An expert has warned that airfares are likely to rise as Rex prepares to enter administration and possibly become the latest airline to collapse after Bonza.
Ernst & Young will be announced as Rex’s administrator on Wednesday, financial news service Bloomberg reported, and that means bad news for travelers.
Greg Bamber, a professor at Monash University and author of Up in the Air, said this would “reduce competition” and encourage Virgin and Qantas, “which form an oligopoly” in the market, to raise their prices.
“That’s what usually happens when there’s less competition – the dominant players raise their prices,” he told Daily Mail Australia.
Professor Bamber said that when Bonza collapsed in early July, “both Virgin and Qantas offered passengers free tickets on the routes they were flying”.
“But the challenge “For Bonza and Rex customers, the beauty of it is that they are flying on routes that were normally regional and in most cases not operated by Qantas or Virgin,” he said.
“So it didn’t always work. That kind of offer didn’t help most passengers in practice.”
If Rex fails, it could be a long time before another airline emerges in Australia to challenge the dominance of Qantas and Virgin.
Regional airline Rex is preparing to file for bankruptcy and Bonza went under earlier this month, so Qantas and Virgin Australia are likely to take advantage of the situation and send flight prices soaring. Bonza staff pictured
‘Over the years, Australia has seen several examples of new airline collapses, not just Bonza and Rex, but going back to earlier times.‘We saw the collapse of Ansett (in 2002), which was not a newcomer,’ Professor Bamber said.
‘The problem is that we have an oligopoly (in Australia) with a very strong player, a quasi-monopolist, Qantas, which has too much market power.
“Regulators have failed to rein in the dominant player that is Qantas. I think we deserve to see greater regulation in Australia to curb Qantas’s massive market dominance.”
Professor Bamber said a strong and competitive airline industry was vital to Australia’s well-being.
“This is a huge country with vast distances between our major population centers,” he said.
‘We have no alternative way to travel between centres because there is no high-speed rail system and roads are not world-class between major cities, which are far apart.
“Aviation is a vital industry in Australia.”
Amid the possible collapse of a second airline within a month, Prime Minister Anthony Albanese said he was “concerned about Rex”.
“It is an important regional airline. What we will do, however, is to study any proposal (to keep it flying).”
He added that ‘Rex, as a regional airline, of course, provides important links with regional communities, and particularly between capital cities and regional communities; it is important for those local economies.
“That’s why we want the aviation industry in Australia to continue to provide those services and that access.”
Shadow First Minister Simon Birmingham said on Tuesday the government “needs to act urgently, but it also needs to be very clear about how to act.”
Mr Birmingham told Sky News that Labour needed to get its priorities right.
“The government has responsibilities to taxpayers and travellers, not to shareholders. That was certainly the approach they (the Coalition) took in relation to the difficulties with Virgin (in 2020).
‘There are ways in which the government can support and maintain routes that are essential to the travelling public, particularly in regional areas.
‘And there are ways they can act to ensure the travelling public is protected.
“But they must also act in a manner that is responsible to taxpayers and not by propping up shareholders or creating an environment in which taxpayers face the potential for significant losses.”
If Rex goes under, it could be a long time before another airline emerges in Australia to challenge the dominance of Qantas and Virgin.
Will my Rex flight go ahead?
As of Tuesday afternoon, Rex’s website was not accepting bookings for its services between capital cities such as Sydney, Melbourne and Brisbane.
Regional services are still available to book, many of which are only served by Rex.
Unlike Bonza, Rex owns its own aircraft, so it is more likely, though not certain, that flight obligations will be met while the company goes into administration.
More details are expected later today or Wednesday morning.
If you have a flight booked in the next few days or weeks, please check directly with the airline or your travel agent to make sure your flight is still available.
How can I get a refund if Rex goes bankrupt?
On April 30, when it was clear that Bonza was on the brink of collapse, customers received text messages saying they would get their money back within three weeks as long as they completed an online form within 24 hours.
But that promise turned out to be a false dawn and the trustees at Hall Chadwick had other ideas.
Unlike Bonza, Rex (plane pictured) owns its own aircraft, so it is more likely, though not certain, that flight obligations will be met while the company goes into administration.
On May 1, they announced that processing refunds for customers was not a priority.
Those who had flights booked were to be treated as unsecured creditors while administrators decided what to do with the business.
Unsecured creditors are usually the last to get their money back, while secured creditors, such as banks, are first in line to receive any remaining money.
The situation with Rex, if it collapses completely, will likely be very similar to what happened with Bonza: customers will be at the back of the queue for refunds.