With Rex Airlines pulling capital city routes, the ACCC says fares have risen up to 95%. Meanwhile, the Government has announced a $80m funding deal for Rex. What’s the scam?
The scam is that the Rex package will not make any difference to airline competition on major routes and may not even guarantee Rex will survive. The Labor Government just doesn’t want to see another airline fail so close to the election after Bonza folded earlier this year.
The $80m is a handout to EY, Rex administrators, to keep the airline running at least until June next year. There is no suggestion that Rex’s capital city routes will be restored.
Rex’s demise has been blamed on its foray into Qantas and Virgin territory. That may be true, but there is also much evidence that Rex (and Bonza) were poorly run companies with insufficient capital, with shareholder infighting never a good sign.
Bonza’s demise. Playing football on the edge of Putin’s business matrix
Other regional airline operators are crying foul, asking why such assistance is given to a failed airline instead of assisting others to better service regional routes. Sharp Airlines, which services Melbourne and Tasmania, is particularly aggrieved, with CEO Malcolm Sharp, telling the AFR ($):
The industry can provide solutions at no cost. But now the government’s throwing $80m at them. I just don’t get it.
The ACCC report: “Since Rex suspended operations on its services between metropolitan cities on 31 July 2024, the average airfare on all major city routes has increased by 13.3 per cent to September 2024.”
“The report found that airfares for ‘best discount economy’ tickets have increased from July 2024 to October 2024 across many of the services between metropolitan cities that Rex no longer operates on. Most notably, this includes services from Adelaide to Melbourne (up 95 per cent to $296), Melbourne to the Gold Coast (up 70 per cent to $432) and Canberra to Melbourne (up 54 per cent to $298).” (Our highights.)
It is also in no doubt as to the cause.
Source: Data collected by the ACCC from Bonza (up to March 2024), Jetstar, Qantas, Rex and Virgin Australia.
Yet, in another universe, in a galaxy far, far, away, Qantas blames Coldplay for the price increases.
Back here on earth, Bridget McKenzie is on record supporting our own long-held belief that one solution to the lack of airline competition in Australia is to split Qantas and Jetstar. But that, of course, would be too obvious…
Kim Wingerei is a businessman turned writer and commentator. He is passionate about free speech, human rights, democracy and the politics of change. Originally from Norway, Kim has lived in Australia for 30 years. Author of ‘Why Democracy is Broken – A Blueprint for Change’.