Faced with the prospect of losing $10 million a month, Regional Express is to ground all its regular public flights around Australia, except in Queensland, where passenger services to rural areas are subsidised by the state government.
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The shutdown, prompted by the closure of state borders to discourage travel activity and contain the spread of coronavirus, starts on April 6.
No refunds will be offered on flights already booked, although passengers will receive a credit for flights when services resume.
The no refund policy has become standard practice for all airlines during the health crisis.
The only chance of some Rex flights continuing after April 6 would be if specific moves were made by the federal and state governments to underwrite the airline's expected losses from the travel ban.
(The federal assistance package offered last week) is grossly insufficient to cover the $10m a month we expect to lose running a heavily reduced schedule
- John Sharp, Rex deputy chairman
Rex, which currently flies in all states, now expected passenger numbers to nosedive to 80 per cent below the same level last year as interstate and regional travel slowed to a trickle focused on essential services only.
Deputy chairman John Sharp said with only 20pc of passenger numbers likely to be left the airline business had reached a tipping point beyond which it was not possible to sustainably operate even a reduced service.
The latest decision overrides Rex's announcement last week of a 45pc cut to the 1500 flights it operates weekly on routes between country airports and capital cities.
Following an emergency meeting of the regional airline's board on Sunday, deputy chairman, John Sharp, said the quasi suspension of all services at this stage presented the best option to preserve cash.
However, if an assistance package of sufficient magnitude and viability was negotiated by the end of this week Rex may be able to reconsider its plans to suspend services.
Supporting restrictions
"Rex is supportive of the strong measures taken by the federal and state governments such as shutting state borders and imposing a lockdown within the states as well as discouraging all non-essential travel," Mr Sharp said.
"These measures will definitely reduce the number of infections from coronavirus and prevent the health care system from being overwhelmed and save many lives."
He said Canberra's swift promise of a $715m rescue package to the airline industry last week was a welcome response to the crisis, but it would only be worth about $1m a month to Rex.
"It is grossly insufficient to cover the $10m a month we expect to lose running the heavily reduced schedule we announced last week," he said.
"Regional air services provide an invaluable and priceless contribution to the socio-economic wellbeing of communities in regional and remote Australia.
"State and local governments should be leading the charge in extreme times like these to assist regional carriers rather than leaving it to the federal government.
"So far the states have not tabled any concrete proposals, although their latest decisions of closing the borders and the lockdowns will simply further decimate what remains of regional air travellers."
Long term consequences
Mr Sharp said failure to achieve any traction on requests by regional carriers for more help from the states would result in more rural communities no longer having an air service "even after this is all over".
Rex confirmed passengers already booked for April 6 or beyond on services to and from its 60 destinations Australia-wide must to wait until March 27 to apply for a credit for a future flight.
The decision to ground Rex's regular passenger services does not include its charter contracts with mining companies, freight services or its Ambulance Victoria contract.
The company's pilot training operations in Victoria and NSW would also continue.
Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
