The journey to establish a successful regional airline in Queensland has been fraught with challenges, and profitability remains elusive for many.
Last week, Rex Airlines disclosed its move into voluntary administration, joining the ranks of numerous regional airlines that have ceased operations.
Back in the late 1980s, Peter Collings envisioned a bright future for regional aviation in McKinlay, a small town situated 1,600 kilometres northwest of Brisbane.
“We had a four-seat Cessna 182 Skylane plane sitting there, by 1992 launched charter operations under the MacAir banner,” he said.
Initially, the routes were unregulated.
“We picked up the contract from mine sites back to the coast. We would go to Mount Isa, Cloncurry, Brisbane and Townsville.”
Collings’ venture thrived, and he expanded his fleet to include around 30 Saab 340s, the same model operated by Rex.
“After Flight West went broke in 2001, we ended up picking up those regulated routes,” he said.
“I sold out of the business not long before, but it went on to become quite large for almost a decade before going broke.”
For over three decades, the Queensland government has engaged airlines to service subsidised routes throughout the state, ensuring that regional and remote communities have access to vital services.
In the fiscal year 2022/23, the government allocated $12 million to subsidise Rex’s regulated air services.
Before Rex’s inception, Skytrans had been servicing the government-subsidised routes in northwest Queensland and the Gulf, having succeeded MacAir in 2009 after its receivership.
Flight West had been operating on some of these routes since 1987.
Despite a history of financial instability, Skytrans CEO Alan Milne remains optimistic about Rex’s future.
“Voluntary administration doesn’t mean that an airline will be shut down,” he said.
Skytrans itself faced administration in 2015 after losing the government-regulated route contract to Rex but resumed operations two months later.
Milne’s experience underscores the resilience required to sustain a small airline.
“[Rex] are our competitors, but we’re a part of the same industry,” he said.
“Off the back of the failure of Bonza, we don’t want to see another one go down so quickly.”
Milne pointed out that the crux of the issue for Australia’s aviation sector is the nation’s modest population size.
“It’s not like a continental USA — we just don’t have the movements,” he said.
The industry is in search of an optimal balance of service providers.
“I don’t know what that looks like, but I don’t think it’s three big airlines competing head to head on the golden triangle [Brisbane, Sydney, Melbourne] route.”
In the Gulf of Carpentaria, serviced solely by Rex, concerns have resurfaced regarding the potential impact on healthcare and industry should the airline cease operations.
Jack Bawden, Mayor of Carpentaria Shire and a resident of Normanton, emphasised the reliance on air travel for medical professionals.
“Nurses, doctors — they all fly-in, fly-out,” he said.
“There would be a big hole and I’d be very concerned about the health outcomes if we did lose the service. I want to see Rex maintained, but my worry is it could be pulled out from under us, which would leave a big hole in all of Western Queensland.”
Seven hundred kilometres away in Hughenden, Flinders Shire Mayor Kate Peddle is worried about losing air access while trying to deliver the $5-billion CopperString 2032 project alongside the state government.
“We shouldn’t be regressing on our services offered, we should be punching forward,” she said.
Adding to the narrative, the expansion of airport facilities had been a key focus, with significant investments made in anticipation of future growth.
“One of our top priorities had been the expansion of the airport and investing in that. This could impact businesses that had been considering expanding into the region, knowing they would be relying heavily on flights to get their staff in and out,” was a concern expressed by stakeholders.
When pondering a solution, Mr. Collings reflected on the increased difficulty of launching a bush airline today compared to a quarter-century ago.
“It’s certainly possible to run a profitable smaller regional airline right now, but you have to weigh up all those costs and variations and transfer that to the tickets,” he said.
“You can’t run a plane that’s half-full for cheap.”
Mr. Collings said any operator would struggle to break even unless conditions changed.
“It’s a matter of axing the routes that aren’t worth heading in to, and if they’re integral for medical reasons then the government needs to step in,” he said.
In a statement, Queensland Transport and Main Roads Minister Bart Mellish said airlines remained the responsibility of the federal government.
“Transport and Main Roads will continue to monitor developments and impacts,” he said.
“Regional Queensland remains our priority.”
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