“Rex
will stand by all regional communities that have stood by Rex during
this global and national crisis”
[Rex
Express Holdings Deputy Chairman and former Nationals MP for Hume, the Hon John
Sharp
AM, company media
release,
29 April 2020]
Stirring
words in that quote at the top of this post.
The
facts on the ground are somewhat different.
It
appears that Rex
Express Holdings*
directors
Kim
Hai Lim,
John
Sharp,
Neville
George Howell,
Christopher
Hine,
Thian
Soo Lee,
Ronald
Bartsch,
James
Davis
and
at least one senior company executive David
Brooksby
are
so offended by having their company's begging letters actually
answered
with increased funding/concessions from
Clarence
Valley Council
that
they have decided to remove the Clarence Valley’s only commercial
air
link with the outside world.
Council’s
financial assistance was in addition to Rex Express receiving nearly
$24
million from the federal government’s
$198 million Regional Airline Network Support Program (RANS) and
$53.9 million from the $100 million COVID-19 Regional Airlines Funding Assistance
Program.
According
to Rex Express on 20 April 2020 the RANS program is to ensure
“regional
airline carriers will be provided assistance to maintain a minimal
weekly schedule to regional and remote ports”. The COVID-19 Regional Airlines Funding Assistance Program is intended to assist airlines "to remain financially viable through the unprecedented downturn in aviationdue to the impact of the COVID-19 pandemic".
Under
revised RANS
guidelines, Rex was
eligible
to receive funding to operate 2-3 return services a week to all
destinations on the Rex Express
network for
up to six months.
Rex’s application for the ports it wishes to provide services to
has been approved and was signed off on 23 April 2020.
So
it seems that the airline had a government funding offer to fly the
Clarence Valley route until at least late September 2020.
So why did Rex Express spit the dummy and pull its Clarence Valley route commencing 3 July?
Admittedly Rex Express as airlines go is only a sprat in the aviation ocean, however it did turn a $17.5 million profit after tax in the 2018-2019 financial year and the board recommended an 8 cents dividend to shareholders.
Perhaps dropping Grafton Airport was because having a leg in again at Ballina Airport since early May 2020, the company board finds that market is more attractive.
Perhaps dropping Grafton Airport was because having a leg in again at Ballina Airport since early May 2020, the company board finds that market is more attractive.
Or perhaps
it has more to do with the changed financial landscape created by the
COVID-19 pandemic and the likelihood that the profit & loss
statement it will present shareholders at this November’s annual
general meeting - given it stated an expectation of a $10 million a month loss due to reduced flights - will not be welcome.
Total
passenger numbers and revenue had
been falling in 2019 but the fall was quite marked in
January-February
2020 – numbers
fell
by
-4
% in January & -3%
in February and revenue fell
by
-6%
in January & -5%
in
February.
By
17 March 2020 it was reported that Rex Express was anticipating
bankruptcy
and on 26 March its ASX share price had dropped to 0.400. Share price has
since recovered to 1.100 as of Friday 5 June.
The
regional airline is also now facing increased competition on some
routes from Qantas which is expecting competition from Regional Express in 2021. Rex wants to expand its own operations on competitive/commercially viable routes.
It
is possible that Rex Express abandoning its flights into the Clarence Valley
will not be the only route it is either jettisoning or downgrading and other low volume regional areas
are in the firing line – they just don’t know it yet.
It may be that the fig leaf Rex is hiding behind – alleged hostility during one
Clarence Valley Council debate of a motion – is meant to forestall
panic in other regions this airline services.
Either way, I have lost count of the times Rex Express has threatened to withdraw or did withdraw its passenger services from airports in the NSW Northern Rivers region. In my personal opinion it is an airline that fails to impress.
Either way, I have lost count of the times Rex Express has threatened to withdraw or did withdraw its passenger services from airports in the NSW Northern Rivers region. In my personal opinion it is an airline that fails to impress.
Note
*
Rex
Express is reportedly 58% owned by shareholders in Singapore.
BACKGROUND
The Daily Examiner,
8
June 2020:
Seven-line
email to council over ‘hostility’ the reason Grafton stunned by
Rex king hit
The
words used in a Clarence Valley Council meeting last week are the
reason Regional Express airlines will cease flying into Grafton from
July 3.
The
airline made the announcement to cease flying via a letter to
Clarence Valley Council general manager Ashley Lindsay on Thursday
afternoon.
A
spokeswoman for the airline confirmed to The Daily Examiner that the
reason for the cancellation of the route was due to the comments made
by councillors in a debate over whether they would provide a credit
note for the airline.
When
pushed on other reasons for the closure of the route, and whether
Rex’s Lismore and Ballina routes would continue, the spokeswoman
declined to comment, and said that further questions from The Daily
Examiner had been forwarded for consideration.
The
motion for providing Rex a credit note of $8908, which was to be used
in January 2021, was passed by Clarence Valley Council 7-2 after a
debate ensued on whether councillors questioned council supporting
the airline.
However
in the letter, the company has stated it has rejected the offer,
despite asking for it in earlier correspondence.
Written
by Rex airports manager David Brooksby, it opens by thanking Clarence
Valley Council for offering Rex a rebate of $8908.
“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. Full settlement has
already been made last week,” the letter reads.
It
concludes: “Please also be aware that Rex will cease all services
to Grafton with effect from 3 July 2020.” Clarence Valley Council
general manager Ashley Lindsay said the decision was “really
surprising and disappointing”, and was seeking to talk to Mr
Brooksby about the matter.
“Council
received correspondence from Rex on March 19 and requested that
council provide a 50 per cent reduction of the head tax from April 1
to December 31, 2020,” he said.
“Council
in March resolved to give a reduction of 100 per cent unanimously.
“We then received further correspondence on April 23 seeking a
credit note over landing fees … that could used in January 2021 for
their first lot of invoices.
“This
was passed 7-2 … and it seems the ‘pull your finger out’
(comment from the debate), that’s what has offended them…..
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