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Rex tells government: Bail us out, or we’ll cut services

written by Adam Thorn | March 23, 2020

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”.

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A file image of a Regional Express Saab 340B. (Dave Parer)
A file image of a Regional Express Saab 340B. (Dave Parer)

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.”

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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.

This chart, provided by Rex, shows the changes to its network.

“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.”

Steer your own in-flight experience – available on print and digital Whether our classic glossy magazine in your letterbox, daily news updates in your inbox, peeling back a few layers in the podcast or our monthly current affair reports, you can count on us to keep you up to date. Sign up today for just $99.95 for more exclusive offers here. Subscribe now at australianaviation.com.au.

38 Comments

  • john

    says:

    if we start bailing out airlines, we then to have to bail out everyone, which is impossible.

    Not sure why welfare recipients are getting gifts ? Sounds like bottle shops, drug dealers are going to do very well in the next few weeks.

    • Rick

      says:

      I guess someone needs to explain to you, if people are out of work then they can’t pay rent or buy food.
      I have three adult children & they have all been told to not come to work as their respective businesses have been told to close >>
      Perhaps you would prefer a system like the US where the queues to the gun shops are as long as our queues for the Centrelink?
      I imagine it will get far nastier over there than it will in Australia.
      Think it through John.

    • john

      says:

      your comments are with out foundation, your cheque for following the L.N.P/NAT party line is in the post, Do try to be a little bit compassionate, accurate and factual.

    • Yianni Johns

      says:

      What a stupid reply from an uneducated and uncaring fool. No apologies for my words but you should be apologising for your social ineptitudes and rudeness to people who are struggling, John.

    • Peter

      says:

      John is right in some sense in that those already long time unemployed before any of this see no change in their circumstances?

      It should not be a blanket approach but those who have been stood down without pay or sole trader/self employed/casual who are unable to earn a living should get additional support beyond the basic job seeker allowance (posh name for dole)

  • Nudge

    says:

    Hard to argue with that? Especially the size of the package, and that I doubt much will get to regionals. I imagine others like Fly Pelican are even more marginal.

    • David

      says:

      Nudge Rex said they would receive something in the order of 1 million dollars from the 715 million dollar package.

    • Hein Vandenbergh

      says:

      Hmm, local Councils have been a disappointment, huh? Well, here on the Far South Coast of NSW (REX destinations MIM and MYA) they have been financially shattered by the bushfires, with many roads, bridges and other infrastructure requiring rebuilding. Of course REX has a very long history of overextending itself and its aircraft by venturing into places Hazelton and Kendall left well alone, namely WA and QLD, and guess what? By holding out its hand for State subsidies (yes, they’re good at begging, not so good at making a commercial case for some routes), and then claiming they (sic) are providing a community service. Of course it’s the States providing that, not REX. So, how does the service fr MIM to SYD and MEL rate for REX? Not essential community services? You betcha they are: an example is the large number of aged residents requiring complex, tertiary medical care in metropolitan hospitals. REX walks away from those because Councils are a disappointment?? Guess who is the disappointment here? You guessed it. And, wasting resourses on tapping into unnecessarily competitive routes such as Byron or the Riverina without also dropping its fares on monopoly routes, which the essential services fr our region are? Naah, rip the && out of a long-suffering clientele. The Emperor has no clothes – if ever he had.

    • Hein Vandenbergh

      says:

      Fly Pelican has exercised restraint and is on a safe, intrastate footing. Sure, they’ll cop the effects of a general economic downturn, but they never overextended themselves or broke into new markets with generous government subsidies. Not like certain Russian/Singaporean investors…their begging bowl was always on the table, broader commercial imperative very seldom so.

  • Let this Singapore controlled operation go to the wall! Its not Governments role to fund overseas companies in Australia even when they have National Party hacks as their Deputy Chairman. Realise they will have National Party MP’s crying for them. If money is to be given it must be guaranteed by the Singaporean Directors. We back Australian airlines not foreign controlled like Rex and Virgin Australia which is controlled from Singapore, China and Abu Dhabi.

    • john

      says:

      hold on, what % of Qantas is foreign owned ? Is it 49% now ? or it impossible to know, who owns the shares & where they come from ?

      Last time I looked both Rex & Virgin are Australian flag carriers. What is this preoccupation with protecting Qantas ?

    • Gareth

      says:

      Aussies work for these companies ya know mate!

      • Just asking

        says:

        So you are saying no worthy Aussies are working for Rex or Virgin are you Gareth ????
        Be careful who you meet in the street.

