Government unveils $298m lifeline for regional airlines

Australia’s regional airlines – including Rex, Alliance and Pelican – will have access to $298 million to continue operating through the coronavirus crisis.

An initial $198 million will underwrite airlines’ operating costs on selected regional routes, with a further $100 million earmarked to provide direct financial support to smaller regional airlines  should it be needed.

The Regional Air Network Assistance Package comes on top of an earlier $715 million provision for the broader aviation sector, bringing the Federal Government’s aviation buffer to just over $1 billion.

“Regional aviation has been smashed by COVID-19,” said Deputy Prime Minister and Transport Minister, Michael McCormack.

“The funding will ensure regional communities benefit from an ongoing airline service by underwriting airlines’ operating costs on selected routes.”

“More than 100 regional and remote airports received a scheduled passenger service last month and this funding will be welcome news for the aviation workforce and the broader communities these services support,” McCormack added.

The near-$300m rescue package will help keep Rex, and other regional airlines, flying.

He said that the 26,000 people employed in the regional aviation sector is in turn worth billions of dollars to rural communities.

There are currently around 12 commercial regional airlines operating regular scheduled passenger services across Australia.

The support package follows calls earlier this week for “urgent financial assistance” by nine of Australia’s regional carriers, led by Regional Express and Pelican Airlines.

Coronavirus crisis averted

Rex moved to suspend all flights within NSW, Victoria and South Australia until the Australian Competition and Consumer Commission stepped in with unprecedented approval for Regional Express, Qantas and Virgin Australia to share services and revenue on 10 key regional routes during the coronavirus pandemic, provided that fares do not exceed those charged as of February 1, 2020.

Some of the combined services include Sydney–Albury, Sydney-Armidale, Melbourne-Mildura, Adelaide-Port Lincoln, Cairns-Townsville and Townville-Mount Isa.

Rex chief operating officer Neville Howell had previously said the airline could fold within six months without government intervention, and has also requested the Government waive a range of fees and charges for a full year to help offset the impact of the coronavirus on regional air travel.

“If regional carriers collapse, so will many regional communities for which the air service is their lifeline,” Howell predicted.

Newcastle-based FlyPelican will also be eligible for the Govt assistance package.

In a letter to McCormack on March 26, signed by Pelican Airlines CEO Martin Hawley on behalf of eight regional carriers, Hawley warned that “the financial survival of our companies can be counted in days rather than weeks.”

“Unlike the major carriers, our companies are generally privately or family-owned… it is the smaller to mid-size companies that offer much needed air services to regional communities throughout Australia servicing routes unattractive to the major airlines. The risks are high and the margins small.”

The Government’s $298m in funding will be available for regional airlines, contracted aero-medical providers and other related essential service providers through a grants program with monthly payments through to 30 September 2020.

David Flynn

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.