Following an emergency board meeting on Sunday, March 22, Regional Express (Rex) has announced that it will shut down its regular public transport (RPT) air services in all states, except in Queensland where the services are underwritten by the Queensland government.
Operations will cease with effect from April 6 unless the federal and state governments are willing to underwrite the losses, the Rex board has said.
On Friday, March 20 the company announced cuts to its services.
In addition to RPT services in Queensland, other activities of the Rex Group not to be affected include Ambulance Victoria fixed-wing air ambulance services, charter contracts with mining companies, freight services and pilot training at its pilot academies in Victoria and NSW.
Rex's deputy chairman, John Sharp said the company was supportive of the strong measures taken by the federal and state governments such as the shutting of state borders and imposing a lockdown within the states as well as discouraging all non-essential travel.
"These measures will definitely reduce the number of infections from COVID-19, prevent the health care system from being overwhelmed and save many lives," Mr Sharp said.
"However, tragically for the airline industry, this means that we can expect the year-on-year reduction of passenger numbers to nosedive to around 80 per cent from the 60 per cent we are experiencing today. There is a tipping point in the airline business beyond which it will no longer be sustainable to operate reduced services," Mr Sharp said.
"We believe that with only 20 per cent of our passenger numbers left we have reached that point and the Rex Group has decided that the quasi suspension of all services at this stage presents the best option to preserve its cash," he said.
"The federal government has acted swiftly by promising a rescue package to the airlines of $715m. However, the direct benefit to Rex from this package is only $1m a month which is grossly insufficient to cover the $10m a month we expect to lose running the heavily reduced schedule we announced last week," Mr Sharp said.
He said the US government rescue package represented a larger proportion of compensation for airlines but also suggested that "state and local governments should be leading the charge in extreme times like these to assist regional carriers rather than leaving it to the federal government".
"So far the state governments have not tabled any concrete proposals although their latest decisions of closing the borders and lockdowns will simply further decimate what remains of regional air travellers. Local councils are also a true disappointment with only two councils having proposed any meaningful assistance for Rex," he said.
"If an assistance package of sufficient magnitude and viability can be negotiated by the end of the week, Rex may be able to reconsider its plans to suspend services. Failure to achieve any traction in this regard will see regional communities lose their air services for many months ahead and even after this is all over, we are afraid that some of the more marginal communities will no longer have an air service," Mr Sharp said.
Passengers with bookings after April 6 must wait until after March 27 before writing in via Rex's website to put their bookings on credit for a future flight. No refunds will be offered as is the standard practice of all airlines during this crisis, the company has said.