AUSTRALIA | Rex Airways could be bailed out by the Federal Government according to the Australian Travel Industry Association.
The Australian Travel Industry Association has supported the idea that the Federal Government should be the buyer-of-last-resort for Regional Express Holdings (Rex), given the first option should always be for a private buyer.
With around AUD 11.5 million in outstanding payments owed to travel agents, predominantly in regional and rural Australia, ATIA is also asking the Government to ensure that any public funds used to support Rex’s ongoing operation use a clawback mechanism for these outstanding debts over a 12-month period.
ATIA CEO DEAN LONG said that there was no doubt that the ideal solution would always be a private buyer. He said that if the Government does buy REX, they must make good on the money owed to Australian travel agents and airports as a result of Rex’s collapse.
“Around AUD 11.5 million is currently owed to Australian travel agents who are predominantly small-business owners in regional and rural Australia. Like these agents, there are also a number of airports that have significant losses due to the collapse of Rex. Any buyout of that debt or nationalisation of the airline must see these debts repaid as a priority. This can’t just be about sending money to international creditors,” said Long.
“The Government gave over AUD 5 billion to airlines during COVID, yet despite that, we’ve ended up with higher airfares. Australia has the most concentrated aviation market in the world. We also have to acknowledge that a number of the routes Rex operates are actually mandated monopolies, so we need a robust third airline business in Australia. ATIA has asked, including in our pre-budget submission, that the Australian Competition and Consumer Commission be empowered and funded to undertake an annual market concentration study of international and domestic services and funded to continue its Domestic Airline Competition Monitoring reports beyond 2026.”
The Government has confirmed additional support will be provided to help maximise the prospect of a successful sale, including a waiver of the “use it or lose it” test for Rex regional flight slots at Sydney Airport, which will ensure access until 24 October 2026.
The Government has also announced that in the event there is no sale, the Government will undertake necessary work, in consultation with relevant state governments, on contingency options, including preparations necessary for potential Commonwealth acquisition.
This announcement is in addition to the Government lending up to AUD 80 million to keep Rex’s regional routes operational until 30 June 2025 and acquiring AUD 50 million of debt from Rex’s largest creditor, PAGAC Regulus Holdings Limited, earlier this year to ensure the airline could continue to operate.
“The major issue for Rex is the age of the fleet, and this will be a major barrier for any buyer as there is a global shortage of aircraft. If we allow Rex to collapse, it’s going to lead to even higher prices for regional communities but, critically, also a huge loss of connectivity, which will have a significant impact on their economies,” said Long.
ATIA continues to work closely with the Government to ensure the needs of the Travel Sector are considered throughout the process.
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