Australia’s aviation market is had some bumpy months. Actually, since covid things have been quite tough for any airline that isn’t part of the Qantas empire. First Virgin Australia restructured massively downsizing fleet and operations in the attempt to make the entire business sustainable. Then Bonza ceased operations with no prior notice. Finally, the last airline to encounter trouble is Rex. The airline and its controlling group Regional Express Holding Limited has entered voluntary administration. What does it translate to for Australian passengers? Let’s look into it.
Rex Halts All 737 Operations Across Australia
Rex, or Regional Express, had ventured off what for two decades had been the airlines core business. In recent years, the airline launched flights on much larger planes than its usual Saab 340s. With a fleet of 8 Boeing 737-800 Rex set out to offer connections between some of Australia’s major cities.
However, something seems not to have gone according to plan. The airline has ceased on July 30th 2024 all its Boeing 737-800 operations across the country as the airline enters voluntary administration.
There is a plan for its passengers who had tickets on future flights. Rex signed an agreement with Virgin Australia agreement allowing passengers to rebook their flights on Virgin services free of charge. This must be done before the deadline of August 14th 2024 contacting Virgin Australia’s customer support.
Regional Saab 340 Flights Unaffected
All this turmoil will not affect Rex’s regional services aboard its fleet of Saab 340s. Those flights will continue to offer connectivity to the outback and smaller airports as usual. It is possible that this is the more stable part of the business that is generating positive operating margins due to public subsidies and therefore will continue to operate. Also, Rex’s regional flights in many cases are essential for the outback communities and cannot be ceased without another service provider stepping in.
Australia’s Domestic Market Too Small for Multiple Airlines
The way the market is evolving, especially in the last years with the issues faced by Virgin Australia, Bonza, and Rex, is telling us that Australia’s domestic aviation market is just too small to sustain multiple carriers. Although it is true that the country’s major cities are so far apart that only air travel is often the viable mode of transport, a small population of just under 26 million can’t support an industry with five full scale airlines.
I think it has become clear that to have a healthy aviation ecosystem some carriers will have to consolidate or exit the market. It is increasingly likely that Qantas will retain even more its dominant position (along with its low-cost carrier Jetstar), while the only other country-wide domestic airline will be Virgin Australia. In this landscape there is only space for smaller regional carriers offering flights to small remote towns. But I might be wrong in my assessment.
