Regional airlines continue to fly in the face of uncertainty

Regional airline services are facing uncertainty for at least the remainder of 2020 despite a Federal Government relief package designed to prop up an industry that has been grounded by the COVID-19 pandemic.

The Federal Government has moved to deliver a $198 million funding package to help maintain the regional air network. A further $100 million has been made available to provide direct financial support to smaller regional airlines.

Deputy Prime Minister and Minister for Infrastructure, Transport and Regional Development Michael McCormack said critical air services are needed to connect regional Australia to freight, medical testing, supplies and essential personnel.

“This package guarantees core routes for domestic air freight will remain open and essential workers remain employed, while providing vital financial support for airlines servicing regional and remote locations,” he said.

“The funding will ensure regional communities benefit from an ongoing airline service by underwriting airlines’ operating costs on selected routes.”

Two weeks ago, the Australian Competition and Consumer Commission (ACCC) granted authorisation to Regional Express (Rex) to collaborate with QantasLink and Virgin Australia on 10 regional routes until 30 June 2021.

The routes include Sydney to Wagga Wagga, Dubbo and Albury. Canberra was not included.

The ACCC’s Airline Competition in Australia report, published on 17 September 2020, also explores the impact of COVID-19 on the airline sector, where travel restrictions have led to a 95 per cent reduction in Australian airline passengers compared to the same time in 2019.

ACCC chair Rod Sims said it is critical that when the industry starts scaling up domestic flying, any potential damage to competition is identified quickly.

“Domestic airline travel was expected to be on its way to returning to more regular operations by now, but infection spikes in some states and tighter border restrictions have delayed the recovery,” he said.

A Virgin Australia spokesperson said the airline has made guarantees to people wanting confidence and flexibility when booking their travel.

“We’re hopeful borders will reopen by Christmas and our passenger promise will help get travellers on their next flight as the right step forward to rebooting the Australian tourism industry,” the spokesperson said.

Rex’s general manager for network strategy Warrick Lodge said the airline would help fill the void left by Virgin Australia which has already abandoned eight regional routes.

“Rex has been inundated by desperate pleas from both individuals and community leaders to step into the shoes of Virgin Australia following its announcement to exit,” he said.

“These communities are concerned about their future as they face the prospect of being left with Qantas as the sole monopoly provider, especially at a time when their regional economies have been devastated by the COVID-19 pandemic, bushfires and drought.”

Mr Sims said the ACCC will continue to watch monthly flight capacities, passenger numbers and revenue data from Qantas, Virgin Australia and Rex, which supply the vast majority of Australia’s passenger airline services.

“We will act if we identify behaviour that damages competition, either arising from the conduct by airlines directly or through their arrangements with others,” he said.

“The ACCC will be reporting to the government regularly and this will assist with informed policy development, particularly if we observe signs that competition in the sector is not effective.”

Original Article published by Michael Weaver on The RiotACT.