Rex using taxpayer funds as bargaining chip

 

The Australian Airports Association (AAA) has raised concerns that Regional Express (Rex) is leveraging government assistance in response to COVID-19 to push regional airports to lock in new and unfavourable long-term contracts.

Rex wrote to seven South Australian regional airports on Tuesday, providing a four-day deadline for local councils to agree to new terms for a five-year period or risk the immediate cessation of air services.

AAA A/Chief Executive Officer Simon Bourke said airports feared their communities could now be cut off from city centres.

“It is unacceptable for taxpayer funds to be used to help convince airports to accept onerous terms that will last well beyond the current COVID-19 crisis,” Mr Bourke said.

“Regional airports were struggling even before COVID-19 and have not benefited from the same support Rex will receive as part of government assistance packages.

“Government assistance is supposed to keep regional airlines flying to the communities that need them most, and it would be devastating if Rex left them behind in pursuit of its own self interest at this crucial time.

“It is incredibly disappointing that a beneficiary of COVID-19 relief measures would use that support to negotiate outcomes that would see their partners worse off for many years to come.”

Rex issued an open letter to seven SA airports advising it “intends to tap into both the Federal funding and the State funding (if this becomes available) to provide a minimum of essential services to your community if your council embraces the partnership approach”.

It said failure to agree to their terms by today could result in the immediate cessation of services.

The Federal Government recently announced a $198 million Regional Airline Network Support Program to subsidise regional airline routes. An additional $100 million is available to provide direct financial support to smaller regional airlines should it be needed.

The AAA has written to Government to raise its concerns about the application of funding for regional airline routes.

ENDS

17 April 2020

 

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