COOBER PEDY News & Events

DCCP TO CONSIDER REX AIRLINES REQUEST FOR FINANCIAL ASSISTANCE

Rex Airlines disembarking passengers on the tarmac at Coober Pedy

The District Council of Coober Pedy have tabled a request for financial consideration from Rex Airlines at its Tuesday night’s council meeting 24-3-2020. The letter of request outlines the airlines concerns in staving off suspension of air services to Coober Pedy amid the Covid-19 crisis in Australia. (See Rex letter to DCCP below)

Coober Pedy Council’s CEO Mr. Dean Miller has said, ahead of tonight’s meeting. “The mooted grounding of Rex Airlines will be a further blow to outback communities that are already struggling with the impact of job losses caused by Covid-19.”

“The airline’s request for a waiver of 50% of the landing fees at Coober Pedy airport for the next 7 months will be considered at tonight’s Council meeting. Council is open to granting a waiver but this would be subject to Rex providing Council with information about its financial position.”

“The recommendation is that Council defer payment, not waive, the fees. The request would cost Council $30,000 – money it can ill-afford. Council calls on the Commonwealth and State Governments to do everything in their power to save Rex Airlines,” concluded Mr. Miller.

As detailed in multiple media releases (available here), Regional Express (Rex) Airlines has called on all levels of governments, Federal State and Local, to assist as the aviation industry enters a much more dire situation.   

Following an open letter to Deputy Prime Minister, the Hon. Michael McCormack on the 16 March 2020 (available here), Rex expressed support of the $715Million relief package announced by the Federal Government.

While the Federal Government acted quickly in announcing a $715M relief package in place, the direct benefit to Rex from this package amounts to only $1M a month in operating cost-savings, which is grossly insufficient to cover the level of losses expected during this crisis.  If the airline’s flight schedules are reduced by 80%, then so too will the $715Million of cost assistance be reduced by 80%.

To provide some context to the $1M of cost-saving per month through the Federal Government Assistance Package, Airport Charges for Rex amount to $2.5M per month and this is why it is critical for local councils and airport owners to provide meaningful assistance.    

Regional air services provide an invaluable contribution to the socio-economic well-being of local communities throughout regional and remote Australia and it should be incumbent on State and Local Governments to preserve vital air services where travel is for essential reasons including critical medical related travel both which patients seeking medical treatment and medical specialists providing services in regional and remote communities.  

While Rex has already taken drastic measures to ensure its continued viability, including a significant cut to our schedule announced last Thursday; as the situation deteriorates, Rex has been forced to declare today that the current environment will not be able to support the ongoing operation of the airline, and will suspend all operations with effect from 6 April 2020 unless further assistance is released, as the current measures are not enough to sustain the airline.

This is why Rex has sought the support of District Council of Coober Pedy, so that local communities in regional and remote Australia continue to have a critical regional air service.

Airport charges are a significant operating cost for regional airlines, and Rex has written to District Council of Coober Pedy to request either a reduction or a full waiver of airport charges.  Please refer to the attached letter.

The situation is extremely dire and all measures should be deployed to save Coober Pedy’s essential air service.

REX AIRLINE’S LETTER TO DISTRICT COUNCIL COOBER PEDY

19 March 2020
District Council of Coober Pedy
PO Box 425,
Coober Pedy, SA 5723

Dear Mr Dean Miller,

As you are probably aware by now, the current COVID-19 pandemic is threatening to bankrupt every airline in the world within 3-6 months if the situation continues to deteriorate as is expected. You may have heard that Qantas today has grounded 2/3 of its workforce. Please see attached Rex’s media release that explains the implications to regional aviation and regional communities.

Rex has been faithfully serving your community since Rex’s incorporation in 2002 (previously by Kendell Airlines since August 1986) and we believe we have contributed significantly to the socio-economic well-being of your community.

Given that Rex is now fighting to survive long enough for the worldwide situation to return to normalcy, we would like to request that council shows its recognition of the contributions of Rex to your community by providing a 50% reduction of the head tax payable from 1 April 2020 to 31 Dec 2020 in a first instance. This will be critical to the survival of Rex and with it the longevity of the air services to your community if Rex manages to survive this carnage. In this regard we are heartened by councils like Parkes who has reached out to us unsolicited and volunteered to waive all head tax and allow free parking of aircraft if needed. In times like these we know who our true friends are and Parkes’ actions will never be forgotten by Rex. We too will always stick by them in their times of adversity.

Should this reduction not be possible, the route may not be commercially viable with the sharp reduction in passenger numbers and we may have to reduce further the already sharply reduced schedule planned for Coober Pedy or be forced to suspend services altogether until such time that Rex is strong enough to service your community again. We seek your understanding.

We look forward to your immediate attention to this matter due to the urgent nature of the matter and in any case before 25 March 2020 (sorry for the tight deadline but we are all battling for our survival here) after which we will assume our proposal is rejected.

Yours faithfully,
Warrick Lodge
General Manager Network Strategy

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s