The Federal Government will give domestic airline Rex an $80 million bailout to continue operating regional routes.
Rex Airlines went into voluntary administration in July, laying off more than 600 workers.
Voluntary administration means a company can’t afford to pay its debts, and has appointed an independent body to take control of its operations.
It comes as new figures from Australia’s competition watchdog show 98% of domestic travel is now serviced by Qantas and Virgin.
Rex
Rex is a regional-focused carrier. Prior to entering administration in July, it was Australia’s third-largest airline.
The company had been struggling to recover from the COVID-19 pandemic. In the 2022/23 financial year, it recorded a loss of $30 million.
Financial services firm Ernst and Young (EY) took over as administrator in July.
While it’s stopped flying between major cities, Rex is still running flights to and from regional towns.
Bailout
Today, the Federal Government announced it was giving Rex $80 million to continue operations.
The funding will go towards running “critical services for regional communities”.
For example, Rex flies in and out of the regional NSW town of Albury.
On a typical day, Qantas and Rex are the only two commercial airlines running flights to and from Albury Airport.
In a statement, Transport Minister Catherine King and Workplace Relations Minister Murray Watt said sacked Rex workers will be able to get early access to the ‘Fair Entitlements Guarantee’. This is a Government payout for workers who’ve been laid off from a bankrupt business.
Rex currently isn’t listed as bankrupt.
EY has applied to the Federal Court to continue as the administrator until the end of the financial year, in order to “secure a commercial future for the airline”.
ACCC
Earlier today, the Australian Consumer and Competition Commission (ACCC) announced 98% of domestic travellers are flying on Qantas or Virgin.
There has been a 13% jump in average airfares between the major cities in Australia and a 6% drop in the number of seats available since Rex entered administration.
ACCC Commissioner Anna Brakey said: “With less competition, there is less choice for consumers and less incentive for airlines to offer cheaper airfares.”
Opposition
Shadow Transport Minister Senator Bridget McKenzie told TDA “Australia is now the least competitive market in the world” for air travel.
“We have seen two regional airlines collapse under the Albanese Government.
“All the Government has done is kick the can down the road past the date of the next election.”
