Rex Airlines is the only carrier that services some rural towns. Photo: File.
A transport expert, trade union and the Opposition have expressed support for the Federal Government’s decision to acquire $50 million of debt from regional airlines Rex, which went into voluntary administration in 2024 after years of financial difficulty.
On Thursday (23 January), it was announced the Albanese Government would take over the debt from Rex’s largest creditor, PAGAC Regulus Holdings Limited (PAG).
The decision is aimed at preventing the company from going into liquidation and preserving its rural and regional services. Rex is the only airline that services several small country towns, such as Moruya and Narrandera in NSW. Administrators are continuing to search for a buyer who can take over the airline’s regional services.
Rex’s only Canberra route, to and from Melbourne, was suspended last year and has not been revived.
By acquiring its debt, the government will become the principal secured creditor and will seek to become a voting member of the Committee of Inspection, which oversees the administration process.
Dr Michael De Percy, a transport expert and lecturer at the University of Canberra, says the Federal Government has made the right move.
“Rex is a business serving a market that almost isn’t viable, which is why it always goes broke,” he said.
“Sometimes we have to accept that providing services to regional and remote communities costs money and sometimes it’s not profitable and sometimes the market fails.
“Regional airlines are essential. Other forms of transport are subsidised [like buses and trains]. If something is not profitable, we generally accept that government has to play a role in making it viable.”
Dr De Percy also concedes that Rex management have made decisions that may have contributed to its demise, such as its move to compete with Qantas on non-regional routes between big cities.
“Hopefully the government’s decision to buy out the debt enables it to have more influence to make sure Rex focuses on its core business and doesn’t try and compete with other airlines where it hasn’t been competitive,” Dr De Percy said.
“But if the government doesn’t bail them out, they have to do something else to keep the service going.
“The government could run Rex itself, but then it would be like the NBN … a bailout is the better option.”
The Transport Workers Union (TWU), which represents aviation employees, has also expressed measured support for the government taking on the $50 million debt.
“This announcement is a relief to workers and the flying public, and a clear message that the Federal Government will not let Rex fail. This is crucial in rebuilding the public’s trust in aviation, which was decimated after a decade of collapsing standards under Alan Joyce’s Qantas,” TWU national secretary Michael Kaine said.
“We know that Rex is a lifeline to regional Australia: essential for healthcare, tourism, business and connecting families. While today’s announcement is an important next step, the constant instability in aviation hurts businesses and it hurts communities. Without a long-term solution for Rex and for the broader aviation industry we’re going to keep seeing a vicious cycling of failed airlines.”
Former transport minister and Member for the Riverina Michael McCormack also backed the decision.
“I think the government is doing the right thing in taking on the debt,” he said.
“The government needs to do this for as long as it takes to get the right outcome … a lot of country towns rely on Rex to get doctors and nurses into town; without this service, people will die.”
He says he has no issues with taxpayers subsidising the carrier.
“I pay for a lot of [city] trains and public buses and so do many people who live in regional areas.”
The Federal Government said the debt takeover followed on from providing a commercial loan of up to $80 million to the administrators to keep Rex’s regional routes operating and supporting Rex employees who had lost their entitlements due to the reduction of services.
Original Article published by Oliver Jacques on Riotact.
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