    • David

      says:

      Hi Neil

      Thank you for your comment it is nice to know that Qantas “THE AUSTRALIAN AIRLINE ” (with a 49% cap on foreign investment just a whisker from majority foreign ownership), as you are, discriminating against regional and remote Australians that are reliant Regular Public Transport.

      BEFORE you reply I know that neither you nor Qantas are actually discriminating against anyone. The fact Qantas doesn’t fly to these regional and remote location is because they can’t make a profit on them so they don’t fly them so your much maligned foreign ownership airlines do their best to absorb the loses under normal operating circumstances, these are not normal operating circumstances.

      The simple fact is some airlines are going to close forever because the airline industry major players can’t sit together with the various governments and sort something out for the both the current and future of the industry and more importantly for all the Australian people. For this to happen the biggest player of all, who was brought at the time called “The Troubles” needs to go against everything he has learnt in his life to be the success he is today to enable this to happen. Yes Alan I am talking directly to you. It is a lot of pressure for one person do you have what it takes to make it happen? If so it will be an indelible legacy for both all Australians and the Australian Aviation Industry. Good luck

  • William GOODE

    says:

    Well yes it would be a great shame for Lismore to lose its connection, but like trucking and coaches and rail, it is time to stop competing and duplicating similar routes over price differentials alone, logistics has to be rationalised to make a wholistic reduce tion in fuel used

  • Mark

    says:

    Rex put a small airline out of business with help from the state government in Mount Gambier. What goes around comes around.

  • Scott

    says:

    Neil –
    Your one dimensional, all these airlines employ Australians, this government is about preserving Australian jobs, not the holdings of the companies. For your info google the holdings of the company your excluding and you’ll find it’s got owners on Wall St.

    • Hein Vandenbergh

      says:

      These airlines are about providing services, not about keeping Ozzies in jobs, that’s the rôle of the consumers of these services.

      • Scott

        says:

        Your assuming a level playing field, and it’s far far from that.

  • Stephen Smith

    says:

    We can’t possibly bail out every company that bleats that is losing money.This country would go broke very quickly if the government listened to every sob story.

  • john

    says:

    surely the govt could guarantee a certain number of Rex flights a week, where there’s no Qantaslink competition. Seats wouldn’t be cheap, but a regular service could surely be maintained. Obviously not any interstate flights for the time being.

    Has anyone in Qld decided what to do about OOL airport, being in both Qld & NSW ?

  • Adrian P

    says:

    The problem is an over reaction to a health management issue.
    The number of people infected is below the road death toll (should we ban private vehicles).
    Isolate and protect the vulnerable as we always should and the rest of us will be ok.
    Coming up to 64 years of age the biggest threat to my health is riding my motorbike on the public highway.

  • Craigy

    says:

    How many routes around the country flown by REX are subsidised by state tax payers?

    I don’t know what discussions have been held to date between government and REX but with everything that is going on and giving governments an ultimatum to cough up cash by Friday is a disgrace. I feel sorry for the REX staff but you are not well served by John Sharp.

    • Hein Vandenbergh

      says:

      Hear hear – re: that last sentence! A lackey for foreign investors. Not a champ of Australian values: REX is a leaner (on subsidies), not a lifter, on true unfettered enterprise mixed with PUBLIC, thus social, transport responsibilities.

  • Meepa Chandry

    says:

    Rex holding the country people hostage again and teething to extort there government! Nothing new.
    That’s been there business model for a few years now, buy taking government assistance to fly remote routes and this fleecing tax payers without proper business models.
    As far as many are concerned, Rex management and LKH (CEO) should all be on the unemployment line with the way they treat their staff and the tax payer.

  • gerg

    says:

    I used to travel to two different regional towns on an occasional basis but rarely flew as it’s a luxury compared to driving. Why should it be sponsored during a period of financial difficulty? Hardly anyone is going to travel anyway and if they do, let them drive or catch a bus/train.

    • Hein Vandenbergh

      says:

      Gerg (Greg?): you’ve never done 7 hrs on the Princes Hway, obviously. NRMA says, with stats to back it up: most dangerous road in Australia. Yup, the ‘let them eat cake’ fallacy, didn’t do Marie-Antoinette any good, either.

  • Aubrey

    says:

    Be cheaper to nationalise them, oh wait … and John I think that you will find that most of those”welfare recipients” were actually working last week ..

  • Peter Orange

    says:

    Whilst many businesses including airlines have foreign ownership they employ many people who are hard working and support families and the economy by paying their taxes and spending income in the local / regional and national economies. If you own a car these are all made and owned by foreign firms too yet support huge numbers of people in their employ just like the airlines.

