Australia’s third-largest airline, Rex, enters voluntary administration

Australia’s third largest airline, Regional Express (Rex), has entered voluntary administration following a failed attempt to compete with major airlines Qantas and Virgin Australia. This has resulted in the immediate grounding of all Rex’s Boeing 737 jets and the cessation of flights between major Australian cities.

Rex has appointed Ernst and Young as administrators and has suspended share trading on the ASX. The airline will continue its regional operations using smaller Saab 340 turboprops, serving 56 destinations, many of them remote.

Rex expanded into the competitive major city routes during the pandemic, leasing former Virgin Australia 737s. Despite efforts such as slashing fares, the airline struggled against its well-established competitors, leading to a loss of over $3 million in the first half of 2023/2024.

Virgin Australia has agreed to honour prepaid tickets for Rex’s suspended routes, allowing customers to transfer bookings to Virgin flights at no additional cost. Customers must re-book by August 14.

Prime Minister Anthony Albanese emphasised the importance of Rex for regional communities and stated the government is looking into proposals to assist the airline.

The Transport Workers Union highlighted that about 2000 employees are affected. The collapse follows the recent failure of budget carrier Bonza, raising concerns about the viability of multiple airlines in Australia’s domestic market.

Virgin Australia has also secured leases over three of Rex’s aircraft and invited Rex employees to apply for jobs with them.