Photo Credit: Getty Images
Australia's third-largest airline, Rex Airlines, has entered voluntary administration, resulting in the cancellation of flights on several routes. Rex Airlines, known for servicing smaller regional towns and cities that larger carriers like Qantas and Virgin Australia do not reach, has appointed Ernst & Young Australia as administrators.
Trading in Rex shares was halted earlier this week in anticipation of the announcement. This development follows the recent collapse of another Australian carrier, Bonza, reflecting the turbulence in the domestic aviation market. Founded in 2002 after the collapse of Ansett, Rex operates from around 56 airports with a fleet of 66 aircraft, mainly 34-seater Saab 340 planes and nine Boeing 737-800s.
Since 2020, Rex has used its larger 737-800 aircraft to service routes between major cities such as Melbourne, Sydney, and Brisbane, competing with other established carriers. These flights have now been canceled, with the 737-800s grounded. Passengers with bookings on these routes will not receive refunds but can transfer their flights to Virgin Australia free of charge. Meanwhile, services on regional routes using the smaller Saab planes will continue.
Australian Prime Minister Anthony Albanese emphasized Rex's significance to regional Australia, stating, "One thing we need to do is to make sure that we have a viable and ongoing Australian aviation industry." Transport Minister Catherine King echoed this sentiment, expressing the government's readiness to "work with Rex" to secure its future. She added, "We obviously don't want to do that just at any cost. We want to be involved very closely in what that future might look like."
The opposition transport spokeswoman, Bridget McKenzie, highlighted the lack of competition in the aviation sector, dominated by Qantas and Virgin Australia, which control over 93% of the domestic market. "Two aviation companies control more than 93% of the domestic space and companies like Rex create more competition, which means cheaper airfares across the board," she stated.
Rex shares have nearly halved in value over the past year. The company also holds a 50% stake in an aviation business that transports workers to remote worksites, such as mines. The collapse of low-cost carrier Bonza earlier this year, which resulted in over 300 employees being stood down, underscores the challenging environment facing Australian airlines. Bonza's administration came after the sudden repossession of its fleet of six Boeing 737 Max-8 aircraft, with no rescue deal materializing.