  • Royce Jones

    says:

    Of course all Australian based airlines servicing Australian skies need a serious bailout from the Government. You don’t realise how much you need aeroplanes until they are gone, they are the veins of any important business and a key part of the economy. We are an island after all.
    $5billion package does not sound unreasonable for VA, QF and Rex as well as the smaller offshoots from the main two. This will ensure we have a viable country following this.

    • Brian Richard Allen

      says:

      …. This will ensure we have a viable country following this ….

      Yair — And that Australia’s government will have become the first EVER, in history, to have taxed itself into “viability.”

  • PB

    says:

    I can’t believe why the article and comments favor continuing air service with the infection potential of this virus! The worst place to be is to be cooped up with other people in an aluminum tube for an hour or two.
    Italy ignored the seriousness, and now they have folks dying by the thousands. If Australians don’t take this virus seriously and stop congregating in places where infections easily spread then the outcome will be dramatic and unhappy.
    Australians have a habit of blaming government for everything that goes wrong but in this case Rex should cease operations until the infection period has passed!

    • Brian Richard Allen

      says:

      …. Italy ignored the seriousness ….

      Rubbish. Italy’s 320,000 China-Citizen/’ Belt and Road’ workers all went home for Chinese New Year and on their return and in their scores of thousands, took back the CCP-Virus, with them.

  • Joe Soap

    says:

    Having worked there for a short time, I can say that the owner loathes Australians in my opinion and he made that perfectly clear to most who worked there and they will know what I am talking about. He is out to exploit all he can and then takes all the profits offshore and doesn’t give a damn about anything else. I can tell you some stories… but I will refrain

    • Hein Vandenbergh

      says:

      Thanks Joe. What we suspected… A bit like the flat-footed approach by the federal Dept of Health (see QnA last night), what a load of waffling lies. I understand, I worked there as a CMO in the early 90s… Alas, the PS Secrecy Act prohibits me from detailing the reasons for my disappointment. But they were sufficient for me to resign in disgust.

  • Hein Vandenbergh

    says:

    Is an ultimatum EVER the way to go, in any setting where duress affects both parties? At a micro level, it’s the taxpayer, not that hazy concept of “the Gummint”, who ultimateky pays for ANY subsidy or largesse provided. I SHALL NOT BE STOOD-OVER BY ANYONE, LET ALONE A FOREIGN AGENCY.

  • Brian Richard Allen

    says:

    …. Rex threatened/blackmailed Australia’s Government: (We, The People, that is: Us – by any other name) cover its losses before week’s end — or Rex will cut most of its services ….

    TRANSLATION: Rex criminally-arrogantly declared itself unfit to continue in business and, thus, opened up all kinds of opportunities for newcomers. For new air-service operators.

  • Paul

    says:

    Max Hazelton successfully operated this regional airline for many, many years through both adversity and good economic times. Granted, the industry was regulated for much of his time, but it still is. As best I recall, his props didn’t fall off mid-flight and his engines didn’t catch fire and he respected served the communities he flew to. REX has been marginal since it’s launch, and not a little grandiose in it’s approach. Here’s a thought John Sharp -Business 101 – always have 90 days cash availability to operate your business at full strength through unforseen and difficult circumstances, not a few weeks. Relying on government handouts is not a viable business plan. Governments and councils are not the “disappointment” here.

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Rex tells government: Bail us out, or we’ll cut services

written by Adam Thorn | March 23, 2020

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”.

Advertisement
Advertisement
A file image of a Regional Express Saab 340B. (Dave Parer)
A file image of a Regional Express Saab 340B. (Dave Parer)

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.”

PROMOTED CONTENT

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.

This chart, provided by Rex, shows the changes to its network.

“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.”

Steer your own in-flight experience – available on print and digital Whether our classic glossy magazine in your letterbox, daily news updates in your inbox, peeling back a few layers in the podcast or our monthly current affair reports, you can count on us to keep you up to date. Sign up today for just $99.95 for more exclusive offers here. Subscribe now at australianaviation.com.au.

38 Comments

  • john

    says:

    if we start bailing out airlines, we then to have to bail out everyone, which is impossible.

    Not sure why welfare recipients are getting gifts ? Sounds like bottle shops, drug dealers are going to do very well in the next few weeks.

    • Rick

      says:

      I guess someone needs to explain to you, if people are out of work then they can’t pay rent or buy food.
      I have three adult children & they have all been told to not come to work as their respective businesses have been told to close >>
      Perhaps you would prefer a system like the US where the queues to the gun shops are as long as our queues for the Centrelink?
      I imagine it will get far nastier over there than it will in Australia.
      Think it through John.

    • john

      says:

      your comments are with out foundation, your cheque for following the L.N.P/NAT party line is in the post, Do try to be a little bit compassionate, accurate and factual.

