Saturday breaking news: regionals get their $300m bailout

written by Adam Thorn | March 27, 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.

The package will include $198 million for regional airline routes to 138 communities and a further $100 million for related aviation 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 Rex said it would struggle to transport coronavirus testing samples without a bailout, and eight regional carriers said the government had washed their hands of them.

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

“The Federal Government will step up as part of a now more than $1 billion package. There are 26,000 people employed in the sector.

“$198 million will subsidies the 138 communities that rely on regional aviation. They will be able to subsidise those routes. They’ll also be another $100 million for regional companies, and we’ll work with them on a case by case basis.”

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”.

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On Friday, Rex said it may not be able to transport COVID-19 testing samples from regional areas to capital cities for analysis unless it received a government bailout.

Australia’s largest independent airline said it would announce the “shutting down of its network” later that day 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 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, “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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3 Comments

  • Scott

    says:

    Well done to the federal government supporting the broader aviation industry and recognising the critical part in our nation all these carriers play. They are all large Australian employers when combined, and they provide economic multiplying through the other industries. Glad coming out the other side we will have multiple regional aviation companies with Australians employed, and the same process must now be applied to the majors if and when that time comes as a precedent is now set for the industry. The industry can get on with it, on the other side.

  • Craigy

    says:

    I hope the funds for REX came with very strict conditions including no funds to go to shareholders. Can someone ask REX how much additional financial support was provided by the shareholders before Sharp had is hand out for taxpayer funds? I suspect zero. Take the profits and expect the Australian taxpayer to prop the business up when things go bad.

  • Jabiru Joe

    says:

    Its not clear to me yet as to how this will apply to the regionals that are not flying, are now grounded. As I understand from the above, the package mainly will apply to “active” companies because of the “service, security and fuel excise” comment . So not flying means far less maintenance, far less fuel excise, far less security and less service charges. The LAME, the refueller, the private security, the instrument tester all are vulnerable and part of this industry directed (partly by association due to space limitations) to cease business by govt in an attempt to limit spread. I will just have to wait for the detail but my best wishes go out to everybody who is actually or potentially out of income. So good to see a government taking an active, on the whole, part in securing peoples futures. Of course in the wash up it is hoped things return to normal and the tax man recoups his investment then.

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