Rex delivered an ultimatum to the government on Monday morning: underwrite our losses by the end of the week, or we’ll cut most of our services.
Following an emergency board meeting on Sunday, Regional Express stated it would shut down its “expansive regular public transport” air services in all states except Queensland from 6 April.
However, in only the second sentence of the statement outlining the action, Rex said it would make the cuts “unless the federal and state governments are willing to underwrite the losses”. It then added that “local councils are also a true disappointment”.
The cuts will not include Ambulance Victoria fixed-wing air ambulance services, charter contracts with mining companies, freight services and pilot training at its pilot academies in Victoria and NSW.
Rex’s deputy chairman, John Sharp, said the previous package of help was not enough.
Sharp said, “The federal government has acted swiftly by promising a rescue package to the airlines of $715 million.
“However, the direct benefit to Rex from this package is only $1 million a month, which is grossly insufficient to cover the $10 million a month we expect to lose running the heavily reduced schedule we announced last week.”
Rex said it is seeking a rescue package similar to what has been promised in the US, which, the business says, would amount to 20 per cent of one year’s worth of revenue.
“Australia’s total airline revenue is $23 billion, indicating that an equivalent effort in Australia would require a rescue package in the order of $4.6 billion instead of the $715 million proposed,” said Sharp.
The deputy chairman finished by speaking up the importance of regional air services and attacking the government and local councils for their failure to act.
Sharp said, “State and local governments should be leading the charge in extreme times like these to assist regional carriers rather than leaving it to the federal government. So far the state governments have not tabled any concrete proposals although their latest decisions of closing the borders and lockdowns will simply further decimate what remains of regional air travellers.
“Local councils are also a true disappointment, with only two councils having proposed any meaningful assistance for Rex.
“If an assistance package of sufficient magnitude and viability can be negotiated by the end of the week, Rex may be able to reconsider its plans to suspend services.
“Failure to achieve any traction in this regard will see regional communities lose their air services for many months ahead and even after this is all over, we are afraid that some of the more marginal communities will no longer have an air service.”