Government guarantees Rex regional flight bookings during airline’s administration
The federal government has announced it will guarantee all flight bookings for the embattled airline Rex as it continues its regional operations while under voluntary administration.
On Thursday the transport minister, Catherine King, said Rex customers flying on regional routes would now have certainty “they will either fly or get their money back”, with the government agreeing to provide funding to guarantee bookings.
“Rex’s continuation is in the best interests of Australia, and the government is working closely with the administrators to ensure a strong regional aviation presence now and into the future,” King said.
“This will give customers confidence to continue booking regional flights with Rex – flights that allow them to stay connected to family, friends, healthcare and other services – while also helping to maintain regional aviation in Australia.
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“This guarantee is a message to regional Australia that we know how important reliable air services are to you and that we are not going to allow your communities to be left behind.”
The guarantee is for all regional flights booked after Rex entered voluntary administration at 9.31pm on 30 July, when Ernst & Young Australia (EY) were appointed to determine its future.
During question time on Thursday, King stressed that it was not a commonwealth injection of funds for Rex or for its administrators, but rather a guarantee for bookings made after the airline entered voluntary administration.
“The guarantee will only be triggered if a service is cancelled and where no alternate service has been delivered and no refund,” she said.
Rex has continued to fly regional routes with its fleet of ageing 36-seater Saab 340 turboprop planes since entering administration.
Its jet operations, flying cheaply leased Boeing 737s between capital cities, have been axed since entering administration. There has been no talk of these services, which were launched at the height of the pandemic, resuming.
Samuel Freeman, one of the EY administrators, said the government’s guarantee was “a positive step toward securing the future” for Rex, the airline’s 1,200-plus employees and Australian travellers.
“The federal government’s flight booking guarantee will give Australians confidence to continue booking to or from a regional destination on Rex, ensuring that in the unlikely event that their service is not delivered they will be entitled to receive a full refund,” he said.
“The guarantee will help Rex to keep flying while we undertake the recapitalisation of the airline and secure its future. We’re currently undertaking a process to find an investor committed to a sustainable commercial regional network.”
At the first creditors meeting on Friday, administrators said a large number of potential buyers had expressed interest in the airline.
“Some are already executing on disclosure agreements … there’s been quite some interest, which is really positive,” Freeman said.
The administrators also revealed the carrier had been weighed down with $500m in debt.
Rex’s regional flights have continued because of funding from private equity firm PAG Asia Capital, which provided $150m for its expansion into jet operations and further funding to continue regional operations since entering administration.
Nearly 600 jobs at Rex – mostly from the 737 jet operations – have been axed and about 1,000 more are in limbo.
The Australian Airports Association welcomed the guarantee, but called for further support for airports owed money by Rex. It said regional and remote airports have detailed debts of close to $4m owed by Rex, with some airports owed up to $650,000.
The opposition’s transport spokesperson, Bridget McKenzie, called for the government to go further and guarantee Australians that “regional services will not be cut, air fares will not rise, and no community will be cut off”.
The Transport Workers’ Union (TWU) described the government’s guarantee as a “stopgap measure”.
The TWU national secretary, Michael Kaine, called for urgent action to guarantee the entitlements of redundant Rex workers, who had been unable to access the federal government’s Fair Entitlements Guarantee (FEG) scheme for unpaid wages due to the administration.
Hundreds of employees of Bonza, the budget airline that entered voluntary administration in April, had to wait until the business was officially liquidated in July before receiving the FEG.