The Albanese government will on Wednesday announce it is willing, as a last resort, to purchase the collapsed Rex Airlines, in its latest bid to prop up aviation services to regional and remote areas.
Author
- Michelle Grattan
Professorial Fellow, University of Canberra
As the administrators work on the second attempt to sell Rex, the government will say that, in the first instance, it will work with shortlisted bidders on potential support to maximise the prospects of a sale. The initial attempt to sell Rex failed last year.
What support will be offered will be conditional on bidders committing to provide an "ongoing, reasonable level of service to regional and remote communities". Assistance must also represent value for taxpayers' money and there would have to be assurances from the potential buyer of good governance.
While the government is not a bidder in the sale process now underway and hopes that will be successful, if there is no result, it will go down an alternative route.
"In the event there is no sale, the Albanese government will undertake necessary work, in consultation with relevant state governments, on contingency options, including preparations necessary for potential Commonwealth acquisition."
The government is also providing an extension to the exemption from the "use it or lose it" test for REX regional flight slots at Sydney airport. This will ensure its access to those slots until October 24 next year.
REX went into voluntary administration last year. An attempt (now abandoned) to compete on capital city routes had proved disastrous for it.
The Federal government has provided it with extensive support to keep it in the air on regional routes while its future is being determined.
This has included $80 million in a loan to the administrator to keep regional flights operating until June 30, as well as a buyout of $50 million debt from its biggest creditor, PAGAC Regulus Holdings Limited. The government is now Rex's largest creditor.
Prime Minister Albanese said: "We are working collaboratively with the administrators of REX to ensure that regional services continue beyond June 2025, including looking at what support the Commonwealth can provide.
"Regional Australians can be assured that our government will continue to fight to ensure these regional airfare remain available."
Transport minister Catherine King said: "When markets fail or struggle to deliver for regional communities the government has a role to ensure people do not miss out on opportunities, education and critical connections."
When speaking about the future of the airline last month, opposition transport spokeswoman Bridget McKenzie declined to say whether the Coalition would support nationalisation of Rex.
Until the 1990s the federal government owned Qantas and one of the two major domestic airlines.
Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
