Rex’s “Strong-Armed” Tactics Against Local Councils Exposed

Regional Express Saab 340 planes at Cooma Airport

Regional Express Airlines (Rex), Australia’s largest independent regional airline, has been profitable almost every year since 2004. Given the volatility of the aviation industry and tight margins on regional aviation, that’s a remarkable achievement for the airline which will shortly launch jet services between Sydney, Melbourne and Brisbane. But has Rex’s success been at the expense of some of the small airports that rely on the regional carrier for their town’s only air service?

By our count, Rex has publicly attacked, shamed or threatened at least 12 regional Australian airport operators since 2014. Rex was the only airline serving half of these regional airports – most of which are run by local councils.

Rex’s grievances vary in substance, but often relate to disagreements over landing fee increases or the airline taking exception to something a councillor has said.

Disputes over airport service charges

Rex has publicly criticised airports including Dubbo, Wagga Wagga, Broken Hill, Mildura and King Island for increasing airport charges. In 2014, for example, Rex threatened to pull all direct flights to capital cities from Broken Hill Airport after Broken Hill City Council proposed to increase its service charge from $12 to $12.30 per passenger, in line with inflation. It similarly threated to cut flights to Wagga Wagga in 2016. And it did actually cut flights to Mildura in 2018 after accusing Mildura Airport Pty Ltd of “abusing its monopolistic position”.

Rex also cut flights to King Island twice in 2018 following a lengthy dispute over airport charges and allegedly offensive comments made by the local mayor.

“I am sick and tired of the chicaneries of the King Island Council and as a result, Rex will no longer be continuing the two weekly return services that were recently reinstated,” Rex executive chairman Lim Kim Hai said at the time.

Air service withdrawn over councillor comments

This is not the first time Rex has withdrawn flights as retaliation for comments made by a local councillor. The airline ended Grafton’s only air service earlier this year after a local councillor suggested Rex needed to “pull their finger out” during a debate about whether to approve the airline’s request for a rebate. Clarence Valley Council, which runs Grafton Airport, did ultimately approve a $8,908 rebate for Rex.

“Please note, however, that given the hostility of the councillors in relation to this matter, and following the call for REX to ‘pull their finger out’, REX will reject Council’s offer,” Rex national airports manager David Brooksby told Clarence Valley Council in an email in June, as reported by the ABC.

“Please also be aware that REX will cease all services to Grafton with effect 3 July 2020,” the email said.

Rex reinstated flights to Grafton in August, but only after the local Nationals MP intervened.

Last year, Rex issued a media release “condemning” the “rogue behaviour” of the CEO of the District Council of Grant, which runs Mt Gambier Airport, after the airline wasn’t invited to be a member of the local airport strategy committee.

“Regional Express (Rex) calls on the District Council of Grant (DCG) to take disciplinary action against its Chief Executive Officer (CEO) David Singe for his highly irresponsible actions,” the media release on 6 March 2019 said.

The airline also attacked Orange City Council in 2016 for criticising Rex’s reliability record, and publicly blamed a decision in 2017 to redeploy planned service improvements from Merimbula to Moroya on Bega Valley Shire Council (which owns Merimbula’s airport) “flip flopping on its decision numerous times”.

The fight against airport security screening charges

Rex also has a history of fighting with airports over security screening charges.

Rex lost a legal battle with Dubbo City Council in 2014 after the airport started charging Rex passengers for security screening costs. Rex argued that its passengers should not need to undergo security screening because their Saab 340 aircraft are below the threshold – and therefore the airline should not have to pay security costs in Dubbo.

The airport had introduced security screening for all passengers when QantasLink began flying larger Q400 planes to Dubbo which were above the legal threshold for requiring passenger screening. Dubbo City Council argued that it would have been more expensive overall to have separate departure areas for Rex and QantasLink passengers.

Despite losing this legal challenge in 2014, Rex’s campaign to stop security screening charges in Dubbo was still displayed prominently on the home page of its website until last month.

When Rex called for expressions of interest from regional airports to apply for new air services in September this year, Rex General Manager for Network Strategy Warrick Lodge added that “cities, such as Tamworth, which insist on charging security screening charges on carriers not legally required to be screened, will not be considered.”

Flights withdrawn over council’s refusal to buy a power outlet

Rex also publicly criticised Cairns Airport in 2018 for declining to participate in its Community Fare scheme, accusing the airport of being “not willing to assist the less fortunate in the community”.

