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Sharp Airlines has called the federal government’s decision to provide $80 million to rival Rex “extremely disappointing”.
The carrier’s CEO, Alistair Dorward, argued any support should be offered to the industry as a whole to ensure an “even playing field for all operators”, adding Rex’s management was responsible for its collapse into administration.
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The intervention comes after the government offered Rex a financial lifeline earlier this month, at the same time as EY Australia hinted it could use an extended administration period to expand Rex’s ageing fleet.
Sharp, though, has a history of conflict with Rex, having accused the larger airline in 2020 of muscling in on a route between Wynyard and King Island in Tasmania and attacking its “aggressive” tactics in July.
The pair compete directly on the route between Melbourne and King Island.
“Whilst remote regional centres require sustainable air services, any government support should be provided to the regional aviation industry as a whole to ensure that there is an even playing field for all operators,” Dorward said on Monday.
“Last Tuesday’s announcement by the Federal Government to provide $80 million to support Rex’s regional operation is extremely disappointing and ignores requests from regional operators across the country for the need for an industry-wide solution.
“There are many small operators like Sharp Airlines that provide reliable essential services to regional communities throughout Australia. These operations require substantial investment and generally earn very meagre returns at best.
“The management of Rex’s failed ambitions to directly take on Qantas and Virgin on domestic routes has greatly contributed to their current financial situation and their voluntary administration.
“The $80m windfall, which on the surface appears to have no conditions attached, enables Rex to continue to directly compete with other operators without similar support.
“Currently, three RPT operators provide services from Victoria to King Island, and we are now entering a period where the playing field is grossly distorted.
Dorward added that “unlike our competitor” his airline engages with the community, works closely with councils and supports local businesses.
“The Federal Government decision highlights a lack of understanding of regional airlines and the services they provide to remote communities,” he said.
“Of particular concern will be the viability of those companies that operate without subsidy, with the government propping up one company to the potential detriment of others.”
EY Australia has been unable to find a buyer for Rex’s regional operations since the collapse in July. However, it has sold aeromedical division Pel-Air to Japan-owned Toll Aviation and is reportedly looking to sell Rex’s flight school in Wagga Wagga.
Administrator Sam Freeman said EY would use the financing and potential extension of its tenure as custodian to embark on a “business improvement program”, including a fleet expansion.
“The extension we are requesting will help us to build a strong network for regional Australia, enabling us to continue to operate the regional network while undertaking a business improvement plan to reposition the business for sale,” Freeman said.
“We’re planning to increase the size of the operational fleet while providing greater clarity for the Rex team and investing in strategic growth initiatives. Through this plan, we’re looking to increase reliability and capacity on the regional routes.
“An extension will not disrupt the continued operation of the regional network, which is such a critical part of regional and rural Australia’s connectivity. The actions to be undertaken in the extension period are expected to enhance the network.”
Richard Daniell
says:He’s definitely got a good point, what makes REX so special that it gets support when no other airline does.
REXs collapse is a direct result of its own stupidity, now that stupidity is supported by government as well.
Split the routes up among the remaining players and give them the support to offer a better more sustainable service. Government should be propping up the existing players not the stupidity and greed of the failed operations of REX.