    • Yianni Johns

      says:

      What a stupid reply from an uneducated and uncaring fool. No apologies for my words but you should be apologising for your social ineptitudes and rudeness to people who are struggling, John.

    • Peter

      says:

      John is right in some sense in that those already long time unemployed before any of this see no change in their circumstances?

      It should not be a blanket approach but those who have been stood down without pay or sole trader/self employed/casual who are unable to earn a living should get additional support beyond the basic job seeker allowance (posh name for dole)

  • Nudge

    says:

    Hard to argue with that? Especially the size of the package, and that I doubt much will get to regionals. I imagine others like Fly Pelican are even more marginal.

    • David

      says:

      Nudge Rex said they would receive something in the order of 1 million dollars from the 715 million dollar package.

    • Hein Vandenbergh

      says:

      Hmm, local Councils have been a disappointment, huh? Well, here on the Far South Coast of NSW (REX destinations MIM and MYA) they have been financially shattered by the bushfires, with many roads, bridges and other infrastructure requiring rebuilding. Of course REX has a very long history of overextending itself and its aircraft by venturing into places Hazelton and Kendall left well alone, namely WA and QLD, and guess what? By holding out its hand for State subsidies (yes, they’re good at begging, not so good at making a commercial case for some routes), and then claiming they (sic) are providing a community service. Of course it’s the States providing that, not REX. So, how does the service fr MIM to SYD and MEL rate for REX? Not essential community services? You betcha they are: an example is the large number of aged residents requiring complex, tertiary medical care in metropolitan hospitals. REX walks away from those because Councils are a disappointment?? Guess who is the disappointment here? You guessed it. And, wasting resourses on tapping into unnecessarily competitive routes such as Byron or the Riverina without also dropping its fares on monopoly routes, which the essential services fr our region are? Naah, rip the && out of a long-suffering clientele. The Emperor has no clothes – if ever he had.

    • Hein Vandenbergh

      says:

      Fly Pelican has exercised restraint and is on a safe, intrastate footing. Sure, they’ll cop the effects of a general economic downturn, but they never overextended themselves or broke into new markets with generous government subsidies. Not like certain Russian/Singaporean investors…their begging bowl was always on the table, broader commercial imperative very seldom so.

  • Let this Singapore controlled operation go to the wall! Its not Governments role to fund overseas companies in Australia even when they have National Party hacks as their Deputy Chairman. Realise they will have National Party MP’s crying for them. If money is to be given it must be guaranteed by the Singaporean Directors. We back Australian airlines not foreign controlled like Rex and Virgin Australia which is controlled from Singapore, China and Abu Dhabi.

    • john

      says:

      hold on, what % of Qantas is foreign owned ? Is it 49% now ? or it impossible to know, who owns the shares & where they come from ?

      Last time I looked both Rex & Virgin are Australian flag carriers. What is this preoccupation with protecting Qantas ?

    • Gareth

      says:

      Aussies work for these companies ya know mate!

      • Just asking

        says:

        So you are saying no worthy Aussies are working for Rex or Virgin are you Gareth ????
        Be careful who you meet in the street.

    • David

      says:

      Hi Neil

      Thank you for your comment it is nice to know that Qantas “THE AUSTRALIAN AIRLINE ” (with a 49% cap on foreign investment just a whisker from majority foreign ownership), as you are, discriminating against regional and remote Australians that are reliant Regular Public Transport.

      BEFORE you reply I know that neither you nor Qantas are actually discriminating against anyone. The fact Qantas doesn’t fly to these regional and remote location is because they can’t make a profit on them so they don’t fly them so your much maligned foreign ownership airlines do their best to absorb the loses under normal operating circumstances, these are not normal operating circumstances.

      The simple fact is some airlines are going to close forever because the airline industry major players can’t sit together with the various governments and sort something out for the both the current and future of the industry and more importantly for all the Australian people. For this to happen the biggest player of all, who was brought at the time called “The Troubles” needs to go against everything he has learnt in his life to be the success he is today to enable this to happen. Yes Alan I am talking directly to you. It is a lot of pressure for one person do you have what it takes to make it happen? If so it will be an indelible legacy for both all Australians and the Australian Aviation Industry. Good luck

  • William GOODE

    says:

    Well yes it would be a great shame for Lismore to lose its connection, but like trucking and coaches and rail, it is time to stop competing and duplicating similar routes over price differentials alone, logistics has to be rationalised to make a wholistic reduce tion in fuel used

  • Mark

    says:

    Rex put a small airline out of business with help from the state government in Mount Gambier. What goes around comes around.

