Regional travellers could be in luck with a troubled airline on the brink of being rescued, but whether ticket prices will actually come down remains up in the air.
Administrators have confirmed US company Air T is planning to buy troubled Australian carrier Rex 15 months after it collapsed into administration.
But the sale must still be approved by creditors, who will meet in coming weeks, while shareholders are expected to be left with nothing.
Federal Transport Minister Catherine King said the proposed buyout was welcome and would help Rex bolster its fleet of aircraft after a taxpayer-funded, $130 million rescue package helped keep it airborne.
The regional airline runs ageing Saab planes and the minister noted Air T had access to a large collection of similar aircraft and spare parts.
“It’s able, hopefully, to get a few more aircraft operating across Rex’s fleet,” she told ABC radio on Wednesday.
“We’ve got to get through this creditors meeting and then obviously the business needs to consolidate … and then our view very firmly has been that we’d be looking at expansion.”
But University of Sydney transport and supply chain expert Rico Merkert said there were few markets into which Rex could expand.
Prior to falling into administration, the airline had a solid network across regional Australia.
“We think they should focus on that and get that profitable again,” Professor Merkert told AAP.
Rex’s failure was widely blamed on its attempt to compete with Qantas and Virgin on major-city routes, including between Sydney, Melbourne and Brisbane, that were dominated by the aviation duopoly.
“The expansion into that triangle, I think, was a huge mistake, Prof Merkert said.
Since the company went under, the federal government bought $50 million of its debt and loaned it up to $80 million to ensure regional and remote communities could continue to access flights.
Ms King’s office declined to comment when asked whether the money taxpayers poured into Rex would be returned or whether the change would lead to cheaper flights for consumers, citing sensitivities about the ongoing sale process.
But Prof Merkert said he hoped there was a provision in the deal for the taxpayer funding to be repaid.
He also suggested the buyout could lead to cheaper flights on some regional routes because the business would be operating more smoothly post-administration.
Air T noted it had entered into an agreement with the Commonwealth to restructure Rex’s funding arrangements, but it did not provide further details.
“(We) will work to ensure Rex will continue to operate on a sustainable basis, thereby providing critical services to regional Australians,” the company said in a statement.
The union representing aviation workers is seeking a meeting with the US company, demanding it guarantee the future of regional routes and security of workers’ pay and conditions.
Transport Workers Union national secretary Michael Kaine said there were still significant questions about Rex’s long-term future.
“Regional Australia has been left behind too frequently when it comes to aviation, and now more than ever we need certainty into the future for Rex,” he said.
Opposition transport spokeswoman Bridget McKenzie said the government needed to clarify which routes Rex would operate under its new ownership and whether prices would change.
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