General News
31 July, 2024
Uncertainty as Rex Airlines enters voluntary administration
Shockwaves rippled across the country earlier this week at the surprise news that Rex Airlines - and other subsidiaries of Regional Express Holdings Limited, known commonly as The Rex Group - has entered voluntary administration.
In a statement released on July 30, the Rex Group indicated that only the company’s domestic routes between major cities serviced by its fleet of Boeing 737 aircraft were impacted at this stage, with all 737 flights grounded. The statement said that its regional Saab 340 flights will continue to operate.
“Pre-paid ticket-holders will continue to have their tickets honoured by the Rex Group on regional routes,” the statement added.
How long this guarantee will remain in place for regional ticket-holders, however, is unknown at this time, with competitor, Virgin Australia, offering Rex customers a lifeline.
“Rex and Virgin Australia are also exploring opportunities to support regional customers, which include Virgin Australia selling Rex’s regional services through codeshare or interline arrangements, and making Velocity Frequent Flyer benefits available to Rex’s regional customers,” the statement indicated.
The Rex Group also announced that eligible customers on 13 domestic routes overlapping those serviced by Virgin Australia would be re-accommodated on those flights as close as practicable to their original time of travel, where possible.
Rex’s regional significance
The organisation that was born in the bush and has as its tagline “Our Heart is in the Country” provides the primary commercial aviation services to many regional locations across the country.
If those services were lost to regional communities, the impacts would be catastrophic. Dubbo is one of the 47 regional locations currently serviced by Rex Airlines.
NSW Nationals leader and state member for Dubbo, Dugald Saunders, was quick to comment on the shock announcement .
“The recent news around Rex Airlines is very concerning to anyone who lives or works in regional NSW,” Mr Saunders posted to social media.
“Not only is the carrier crucial to the 2.5 million people that use it every year, but it has also played a role in freight and medical transport,” he added.
“I’ll be watching any developments closely in the coming days, but the state and federal Labor governments need to make sure our regional communities won’t be left stranded by this situation,” Mr Saunders concluded.
Domestic growth and regional cuts
It has been an “interesting” year for The Rex Group so far, expanding domestic services to major urban centres across Australia while prolonging some regional network reductions that were implemented in various stages in 2023.
These reductions were blamed on “continuing dislocated supply chains post-COVID” that reportedly impacted the provision of aircraft engine spare parts.
The existing regional network reductions were set to continue through until October 27, according to a company statement released on February 2.
“Rex is committed to the rebuilding of its regional network, and intends to return to the standard flight schedules from October 27, 2024, subject to the situation improving,” Rex’s general manager of network strategy, Warrick Lodge, explained at that time.
Just five-weeks-ago, ahead of its first domestic flights to Perth from Melbourne and Adelaide, the company also boasted it had “toppled both Qantas and Virgin to be the most-reliable major airline in Australia” according to figures at that time.
“We are excited to be bringing our jets to Perth, and cannot wait for passengers on our new services to WA to experience the country style hospitality Rex is famous for,” Rex chairman - and former federal transport and regional development minister - John Sharp AM said in a statement in late June.
“Every time Rex enters a new domestic market, there has been downward pressure on airfares, so our message to Australians is, if you want competition, all you have to do is support it.”
What else is impacted?
The Rex subsidiaries impacted by the voluntary administration, which will be managed by Ernst and Young Australia, include Regional Express Holdings Limited, Regional Express Pty Limited, Rex Airlines Pty Ltd, Rex Investment Holdings Pty Limited, and Air Partners Pty Ltd.
It is unknown at this stage if the administration will also apply to wholly-owned Rex subsidiaries Pel-Air Aviation, which provides air freight, aeromedical and charter operations, the Australian Airline Pilot Academy, which has campuses in Wagga Wagga and Ballarat, and propeller maintenance provider, Australian Aerospace Propeller Maintenance.
Rex is also a 50 per cent shareholder of premier fly-in-fly-out charter and freight operator, National Jet Express.
None of these organisations were listed in the schedule of subsidiaries impacted by the voluntary administration.