Rex Airlines has entered voluntary administration, suspending its 737 flights serving major cities while maintaining its Saab 340 regional services.
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Ernst & Young Australia has been appointed as administrator.
With around 2,000 employees facing uncertainty, there are growing calls for government intervention to provide support.
In this episode of The Briefing, host Sacha Barbour Gatt is joined by Robyn Ironside, aviation writer for the Australian newspaper, to discuss what this development means for regional travel and ticket prices going forward.
Since the pandemic, the airline company has struggled with profitability.
In February, it reported a bottom-line net loss of $3.2 million for the first half of the 2023/24 financial year.
Ms Ironside revealed that Rex’s collapse would significantly affect travellers, forcing them to pay more on airfares.
“The Australian Competition and Consumer Commission provided a lot of evidence that on routes where Rex was providing competition, the airfares were coming down and they’d recently just added Melbourne Perth, where they were doing $99 there,” she said.
In response, Virgin Airlines reduced its fares to $97, which were previously priced at $600 or $700.
“So you can see that downward pressure on fares does happen as a result of competition. So to now lose that prospective competition. It’s not good for travellers at all.”
The company would not offer refunds for travellers who already purchased Rex flights.
However, a statement on the Rex website said Virgin Australia offered to assist customers affected by the cancellations.
“We are not offering refunds, but an agreement has been reached with Virgin Australia to honour all prepaid tickets for the Rex Group’ direct services between domestic capital cities, at no additional cost to passengers.”
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