Editorial
Capital city failure must not threaten Rex Airlines’ regional services
The collapse of Rex Airlines will, and should, again raise the question of how much longer Qantas and Virgin can be permitted to maintain their monopoly at airports on one of the world’s busiest aviation corridors.
Rex has gone into voluntary administration and 610 workers will lose their jobs after its attempt to muscle in on the lucrative “golden triangle” Melbourne-Sydney-Brisbane routes failed. Unlike the incumbent monopolists, Rex did not have enough capital or planes and bled cash while struggling to get more than a foothold in the Australian capital city market.
The Albanese government could have helped Rex in the big smoke but instead sat on its hands despite a February 2021 recommendation from former Productivity Commission chairman Peter Harris to open more peak time slots at Sydney airport.
As a result, the lingering twin airlines’ mentality that has held sway in Australia’s crowded skies since the 1940s has claimed another victim.
Rex began in 2002 when Ansett subsidiaries Kendell and Hazelton airlines were prised free from the collapse of the national carrier.
Rex serviced regional Australia and, after the pandemic as chaos ruled the airline industry, entered the capital city market in 2021, ignoring the previous ignominious ends of Compass, Impulse, Tiger, Air Australia and OzJet.
The Australian airline industry remains extremely unpredictable. Only three months ago Bonza’s hopes to be another player fell to earth and last July, Qatar Airlines was ostensibly blocked from greater access to Australia’s aviation market due to the treatment of Australian women at Doha Airport.
In the public mind, the decision came to be linked with protecting Qantas’ market share. The national carrier’s history of flight cancellations and lost luggage had already created a mountain of public anger and dismay. It was exacerbated by the tone-deaf behaviour of then-Qantas chief executive Alan Joyce, who refused to honour flight credits and departed with huge bonuses.
And just as they had with previous interlopers, cossetted Qantas and to a lesser extent Virgin, responded to Rex’s attempt to gatecrash their key routes by adding capacity and cutting prices. Clearly, Rex’s move to augment its regional services by offering services flying between capital cities was folly.
Now the Transport Workers’ Union wants the federal government to take an equity stake in the airline. However, as Prime Minister Anthony Albanese has pointed out, the airline already received substantial public funding with “no conditions attached”.
Virgin is being mentioned as a possible buyer, but the importance of Rex’s core business – servicing regional Australia – cannot be allowed to be jeopardised by its rash entry into the capital cities. Certainly, there are challenges facing the company’s regional business, not least an ageing fleet of small SAAB 340s, half of which are reportedly grounded due to a global parts shortage.
Such flights are the backbone of regional towns and cities, essential for economic, health and social wellbeing. To this end, the option of some transitional government support may be needed to maintain regional routes.
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