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Rex plea: Govt must help or airlines will go to the wall

February 12, 2014 Aviation, Headline News No Comments Email Email

egtmedia59Rex, Australia’s biggest regional airline, has joined Qantas in asking for some sort of government support, and warning that the aviation sector may collapse without it, going the way of Aeropelican and Brindabella.

Rex issued a profit warning, predicting that its pre-tax earnings for the first half of this financial year are likely to fall 40% below the level achieved during the corresponding period in the previous year. itcmchina_en_250x250_animated

The airline has noted a major slump in business traffic, which it blames for most of the drop in revenue, ABC News reported.

Rex chief operating officer Garry Filmer said the whole aviation industry was facing financial problems. He spoke at an opportune time, with Qantas and Virgin Australia both noting big revenue declines.

“Regional aviation is even harder hit, as the profit margins are slimmer,” Filmer declared.

“We have already seen the collapse of two of Australia’s oldest regional carriers during this financial year, Aeropelican and Brindabella, and in today’s toxic environment, more will likely follow suit. In the past decade, there was an average of one regional airline collapsing every year.”

Filmer called on the Deputy Prime Minister and Minister for Regional Development, Warren Truss, to fulfil a pre-election promise to offer AUD 3.5 million worth of rebates to airlines operating on routes with low passenger volumes.

“We implore the Minister for Infrastructure and Regional Development to take immediate and forceful efforts to fulfil his election commitments to regional aviation outlined in the Coalition’s Policy for Aviation, as many regional carriers have little time left before they face the same fate as Brindabella,” he said.

Reports emerged last year that the Government was considering buying a stake in Qantas or moving to guarantee its debt, but the government talked down such speculation.

The Coalition government is very “dry” on economic issues, and its sink-or-swim attitude has been demonstrated recently with Holden, SPC Ardmona and now Toyota. Regional airlines are a lifeline to remoter communities in rural Australia, however, and may rate as a special case in a big land with far-flung settlements.

Written by : Peter Needham

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