Queensland regional airline Skytrans shuts down, cancels all flights

Skytrans Airline has ceased flying after 25 years of serving the Queensland regional community.

The airline announced this afternoon that it would "cease trading, effectively immediately”, with all flights cancelled and all staff made redundant.

The Cairns-based airline flew across the state and in New South Wales to destinations such as Brisbane, Toowoomba, Charleville, the Sunshine Coast, Mount Isa and Sydney, but ahead of today's shut down it had already retrenched 121 staff during November and December 2014.

Skytrans Managing Director Simon Wild said the recent loss “of a large government contract” – subsidised NSW routes which were handed over to Regional Express (REX) – coupled with the sinking value of the Australian dollar meant the airline had to abandon its plans for a leaner Skytrans focused on the Cape routes.

"Our initial model for 2015 was based on an exchange rate with the US$0.91” Wild revealed, however "the majority of our costs are actually in US$, so fluctuations in exchange rates have a material impact on our business.”

"Within the last few weeks we have seen the Australian dollar fall as low as US$0.81. Unfortunately a drop below US$0.88 means our revised Skytrans model would not be a viable long term proposition."

"In addition to the currency challenge it now appears likely that we will have competition on our Cape routes with an inevitable price war,” Wild added, "a war where the only winner would be the airline with the deepest pockets."

Refunds for future travel with Skytrans

Passengers who have already paid for future flights with Skytrans, including those who are now stranded, are advised to contact their travel insurer and make alternate arrangements.

For tickets purchased using a credit card, you may be able to have the cost of any future Skytrans travel refunded by filing a 'chargeback' request with your card issuer.

Travel agent bookings are handled directly by travel agents, who can advise on refund possibilities and can assist with booking alternate flights, and if necessary, hotels.

Travellers who have paid using cash, or cash-equivalents such as Electronic Funds Transfer and BPAY, will need to contact Skytrans directly.

Two million dollars has been set aside by the airline and secured by its bank to assist customers in obtaining refunds.

Other out-of-pocket expenses such as meals and accommodation for stranded travellers may be covered by your travel insurance provider.

Just over a year ago, NSW regional carrier Brindabella Airlines went into receivership after the grounding of eight of its 10 aircraft owing to overdue maintenance checks, at which point Qantas stepped in to pick up some of Brindabella's government-approved monopoly routes such as Sydney-Mudgee.

The Financial Review reports that Regional Express intends "to fly all of the Cape York routes that were abandoned by Skytrans,", with "limited operations" starting within six weeks pending clearance from the Civil Aviation Safety Authority.

Qantas is believed to have not plans to extend its QantasLink regional fleet into the former Skytrans network, while a spokesperson for Virgin Australia said the airline "continues to monitor the northern Queensland market to explore the potential for new services however we have nothing to announce at this time."

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Chris C.

Chris is a a former contributor to Executive Traveller.