to land a successful deal.
It said any government support would require the potential buyer to agree to provide ongoing and reasonable levels of service to regional and remote communities, as well as provide value for money to taxpayers and demonstrate good governance.
But if a private sale fails, the federal government will consider acquiring Rex itself. “The government is not a bidder in the upcoming sale process and would like to see a successful market-led outcome,” a government statement said.
“However, in the event there is no sale, the Albanese government will undertake necessary work, in consultation with relevant state governments, on contingency options, including preparations necessary for potential Commonwealth acquisition.”
Transport Minister Catherine King said governments had a role to play when markets failed in regional communities, “to ensure people do not miss out on opportunities, education and critical connections”.
The government will also waive the “use it or lose it” test for Rex’s regional flight slots at Sydney Airport until October 2026. Other carriers must use at least 80 per cent of their slots or relinquish them to other airlines.
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