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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.
Kerrti Joice
says:here in Moruya we rely on Rex for flights to Sydney, why not just reduce number of flights, eg during the day but maintain early morning and evening flights, we are already suffering because of lack of transport from the town, we hav found that when needing flights to Sydney in the morning and evening, flights are often booked out and have to leave a day or two early, adding expense of overnite accomodation. The closure of this route will force Moruya residents to drive the often dangerous roads to Canberra to access flights to Sydney and Melbourne. Please don’t do this to us!
Terry Jones
says:This is just sabre rattling by Rex!
As stated in Rex’s press release, Rex do not want to lose any of the Federal government contributions – whether warranted or not – as this will affect the bottom line.
Also, looking at the bottom line, the reported decrease in profit of 9.8% is a bit of creative accounting as you will find in a previous media release a few weeks back, Rex announced that it was purchasing outright several SAAB340B models it had been leasing. A quick look at the assets on hand since last year will show that the increase of approximately $6m in assets more than makes up for the 9.8% reduction in profit.
Another reason for the sabre rattling, which is exactly what they did last EBA negotiating season, is to try to spook the pilot body into accepting unfavorable employment terms in this round of negotiations.
Stuart Johnson
says:Rex are the only airline to service Merimbula, I have no information on the other routes but to see that service go would be quite sad. Me & my family travel there twice a year on this route and to see it go would be a great loss.