The crisis in the Australian aviation industry has worsened dramatically since Rex (Regional Express Airlines) announced, on July 31, it had gone into administration.
It follows the April collapse of Bonza, another smaller regional airline.
Rex Airlines employees were informed at an all-staff meeting with administrators that 610 jobs were to be terminated — 360 from its capital city operations and another 250 likely to go from its regional and rural carrier.
The airline grounded its services between major cities, before appointing Ernst & Young as administrators.
For the moment Rex’s vital regional services are continuing to operate.
According to University of Queensland economics professor John Quiggin, the collapse “is no surprise to those who have followed the problems of the airline industry”.
“Beginning in 2021, Rex attempted to break into the Melbourne-Sydney-Brisbane market, with a small fleet of Boeing 737s. Unsurprisingly it ran into all kinds of difficulties,” Quiggin said.
Rex accused the Qantas Group and Virgin of “hoarding” landing and take-off slots, a claim they have denied.
“This venture has failed and it remains to be seen whether Rex will survive even as a regional airline.”
Some aviation experts say Australia’s population is too small to sustain three domestic airline businesses.
But Professor Rod Simms, a former Australian Competition and Consumer Commission chair, said on August 1 that the biggest problem is the airport slot allocation system.
“It’s unquestionable that’s the case, so why the government doesn’t change the policy levels to bring that about I really don’t understand.”
He said evidence from around the world shows “when you get routes that have this amount of traffic on them, you can sustain three players”.
Transport Workers Union (TWU) national secretary Michael Kaine said the union is concerned that more than 600 families have been left without employment “in an industry that has taken hit after hit”.
He said the TWU is “working to secure job opportunities at other airlines and aviation companies for ground crew, cabin crew and pilots”.
“The focus now must be on maximising jobs, protecting regional routes, securing redeployment opportunities to other aviation businesses and ensuring entitlements are paid as soon as possible.”
Kaine said federal Labor was considering an “equity stake would serve workers, regional Australia and taxpayers”.
He said while aviation is “locked in a cycle of crises”, there was a need for a “long-term fix to the unregulated market dominance” which favors Qantas. The union is also pushing for new regulator, the Safe and Secure Skies Commission.
Make Rex public
Making Rex a public airline would be a better alternative.
Rex is more than a vital transportation service: it supports medical and education connections and employment, as well as tourism.
Greens Senator for Tasmania Nick McKim said on July 31 the government should “consider” purchasing Rex Airlines to keep it operational and safeguard essential transport links.
Nationalising, or “insourcing”, the full Rex operation, including regional and inter-capital city services, could be the first step in taking the airline industry — including Qantas and Virgin — into public ownership.
A large part of the airline industry’s problems go back to the early 1990s, when the Paul Keating Labor government privatised Qantas.
It had been government-owned until 1993 and had the best safety record in the world.
With a fully unionised workforce and secure wages and conditions, it also had one of the best track records for being on time. This all changed when it was fully privatised.
Argentina re-nationalised Aerolineas in 2008, after 18 years of financial scandals: it proves that it can be done.
Air New Zealand was re-nationalised in 2001 by a Labour government.
The new Labour government in Britain is proposing to take back into public hands the bulk of the British rail system operations — a major advance for the rail network and the travelling public.
It is hard to believe Anthony Albanese’s Labor government could make such a bold move, even though the Prime Minister was once a champion of the very fast train.
Nationalising Rex Airlines could be a catalyst for re-establishing a public transport system across the country which, together with a huge expansion of the national railway network, could bring down carbon emissions.
It would help reverse the disastrous neoliberal trend of privatising the public transport networks which is projected to be Australia’s largest source of greenhouse gas emissions by 2030.