  • Scott

    says:

    Neil –
    Your one dimensional, all these airlines employ Australians, this government is about preserving Australian jobs, not the holdings of the companies. For your info google the holdings of the company your excluding and you’ll find it’s got owners on Wall St.

    • Hein Vandenbergh

      says:

      These airlines are about providing services, not about keeping Ozzies in jobs, that’s the rôle of the consumers of these services.

      • Scott

        says:

        Your assuming a level playing field, and it’s far far from that.

  • Stephen Smith

    says:

    We can’t possibly bail out every company that bleats that is losing money.This country would go broke very quickly if the government listened to every sob story.

  • john

    says:

    surely the govt could guarantee a certain number of Rex flights a week, where there’s no Qantaslink competition. Seats wouldn’t be cheap, but a regular service could surely be maintained. Obviously not any interstate flights for the time being.

    Has anyone in Qld decided what to do about OOL airport, being in both Qld & NSW ?

  • Adrian P

    says:

    The problem is an over reaction to a health management issue.
    The number of people infected is below the road death toll (should we ban private vehicles).
    Isolate and protect the vulnerable as we always should and the rest of us will be ok.
    Coming up to 64 years of age the biggest threat to my health is riding my motorbike on the public highway.

  • Craigy

    says:

    How many routes around the country flown by REX are subsidised by state tax payers?

    I don’t know what discussions have been held to date between government and REX but with everything that is going on and giving governments an ultimatum to cough up cash by Friday is a disgrace. I feel sorry for the REX staff but you are not well served by John Sharp.

    • Hein Vandenbergh

      says:

      Hear hear – re: that last sentence! A lackey for foreign investors. Not a champ of Australian values: REX is a leaner (on subsidies), not a lifter, on true unfettered enterprise mixed with PUBLIC, thus social, transport responsibilities.

  • Meepa Chandry

    says:

    Rex holding the country people hostage again and teething to extort there government! Nothing new.
    That’s been there business model for a few years now, buy taking government assistance to fly remote routes and this fleecing tax payers without proper business models.
    As far as many are concerned, Rex management and LKH (CEO) should all be on the unemployment line with the way they treat their staff and the tax payer.

  • gerg

    says:

    I used to travel to two different regional towns on an occasional basis but rarely flew as it’s a luxury compared to driving. Why should it be sponsored during a period of financial difficulty? Hardly anyone is going to travel anyway and if they do, let them drive or catch a bus/train.

    • Hein Vandenbergh

      says:

      Gerg (Greg?): you’ve never done 7 hrs on the Princes Hway, obviously. NRMA says, with stats to back it up: most dangerous road in Australia. Yup, the ‘let them eat cake’ fallacy, didn’t do Marie-Antoinette any good, either.

  • Aubrey

    says:

    Be cheaper to nationalise them, oh wait … and John I think that you will find that most of those”welfare recipients” were actually working last week ..

  • Peter Orange

    says:

    Whilst many businesses including airlines have foreign ownership they employ many people who are hard working and support families and the economy by paying their taxes and spending income in the local / regional and national economies. If you own a car these are all made and owned by foreign firms too yet support huge numbers of people in their employ just like the airlines.

  • Royce Jones

    says:

    Of course all Australian based airlines servicing Australian skies need a serious bailout from the Government. You don’t realise how much you need aeroplanes until they are gone, they are the veins of any important business and a key part of the economy. We are an island after all.
    $5billion package does not sound unreasonable for VA, QF and Rex as well as the smaller offshoots from the main two. This will ensure we have a viable country following this.

    • Brian Richard Allen

      says:

      …. This will ensure we have a viable country following this ….

      Yair — And that Australia’s government will have become the first EVER, in history, to have taxed itself into “viability.”

  • PB

    says:

    I can’t believe why the article and comments favor continuing air service with the infection potential of this virus! The worst place to be is to be cooped up with other people in an aluminum tube for an hour or two.
    Italy ignored the seriousness, and now they have folks dying by the thousands. If Australians don’t take this virus seriously and stop congregating in places where infections easily spread then the outcome will be dramatic and unhappy.
    Australians have a habit of blaming government for everything that goes wrong but in this case Rex should cease operations until the infection period has passed!

    • Brian Richard Allen

      says:

      …. Italy ignored the seriousness ….

      Rubbish. Italy’s 320,000 China-Citizen/’ Belt and Road’ workers all went home for Chinese New Year and on their return and in their scores of thousands, took back the CCP-Virus, with them.

