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Regional aviation’s $300m bailout: Everything you need to know

written by Adam Thorn | March 30, 2020

The government announced a $298 million bailout for regional aviation on Saturday morning – hours after a help-us-or-lose-us deadline imposed by Rex and eight independent carriers expired.

The package will include $198 million for regional airline routes to 138 communities and a further $100 million for related companies that support the industry. It’s thought the package will last for six months and see service and security charges waived and fuel excise lifted back to its 1 February level.

The news comes 24 hours after Regional Express said it would struggle to transport coronavirus testing samples without a bailout, and eight regional carriers warned the government had washed their hands of them.

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Speaking outside Wagga Wagga Airport in NSW, Deputy Prime Minister Michael McCormack said, “Regional aviation has been smashed by COVID-19. It’s doing it tough.”

Rex has hailed the new regional aviation bailout, just days after threatening to stop most of its services (Rob Finlayson)

He said that while the $198 million will subsidise airlines, the sum will also help cover critical standing costs for safety function, regulatory compliance and minimum operational capability.

An additional $100 million will be made available to provide direct financial support to smaller regional airlines during the downturn, should it be needed.

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Airlines, contracted aero-medical providers and a range of other essential service providers can apply for consideration and subject to financial analysis, be eligible for assistance on a month-by-month basis through to 30 September.

Mr McCormack said, “This package guarantees core routes for domestic air freight will remain open and essential workers remain employed, while providing vital financial support for airlines servicing regional and remote locations.

“More than 100 regional and remote airports received a scheduled passenger service last month and this funding will be welcome news for the aviation workforce and the broader communities these services support.

“The funding will ensure regional communities benefit from an ongoing airline service by underwriting airlines’ operating costs on selected routes.”

He added the bailout was “for those people who rely on pharmaceuticals, for those people who rely on those medical supplies, for those people who need to get where they need to be”.

The announcement ended a dramatic week when Australia’s largest independent airline, Rex, said it would announce the “shutting down of its network” on Friday if it hadn’t received “concrete proposals” of financial aid.

The statement further raised the stakes in regional airlines’ battle to secure help. On Thursday, eight independent carriers separately warned they could go out of business in “days rather than weeks” unless the government underwrote Australia’s small airline operators.

Rex deputy chairman John Sharp said then, “The federal, state and local governments all need to act urgently and decisively to determine specific assistance packages so that the airlines can at least provide the bare minimum of essential air services to keep the communities running.”

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12 Comments

  • James

    says:

    Wow, the govt suckered again by a foreign owned airline.
    Why doesnt Rex admit HOW MUCH GOVT SUBSIDIES it recieves to date!? Huge amounts. The Singaporean owner would be rolling in his billions laughing like a boss right now.

    • john

      says:

      yeah & qantas is 49% foreign owned, so why support them either ?

  • I see this announcement as yet another National Party sop to the regions built on a totally false premise.
    As a former Executive Director of a major Australian airline responsible for cargo I have to challenge that Rex in particular have little to NO role in providing overnight and time sensitive freight to regional communities in NSW, VIC,SA, Tas and Queensland north of Mackay. Since the 1980’s these centres have been served on an overnight basis by express road transport as distances and better roads allow pick ups by 1800 for delivery by road by 11:00 the next day. Between adjoining cities like MEL-SYD this is also the province of road transport.
    Thus to assert regional carriers need propping up to deliver overnight freight and pharmaceuticals is no better than a lie.
    Why would Australian taxpayers subsidise an airline like Rex which is majority owned by Singapore interests on the basis of essential freight services. If Rex were serious about long term involvement in Australian Regional aviation they would have committed to a fleet replacement programme for the very aged Saab 340B fleet which was in the main American Eagle retirements.
    There is nothing to stop the Singaporean shareholders remitting dividends back to Singapore from what they coerced out of the Australian taxpayer

    • Trevor Long

      says:

      I agree with your comments

  • Peter

    says:

    We are living in unprecedented times. I certainly don’t have the facts around the transportation of urgent medical tests or equipment, however I suspect things have changed from how they were even a month ago. As per fleet, the airframes have many hours of useful life and are sized right for the routes they service. They are not full now so why put something newer on the route that is likely going to be bigger. Can you perhaps suggest a viable replacement? What they do need is a cabin update.

  • AlanH

    says:

    Yes it’s just a big smoke and mirrors confidence trick as usual from overseas interests and our gullible Deputy Prime Minister, Michael McCormack, has taken the bait hook, line and sinker for fear of losing valuable NP votes in the bush! If getting the COVID-19 blood samples to the major centres for analysis was that critical the Gov’t could call out the RAAF to do it. These are times where such steps would be justified and a C-17 Spartan or a B350 King Air would be quite capable of carrying anything to anywhere that a Saab 340 currently goes!

  • AlanH

    says:

    Ooops … C-27 Spartan! 🙁

  • DAVID

    says:

    Three cheers for Neil Hansford.
    Now. Who is going to listen to him and all the people who have grave reservations about the way Rex does business?
    Their continual threats to local government about removing services, and in some cases, failing to meet promises to restore such cancelled services, is sickening.
    After a life in regional Australia I value transport and especially air services – but not through bullying and threats.
    Is the Commonwealth now going to offer Qantas financial support for services for routes on which it competes with Rex?
    Will it now have to offer Virgin financial assistance?
    Rex has a Singapore connection which leaves its commitment to anyone other than Rex short-changed, if only by its lousy attitude.

  • Marcus

    says:

    Australia communities being supported by government and foreign investment.
    All in it together.

  • James

    says:

    If the Government is providing this sort of financial aid it should come with equity stake in the airlines concerned.

  • Red Cee

    says:

    If the Federal Government take ownership of REX, and Virgin, they could create a viable Government owned airline under the Virgin brand name, although an entirely new name would be preferable. This would make the airline much stronger, and deliver the services Australia needs.

  • hayden

    says:

    alliance airlines has been flying in and out of mky and bne.

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