Australian regional airline Rex cancelled flights on Wednesday as part of its voluntary insolvency, putting the fate of the country’s third-largest airline in serious doubt.
To avoid liquidation, the airline, which has existed for decades, has called in the insolvency administrators of Ernst & Young.
Officials said flights between major cities – including Sydney, Perth and Melbourne – would be cancelled, but flights to surrounding communities would continue for the time being.
The regional airline, founded in 2002, aims to connect remote areas of the country with the capital cities with its 123 aircraft.
Like many other airlines, Rex had been struggling with supply chain issues for months – including a global pilot shortage – and had already reduced its routes before the announcement.
Australia’s second-largest airline, Virgin, has offered support to Rex customers affected by flight cancellations, the insolvency administrators said.
Transport Minister Catherine King said the government was not considering a comprehensive financial rescue of the airline.
“We know they will ask for support from the government and we will take some time to work through that with the administrators,” she told national radio.
“We understand how important Rex is, especially for the regions – there are some areas where this is the only, only option in terms of transport.”
Rex reported a loss of US$2 million (AUD3.2 million) for the first half of its 2023-24 financial year, compared with a loss of US$10.7 million in the previous six months.
Australia’s domestic airline market is dominated by Qantas and Virgin Australia, which together have a market share of 93.1 percent, while Rex has five percent, according to data from the national regulator.
Aviation expert Keith Tonkin said that while passenger numbers have returned to pre-pandemic levels, airlines around the world are struggling to rebuild the maintenance and operations crews they have had to lay off.
He added that many airlines had received government subsidies to stay afloat during the pandemic, but in most cases these had expired.
“The smaller airlines have managed to survive until now, but now everyone wants to get paid and that cash flow is gone. They can no longer be supported or sustained,” Tonkin added.
“This is a natural consequence of receiving financial support, and this support is now running out.”
Earlier this year, Australian low-cost airline Bonza was forced into liquidation and its more than 300 employees were given notice of layoffs.
Bonza caused a stir when it launched in January 2023, promising a down-to-earth Australian experience with craft beer, snags on board and a relaxed crew uniform design.
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