  • Joe Soap

    says:

    Having worked there for a short time, I can say that the owner loathes Australians in my opinion and he made that perfectly clear to most who worked there and they will know what I am talking about. He is out to exploit all he can and then takes all the profits offshore and doesn’t give a damn about anything else. I can tell you some stories… but I will refrain

    • Hein Vandenbergh

      says:

      Thanks Joe. What we suspected… A bit like the flat-footed approach by the federal Dept of Health (see QnA last night), what a load of waffling lies. I understand, I worked there as a CMO in the early 90s… Alas, the PS Secrecy Act prohibits me from detailing the reasons for my disappointment. But they were sufficient for me to resign in disgust.

  • Hein Vandenbergh

    says:

    Is an ultimatum EVER the way to go, in any setting where duress affects both parties? At a micro level, it’s the taxpayer, not that hazy concept of “the Gummint”, who ultimateky pays for ANY subsidy or largesse provided. I SHALL NOT BE STOOD-OVER BY ANYONE, LET ALONE A FOREIGN AGENCY.

  • Brian Richard Allen

    says:

    …. Rex threatened/blackmailed Australia’s Government: (We, The People, that is: Us – by any other name) cover its losses before week’s end — or Rex will cut most of its services ….

    TRANSLATION: Rex criminally-arrogantly declared itself unfit to continue in business and, thus, opened up all kinds of opportunities for newcomers. For new air-service operators.

  • Paul

    says:

    Max Hazelton successfully operated this regional airline for many, many years through both adversity and good economic times. Granted, the industry was regulated for much of his time, but it still is. As best I recall, his props didn’t fall off mid-flight and his engines didn’t catch fire and he respected served the communities he flew to. REX has been marginal since it’s launch, and not a little grandiose in it’s approach. Here’s a thought John Sharp -Business 101 – always have 90 days cash availability to operate your business at full strength through unforseen and difficult circumstances, not a few weeks. Relying on government handouts is not a viable business plan. Governments and councils are not the “disappointment” here.

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Rex tells government: Bail us out, or we’ll cut services

written by Adam Thorn | March 23, 2020

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”.

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A file image of a Regional Express Saab 340B. (Dave Parer)
A file image of a Regional Express Saab 340B. (Dave Parer)

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.”

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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.

This chart, provided by Rex, shows the changes to its network.

“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.”

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38 Comments

  • john

    says:

    if we start bailing out airlines, we then to have to bail out everyone, which is impossible.

    Not sure why welfare recipients are getting gifts ? Sounds like bottle shops, drug dealers are going to do very well in the next few weeks.

    • Rick

      says:

      I guess someone needs to explain to you, if people are out of work then they can’t pay rent or buy food.
      I have three adult children & they have all been told to not come to work as their respective businesses have been told to close >>
      Perhaps you would prefer a system like the US where the queues to the gun shops are as long as our queues for the Centrelink?
      I imagine it will get far nastier over there than it will in Australia.
      Think it through John.

    • john

      says:

      your comments are with out foundation, your cheque for following the L.N.P/NAT party line is in the post, Do try to be a little bit compassionate, accurate and factual.

    • Yianni Johns

      says:

      What a stupid reply from an uneducated and uncaring fool. No apologies for my words but you should be apologising for your social ineptitudes and rudeness to people who are struggling, John.

    • Peter

      says:

      John is right in some sense in that those already long time unemployed before any of this see no change in their circumstances?

      It should not be a blanket approach but those who have been stood down without pay or sole trader/self employed/casual who are unable to earn a living should get additional support beyond the basic job seeker allowance (posh name for dole)

  • Nudge

    says:

    Hard to argue with that? Especially the size of the package, and that I doubt much will get to regionals. I imagine others like Fly Pelican are even more marginal.

    • David

      says:

      Nudge Rex said they would receive something in the order of 1 million dollars from the 715 million dollar package.

    • Hein Vandenbergh

      says:

      Hmm, local Councils have been a disappointment, huh? Well, here on the Far South Coast of NSW (REX destinations MIM and MYA) they have been financially shattered by the bushfires, with many roads, bridges and other infrastructure requiring rebuilding. Of course REX has a very long history of overextending itself and its aircraft by venturing into places Hazelton and Kendall left well alone, namely WA and QLD, and guess what? By holding out its hand for State subsidies (yes, they’re good at begging, not so good at making a commercial case for some routes), and then claiming they (sic) are providing a community service. Of course it’s the States providing that, not REX. So, how does the service fr MIM to SYD and MEL rate for REX? Not essential community services? You betcha they are: an example is the large number of aged residents requiring complex, tertiary medical care in metropolitan hospitals. REX walks away from those because Councils are a disappointment?? Guess who is the disappointment here? You guessed it. And, wasting resourses on tapping into unnecessarily competitive routes such as Byron or the Riverina without also dropping its fares on monopoly routes, which the essential services fr our region are? Naah, rip the && out of a long-suffering clientele. The Emperor has no clothes – if ever he had.

