Regional Express (Rex) has revealed that it is considering pulling out from no fewer than seven routes in response to rising fuel prices and softening passenger demand.
Rex has identified Sydney-Taree; Sydney-Grafton; Sydney-Moruya; Sydney-Bathurst; Melbourne-Griffith; Melbourne-King Island; and Melbourne-Merimbula as markets it is considering withdrawing from, and says it has now begun briefing community stakeholders.
“The very high fuel price is making the situation quite untenable and all airlines are compelled to put in place rigorous measures to remain profitable,” executive chairman Lim Kim Hai said. “As foreshadowed in the earlier media release, the Rex board has carried out a review of its network and has identified a number of routes that may not be sustainable should the situation degrade further, especially in light of the federal government’s decision to significantly reduce its contributions to regional air services throughout Australia from 1 July 2012.”
Rex promises it will “provide ample notice when the final decision is made”.
The announcement came as Rex detailed its third quarter results for the current financial year, posting an unaudited group profit before tax of $15.7 million for the nine months ended March 31, a fall of 9.8 per cent compared to the same period last year. Group revenue increased by 2.8 per cent to $176.3 million. Capacity increased by 1.8 per cent, but passenger numbers fell by 2.8 per cent to 908,667.
“The operating environment is extremely challenging with fuel price in the third quarter almost 20 per cent higher than the previous period and with continued softening of passenger demand.” Lim said.