But perhaps the most bizarre attack was towards Mid Coast Council which operates Taree Airport. In 2017, Rex cited the council’s decision not to buy a 3-phase power outlet for $1,000 as the catalyst for withdrawing flights from Taree.

“The Taree route is loss-making for Rex however, the impetus to withdraw from the route originated from the Mid Coast Council’s refusal to supply a 3-phase power outlet to the airport apron (an investment of less than $1,000) when Rex was prepared to invest $23,000 for a new 3-phase Ground Power Unit that would improve operating efficiencies and reliability on the route,” Mr Lodge said.

A deliberate tactic to pressure local councils?

Rex also speaks publicly in support of many local councils, particularly when new agreements are reached. But the constant public shaming of other regional councils – and sometimes even individual councillors – could be seen as a deliberate tactic to pressure local councillors into giving in to Rex’s demands. It may also be a warning to other airports to cooperate or face the consequences.

The company would likely know that local politicians will not want to be risk being publicly ridiculed or held responsible for losing their community’s vital air services. Rex is the only airline operator in many of the country towns it serves, so it often gets away with it.

Some councils have fought back

Last year Dubbo City Councillor John Ryan told local Dubbo newspaper The Daily Liberal that Rex had a history of threatening councils to pull air services if they didn’t get what they wanted. It came as Dubbo City Council refused to give in to immense pressure from Rex to drop a proposed landing fee increase of $1.99 per passenger, which the council said was needed to pay for airport infrastructure upgrades.

“Unfortunately the airline has access to vital landing slots at Sydney’s airport, and this gives the company unfair power when it comes to bargaining with individual councils,” Cr Ryan said.

Rex responded by sending a strongly-worded letter campaigning against the local council to around 16,000 Dubbo households.

Dubbo relies on Rex to bring vital competition on the Dubbo-Sydney route, and Rex is the sole operator on the Dubbo-Broken Hill route. But Dubbo City Regional Airport is served by four other airlines, so may have less to lose overall than a country town airport where Rex enjoys a monopoly.

With individual councils often left with limited bargaining power against Rex, some have now “unionised”.

In April 2020, right in the middle of the COVID-19 lockdown, Rex allegedly threatened to “drastically reduce or cease services” to regional airports in South Australia if they didn’t agree at short notice to provide concessions for the next 8 years. In this instance, the Local Government Association of South Australia took up the fight against what they described as “extortion” on behalf of multiple South Australian local councils.

“Councils appreciate the importance of regional air services, and are willing to partner with the State and Federal governments on providing support for companies flying regional routes,” Local Government Association President Sam Telfer said.

“However, we won’t be strong-armed into signing away millions of dollars at a time when our sector is working hard to support communities impacted by COVID-19,” Telfer said.

Regional aviation is a tough business

Based on its past financial performance, there’s little doubt that Rex is a well-run airline. It provides an efficient and reasonably reliable air service to dozens of rural Australian communities, and its Community Fare scheme keeps airfares on many routes at affordable levels.

You can’t really blame Rex – or any other for-profit business – for trying to negotiate better deals from its suppliers. Margins in regional aviation are notoriously thin, and it is very difficult for many regional airlines to make money. Pulling flights from loss-making routes is also a normal part of doing business.

Indeed, Qantas and Virgin Australia have also had public disagreements with airports from time to time – most famously with Perth Airport.

But the repetitive and public nature of Rex’s attacks on such a large number of different airport operators – many of which rely on Rex for their town’s only vital air services – seems unusual.

Rex did not respond to our request for comment.

________________________

Related Articles

Recommended by the Australian Frequent Flyer

Enhanced Internet Access and Security for Travellers Trying to access your favourite Australian websites when overseas only to discover they have been geo-blocked? Concerned about your internet privacy especially when using unsecured wifi? NordVPN will solve both these common problems. www.nordvpn.com
Earn Cash from everyday purchases Get paid up to 25% in real cash from your everyday purchases from leading companies such as Virgin Australia, Booking.com, Coles, Apple, Microsoft and much more. Free to join and no catches! www.cashrewards.com.au

AFF Supporters can Login Now to remove all advertisements


Be the Frequent Flyer Expert!
Subscribe below to The Frequent Flyer Gazette to receive free updates in your inbox every Monday & Thursday morning.



We respect your privacy and never spam. Unsubscribe anytime.

Matt Graham
The editor of Australian Frequent Flyer, Matt's passion for travel has taken him to over 60 countries… with the help of frequent flyer points, of course!
Matt's favourite destinations (so far) are Germany, Brazil, New Zealand & Kazakhstan. His interests include economics, aviation & foreign languages, and he has a soft spot for good food and red wine.