    • Hein Vandenbergh

      says:

      Fly Pelican has exercised restraint and is on a safe, intrastate footing. Sure, they’ll cop the effects of a general economic downturn, but they never overextended themselves or broke into new markets with generous government subsidies. Not like certain Russian/Singaporean investors…their begging bowl was always on the table, broader commercial imperative very seldom so.

  • Let this Singapore controlled operation go to the wall! Its not Governments role to fund overseas companies in Australia even when they have National Party hacks as their Deputy Chairman. Realise they will have National Party MP’s crying for them. If money is to be given it must be guaranteed by the Singaporean Directors. We back Australian airlines not foreign controlled like Rex and Virgin Australia which is controlled from Singapore, China and Abu Dhabi.

    • john

      says:

      hold on, what % of Qantas is foreign owned ? Is it 49% now ? or it impossible to know, who owns the shares & where they come from ?

      Last time I looked both Rex & Virgin are Australian flag carriers. What is this preoccupation with protecting Qantas ?

    • Gareth

      says:

      Aussies work for these companies ya know mate!

      • Just asking

        says:

        So you are saying no worthy Aussies are working for Rex or Virgin are you Gareth ????
        Be careful who you meet in the street.

    • David

      says:

      Hi Neil

      Thank you for your comment it is nice to know that Qantas “THE AUSTRALIAN AIRLINE ” (with a 49% cap on foreign investment just a whisker from majority foreign ownership), as you are, discriminating against regional and remote Australians that are reliant Regular Public Transport.

      BEFORE you reply I know that neither you nor Qantas are actually discriminating against anyone. The fact Qantas doesn’t fly to these regional and remote location is because they can’t make a profit on them so they don’t fly them so your much maligned foreign ownership airlines do their best to absorb the loses under normal operating circumstances, these are not normal operating circumstances.

      The simple fact is some airlines are going to close forever because the airline industry major players can’t sit together with the various governments and sort something out for the both the current and future of the industry and more importantly for all the Australian people. For this to happen the biggest player of all, who was brought at the time called “The Troubles” needs to go against everything he has learnt in his life to be the success he is today to enable this to happen. Yes Alan I am talking directly to you. It is a lot of pressure for one person do you have what it takes to make it happen? If so it will be an indelible legacy for both all Australians and the Australian Aviation Industry. Good luck

  • William GOODE

    says:

    Well yes it would be a great shame for Lismore to lose its connection, but like trucking and coaches and rail, it is time to stop competing and duplicating similar routes over price differentials alone, logistics has to be rationalised to make a wholistic reduce tion in fuel used

  • Mark

    says:

    Rex put a small airline out of business with help from the state government in Mount Gambier. What goes around comes around.

  • Scott

    says:

    Neil –
    Your one dimensional, all these airlines employ Australians, this government is about preserving Australian jobs, not the holdings of the companies. For your info google the holdings of the company your excluding and you’ll find it’s got owners on Wall St.

    • Hein Vandenbergh

      says:

      These airlines are about providing services, not about keeping Ozzies in jobs, that’s the rôle of the consumers of these services.

      • Scott

        says:

        Your assuming a level playing field, and it’s far far from that.

  • Stephen Smith

    says:

    We can’t possibly bail out every company that bleats that is losing money.This country would go broke very quickly if the government listened to every sob story.

  • john

    says:

    surely the govt could guarantee a certain number of Rex flights a week, where there’s no Qantaslink competition. Seats wouldn’t be cheap, but a regular service could surely be maintained. Obviously not any interstate flights for the time being.

    Has anyone in Qld decided what to do about OOL airport, being in both Qld & NSW ?

  • Adrian P

    says:

    The problem is an over reaction to a health management issue.
    The number of people infected is below the road death toll (should we ban private vehicles).
    Isolate and protect the vulnerable as we always should and the rest of us will be ok.
    Coming up to 64 years of age the biggest threat to my health is riding my motorbike on the public highway.

  • Craigy

    says:

    How many routes around the country flown by REX are subsidised by state tax payers?

    I don’t know what discussions have been held to date between government and REX but with everything that is going on and giving governments an ultimatum to cough up cash by Friday is a disgrace. I feel sorry for the REX staff but you are not well served by John Sharp.

    • Hein Vandenbergh

      says:

      Hear hear – re: that last sentence! A lackey for foreign investors. Not a champ of Australian values: REX is a leaner (on subsidies), not a lifter, on true unfettered enterprise mixed with PUBLIC, thus social, transport responsibilities.

