On Wednesday, Rex temporarily reversed its decision to suspend Queensland passenger flights after a last-minute intervention from the state’s government.
The announcement is the latest in a dramatic negotiation between regional airlines and state and federal government, that has featured brinkmanship and U-turns from both camps.
Here, Australian Aviation breaks down how the story has played out:
Rex delivered an ultimatum to the government to underwrite its losses, or else the airline would stop most of its services. Rex’s deputy chairman, John Sharp, argued the previous package of help was not enough, saying, “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.” He added that “local councils are also a true disappointment”.
Eight regional airlines warned they could go out of business in “days rather than weeks” unless the government moved to underwrite Australia’s small airline operators. In a dramatic open letter, the consortium warned that an announcement of help needed to happen in 24 hours’ time.
The email, sent by Newcastle carrier FlyPelican, stated, “The government, while repeatedly proclaiming the importance of protecting regional aviation as a vital resource for growing the economy, appears, instead, to have wiped its hand of the industry at what is its most critical time.” Carriers signing the letter included Air Link, Aviair, Alliance Airlines, Chartair, Fly Corporate, FlyPelican, Hardy Aviation and Sharp Airlines.
Rex said it may not be able to transport COVID-19 testing samples from regional areas to capital cities for analysis unless it receives 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.
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. “For example, Rex carries critical blood supplies daily to regional and remote communities on its network, as well as transporting COVID-19 testing samples from regional centres to capital cities for analysis. This may no longer be possible in the foreseeable future.”
Rex and the Airlines for Australia and New Zealand industry group both welcomed the $298 million government bailout for the regional airline industry.
John Sharp said the business had the “utmost gratitude” for the financial package, which would keep a revised schedule operating for six months. Sharp indicated that, without the aid, it would have stood down 90 per cent of its workforce.
“All regional communities and residents should be extremely grateful to the Coalition government for its commitment to the future of the regional cities,” Sharp said. “This meaningful assistance package not only seeks to keep essential air services going, but also tries to prevent the existing regional aviation providers from collapsing.”
Rex U-turned on its support for Saturday’s regional aviation bailout and said it would shut down Queensland passenger routes in 24 hours. In a statement, Regional Express said, “While the federal government has announced several assistance packages for airlines, no concrete details have been forthcoming and more importantly, not a single cent has been disbursed.”
Rex temporarily reversed its decision to suspend Queensland passenger flights after a last-minute intervention from the state’s government – but warned it may still cancel services if a final agreement isn’t reached in seven days’ time.
Rex raised the stakes in its fight for more financial aid yet again, this time claiming that “lives could be lost” if the airline is unable to transport medical tests on selected routes. The business praised Queensland and Western Australia for offering to subsidise essential services, but said, “no other states have shown any interest”.