You can contact Matt at [email protected]

15
Comments

  Subscribe  
newest oldest
Notify of
PeeBee

Good on REX
Pity they don’t take on Councils for their other practices such as charging exorbitant parking fees.
It seems in many instances that local councils use the airports as a cash cow.
Basic facilities are community owned and should not be used to rip off the locals or the tourists who are often the lifeblood of the communities

Daniel Doyle

Sounds like the Ryan Air of Austraia!

AgentGerko

The fight at Dubbo was not Rex’s fault. QF came on to the route with bigger, faster aircraft intending to push Rex out. Rex quite rightly said their aircraft had never required screening and it was unfair to suddenly force them to do this simply because the larger aircraft of QF required it. QF was as usual being the bully-boy here, hot Rex.

Manfredh

It wasn’t Qantas’ fault either. That was the smallest aircraft in their fleet, and they moved to service the town. Based on your logic, you’re implying Qantas should have bought a new, smaller aircraft type and trained crew just to retain the same operations at the airport. Progress doesn’t work that way, and just like Rex buying 737s now to compete on city routes, Qantas operate with a fleet that works for regional areas so if they serve a new port would sensibly use them. Yes, the outcome for Rex was unfortunate, but just because they visit a port doesn’t… Read more »

nfw

It’s simple really: have separate exits for each airline. Rex pax can use the non-annoying non-security lane/exit and Qantas pax can enjoy the security lane and the extra charge that goes with it. That would be user pays wouldn’t it? Sounds like Qantas controlling the environment; and it’s “Qantas operates…” as there is only ONE Qantas

Peter

Sorry, no, it was not the smallest plane in their fleet. Their flights to Dubbo were all in a plane that was below security requirement weight, just like Rex’s. About five flights per day. Qantas decided that if they flew a larger plane in twice a week, they would effectively force a cost of around $9 per pax on to Rex. It was shrewd underhand tactic that worked for them. I followed this saga right through on a daily, basis, including talking to people very close to the action. I have countless stories like this. This one-sided article is breathtaking… Read more »

Phil Crosby

And then there was the curious decision by Rex to abandon the Merimbula service that it’s had for years, in what seemed a spat over QANTAS adopting the route which would give choice to south coast pax. Yet they are still flying the Moruya leg of the original two port flight, which must surely be the lesser earning service. (I’ve flown this several times, and only saw 1 or 2 pax use the Moruya pick-up stop.). Obviously some strategy going on behind the scene. But in the main, I’ve been impressed by Rex. Good record of on-time flights at good… Read more »

Bronya Pressler

Broken Hill is one of those airports where REX enjoys a monopoly… at the expense of
Broken Hill residents. It’s nothing to expect to pay around $600 for a Flexible fare on a one-way trip to Sydney…! And the hold Council to random whenever the issue of passenger taxes is raised. If REX fares ex BHQ isn’t highway robbery then I don’t know what is…!

nfw

Easy don’t use Rex. There is always the bus and train. Or you could raise shareholder funds to start your own airline.

Peter

So you are suggesting that the many surgeons and specialists who fly to Dubbo every morning, operate and consult, and then fly back to Sydney for afternoon surgery, – can use a bus or train

Chieftain

We all want things cheaper but in reality, to fly from Sydney to Dubbo for even $600 is a relative bargain. I think even a surgeon or a specialist could manage it…

nfw

Oh no, poor councils being “strong armed”. Poor dears, as if local councils (or any government) wouldn’t do the same. If they don’t like Rex they can always set up their own airlines or have others come in and do the job.

Peter

That’s one side of the story, I will wait to hear the other side. And believe me, there is one. An elephant in the room.

Oscar Morgan

I really don’t see an issue with them standing up to Councils. There is not a well run, 100% honest council in this country. Washed up political wannabes full of self interest. Good on Rex. If they aren’t willing to realise Rex are a business needing to make money then they can go and talk to their State government about getting a couple of extra bus services

John

Regional Australia deserves affordable, reliable air travel, since various state governments progressively shut down regional train networks and replaced them with bus services which have now often been reduced also; regional Australia should not be gouged by cashed up small overseas owned airlines, regional councils should not be bagged for trying to maintain a financially viable airport to meet the multitude of operating overheads, safety, security and now health requirements. The untimely and unseemly demise of Ansett was the beginning of the end for regional air networks, and the consequential Qantas monopoly made sure of that. Pillory local government and… Read more »