  • Meepa Chandry

    says:

    Rex holding the country people hostage again and teething to extort there government! Nothing new.
    That’s been there business model for a few years now, buy taking government assistance to fly remote routes and this fleecing tax payers without proper business models.
    As far as many are concerned, Rex management and LKH (CEO) should all be on the unemployment line with the way they treat their staff and the tax payer.

  • gerg

    says:

    I used to travel to two different regional towns on an occasional basis but rarely flew as it’s a luxury compared to driving. Why should it be sponsored during a period of financial difficulty? Hardly anyone is going to travel anyway and if they do, let them drive or catch a bus/train.

    • Hein Vandenbergh

      says:

      Gerg (Greg?): you’ve never done 7 hrs on the Princes Hway, obviously. NRMA says, with stats to back it up: most dangerous road in Australia. Yup, the ‘let them eat cake’ fallacy, didn’t do Marie-Antoinette any good, either.

  • Aubrey

    says:

    Be cheaper to nationalise them, oh wait … and John I think that you will find that most of those”welfare recipients” were actually working last week ..

  • Peter Orange

    says:

    Whilst many businesses including airlines have foreign ownership they employ many people who are hard working and support families and the economy by paying their taxes and spending income in the local / regional and national economies. If you own a car these are all made and owned by foreign firms too yet support huge numbers of people in their employ just like the airlines.

  • Royce Jones

    says:

    Of course all Australian based airlines servicing Australian skies need a serious bailout from the Government. You don’t realise how much you need aeroplanes until they are gone, they are the veins of any important business and a key part of the economy. We are an island after all.
    $5billion package does not sound unreasonable for VA, QF and Rex as well as the smaller offshoots from the main two. This will ensure we have a viable country following this.

    • Brian Richard Allen

      says:

      …. This will ensure we have a viable country following this ….

      Yair — And that Australia’s government will have become the first EVER, in history, to have taxed itself into “viability.”

  • PB

    says:

    I can’t believe why the article and comments favor continuing air service with the infection potential of this virus! The worst place to be is to be cooped up with other people in an aluminum tube for an hour or two.
    Italy ignored the seriousness, and now they have folks dying by the thousands. If Australians don’t take this virus seriously and stop congregating in places where infections easily spread then the outcome will be dramatic and unhappy.
    Australians have a habit of blaming government for everything that goes wrong but in this case Rex should cease operations until the infection period has passed!

    • Brian Richard Allen

      says:

      …. Italy ignored the seriousness ….

      Rubbish. Italy’s 320,000 China-Citizen/’ Belt and Road’ workers all went home for Chinese New Year and on their return and in their scores of thousands, took back the CCP-Virus, with them.

  • Joe Soap

    says:

    Having worked there for a short time, I can say that the owner loathes Australians in my opinion and he made that perfectly clear to most who worked there and they will know what I am talking about. He is out to exploit all he can and then takes all the profits offshore and doesn’t give a damn about anything else. I can tell you some stories… but I will refrain

    • Hein Vandenbergh

      says:

      Thanks Joe. What we suspected… A bit like the flat-footed approach by the federal Dept of Health (see QnA last night), what a load of waffling lies. I understand, I worked there as a CMO in the early 90s… Alas, the PS Secrecy Act prohibits me from detailing the reasons for my disappointment. But they were sufficient for me to resign in disgust.

  • Hein Vandenbergh

    says:

    Is an ultimatum EVER the way to go, in any setting where duress affects both parties? At a micro level, it’s the taxpayer, not that hazy concept of “the Gummint”, who ultimateky pays for ANY subsidy or largesse provided. I SHALL NOT BE STOOD-OVER BY ANYONE, LET ALONE A FOREIGN AGENCY.

  • Brian Richard Allen

    says:

    …. Rex threatened/blackmailed Australia’s Government: (We, The People, that is: Us – by any other name) cover its losses before week’s end — or Rex will cut most of its services ….

    TRANSLATION: Rex criminally-arrogantly declared itself unfit to continue in business and, thus, opened up all kinds of opportunities for newcomers. For new air-service operators.

  • Paul

    says:

    Max Hazelton successfully operated this regional airline for many, many years through both adversity and good economic times. Granted, the industry was regulated for much of his time, but it still is. As best I recall, his props didn’t fall off mid-flight and his engines didn’t catch fire and he respected served the communities he flew to. REX has been marginal since it’s launch, and not a little grandiose in it’s approach. Here’s a thought John Sharp -Business 101 – always have 90 days cash availability to operate your business at full strength through unforseen and difficult circumstances, not a few weeks. Relying on government handouts is not a viable business plan. Governments and councils are not the “disappointment” here.

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