The Australian government under Prime Minister Anthony Albanese may be facing a major decision: Acquiring a majority stake in Rex Airlines is being considered as a last resort to save the financially troubled regional airline. If Rex were to cease operations, many rural communities in Australia would be largely cut off from air transport connections.
Rex Airlines went into administration in July 2024 after failing to compete with larger rivals such as Qantas, Jetstar and Virgin Australia on major Australian routes. The introduction of a small fleet of Boeing 787-800s to serve these routes proved to be a miscalculation. After entering administration, the jets were disposed of and the airline now has only 58 Saab SF340 turboprops, which operate mostly regional routes.
Despite intensive efforts by the insolvency administrators to find a buyer for the company, the first attempt to sell it at the end of 2024 was unsuccessful. The government has now announced that it is working with remaining interested parties on possible support measures to maximize the chances of a sale. If no buyer can be found, a state takeover will be considered.
Securing regional connections as a primary goal
The government's main concern is to ensure accessibility to remote regions. Any state support for the airline will therefore be subject to conditions. A potential buyer would have to guarantee that it will continue to offer an "adequate level of service" to rural and remote communities. The government also stresses that any financial support must be justified to the taxpayer and that a buyer is expected to provide sound management and responsible corporate governance.
A government spokesman told the newspaper The Conversationthat it is currently being examined how a state takeover could be practically implemented if no private buyer can be found.
Support already provided and government interventions
The Australian government has already supported Rex Airlines with several measures. One key decision was the extension of the exemption for the so-called "use it or lose it" rules regarding slots at Sydney Airport. Normally, airlines have to carry out a minimum number of take-offs and landings on their slots in order not to lose them. For Rex, this rule has been suspended until October 2026, allowing the company to continue its regional connections from Sydney.
In addition, the company received government financial support of 80 million Australian dollars (50,4 million US dollars) in the form of a loan to ensure the operation of regional flights until June 2025. The government also assumed debts of 50 million Australian dollars (31,5 million US dollars) from Rex's largest creditor, PAGAC Regulus Holdings Limited. This effectively makes the Australian government the airline's largest creditor.
importance for regional communities
Prime Minister Anthony Albanese reiterated in a statement that the government will do everything it can to ensure that air services to remote regions are maintained after June 2025. Transport Minister Catherine King stressed that the state must intervene if the market no longer functions and regions are otherwise cut off from important economic and social connections.
"When markets fail or fail to deliver services to rural communities, government must step in to ensure people are not excluded from opportunities, education and vital connections," King said.
The last time the government owned an Australian airline was over three decades ago. The government sold its last shares in the national carrier Qantas in August 1992. If the government were to take a stake in Rex now, it would be a significant shift in Australian aviation policy. However, the move may be necessary to ensure that many remote communities continue to have access to important transport links.