I have been spending a bit of time in a courtroom in Wagga Wagga, watching a murder trial in my local area. In the collegial housekeeping moments between lawyers, there have been more than a few passing remarks about travel arrangements since Rex Airlines entered voluntary administration.
Like many country courtrooms, the judge and some of the bar table are often fly-in-fly-out workers. They join professional contractors, tradies, health workers, public servants and other visitors who make up the 225,000 passengers to come through Wagga airport every year.
The Wagga Wagga city council’s 30-year airport lease from the defence department expires on 30 June next year. The mayor, Dallas Tout, said the council had been informed the federal government would then open the lease for expressions of interest and the council could apply along with anyone else.
Air travel is an essential service in a big country. While the vast majority of regional airports were handed over for community use, Wagga is designated as a joint-use airport, because it’s next to the Royal Australian Air Force base. It is also home to the army’s recruit training centre at Kapooka.
So the call for interest means the government airport, upgraded through ratepayers’ funds, could be privatised because little ol’ Wagga council will find it hard to compete against the muscle and deep pockets of private operators.
Take Sydney airport as an example of where that might lead. It is in the news because it has been partly blamed for Rex Airlines’ financial woes.
For those who have never been on a Rex flight, it is very much a regional airline that operates on commercial routes as well as flights to more remote areas made in partnership with the Queensland government, to places including Thargomindah, Birdsville and Mornington Island in the Gulf of Carpentaria. A Rex flight is a very “country” experience. As my colleague Claire Keenan wrote, when you fly Rex as a country person, you often know half the people on the plane.
There were a number of factors that have led to Rex’s financial staggers. Infighting on the board was significant, between the former Nationals minister and now chairman, John Sharp, and the airline’s largest shareholder, Lim Kim Hai. The airline’s attempt to add a bit more competition to the capital city routes was ballsy but perhaps ill-advised – though I can see the attraction. Those 90-minute flights between Sydney and Melbourne generate more revenue than any other route in the world, according to industry data from November 2023.
But we don’t live in the mythical version of Australia that is the land of plucky little battlers, so attempting to out-compete larger airlines may have been doomed from the start. The Sydney airport slot manager is now majority-owned by Qantas and Virgin, the duopoly players on those routes. Sydney airport also has a curfew plus a limit of 80 aircraft movements an hour. Generally, regional New South Wales services cannot use a peak period slot unless it has historically been used only for regional NSW services.
That means new players operating into those capital city routes including Rex and the short-lived Bonza are pushing manure uphill with a pointy stick.
The former Australian Competition and Consumer Commission boss Rod Sims, who is now professor of public policy at the Australian National University, explained it like this to Radio National: “When [competitors Rex or Bonza] want those key slots that they must have to be viable, they have to go and ask for them from Qantas and Virgin. And of course, they’ve also got to put their business plans before them.
“So the government sets this system up for failure. It sets this system up for a duopoly, and therefore sets the system up for higher aviation for higher airline prices than Australians should be paying.”
Six days after Rex’s trading halt on 29 July, the infrastructure minister, Catherine King, announced – surprise! – that the government is opening tenders for the excellent title of Sydney airport slot manager.
That’s not a direct response to Rex’s voluntary administration, it was a recommendation from a 2021 review by Peter Harris of Sydney airport’s demand management scheme.
King has already announced wider reforms in response to the Harris review, including what she termed as “protections for regional NSW communities”, including the ability for regional services to apply for any peak period slot. The reforms also include requiring priority be given to regional flights but add that the slot manager will “need to balance this with other priorities like giving slots to larger aircraft” – two recommendations that seem likely to cancel each other out.
Sims said you could argue that Rex and Bonza “should have anticipated that the system was so rigged against them that they were doomed to fail”. But is this the glorious age of open markets we were promised from the competition reforms in the 1990s?
The prime minister was critical of Rex’s attempt to crack the capital city routes but his government has hinted it would not let the airline fail as a regional service. Yet Guardian Australia has revealed that the government had previously turned down a plea by Bonza for financial help. The Nationals senator Bridget McKenzie accused the Albanese government of dithering on aviation reforms, though the 2021 Harris review was sitting on the desk of the Morrison government as well.
And McKenzie may remember that it was Sharp, the now Rex chairman and National party elder, who put a cap on those Sydney airport movements during his time as transport minister in the Howard government, which made slots the second hottest property in Sydney after houses. Sharp has admitted his creation has come back to bite him.
Back in Wagga, the Riverina MP, Michael McCormack, has extracted a stay of execution on the airport lease until 2026. A defence spokesperson would only say the department was working with the Wagga Wagga city council on options for the future operations of the airport.
But private operators will be circling. Even if Rex has its wings clipped, there is still plenty of flying to be done in the regions.
The truth is that Australian governments have slept while anti-competitive behaviour has crept into so many of our essential services, including airlines, supermarkets, farm supplies, the chicken industry, banks and electricity companies.
Here’s hoping they have learned something from that and keep essential services like country airports for the benefit of communities they serve. And here’s to more competitive skies. Sic ’em, Rex.
