Letter to the Editor - Friday, April 4: Rex at crossroads
REGIONAL Express (Rex) began servicing the Grafton and Taree communities in February 2007.
This followed the collapse of regional airline Big Sky Express in late 2006. Big Sky Express had been operating 19-seat aircraft on the Grafton-Sydney and Taree-Sydney routes, carrying 6000 to 7000 passengers annually on each route.
Following Rex's start-up in 2007, Rex was hit by a global pilot shortage in FY08 and the GFC in FY09.
Since FY09, the costs associated with providing regional air services have significantly increased. Fuel costs are now 45% higher than they were when Rex first started the Grafton and Taree services in 2007.
The imposition of the Carbon Tax in FY13 continues to push up costs of fuel to a record high.
Furthermore, the impact of the Carbon Tax, combined with the removal of the en-route rebate scheme in the same year, adds costs of about $5million to Rex's bottom line.
The combined impact of this and a fall in overall passenger numbers across Rex's total network has resulted in profits falling by 45% in the previous financial year and another 60% in the first half of this financial year.
Through this all, Rex has faithfully maintained its services to Taree and Grafton, and while current Grafton and Taree passenger numbers are double that of Big Sky Express prior to its collapse, the combined passenger numbers on the route have declined by some 30% since FY08.
On most days the load factors on Taree and Grafton are only slightly above 30%. Needless to say this route has been loss-making for some time now.
Rex therefore appeals to the Grafton and Taree communities to significantly increase usage of the Rex services in order to sustain the three-return daily services that are allocated the much coveted peak time slots at Sydney Airport.
If the current trend continues, the Rex board at its May meeting may decide to deploy these resources and slots to another route that is more commercially viable.
GM Network Strategy & Sales