Regional airline Rex had been calling on the Government to waive domestic aviation charges. (Supplied)
The Federal Government will waive $715 million worth of fees and charges for domestic airlines, as Australia’s aviation industry buckles from the fallout of the coronavirus pandemic.
- The support package will refund and waive aviation fuel excise, air service charges and domestic and regional aviation security charges
- It comes after Qantas said it would ground 150 aircraft and regional airline Rex announced a voluntary trading halt to the ASX
- Airlines around the world have struggled since the outbreak of COVID-19 with many asking for government bailouts
The support package, announced on Wednesday, will refund and waive aviation fuel excise, air service charges and domestic and regional aviation security charges.
Deputy Prime Minister Michael McCormack said the “major relief package” would be backdated to apply to charges from February 1, returning almost $160 million to the industry.
“Providing this assistance not only helps our airlines, but the entire aviation industry, regional Australians in particular and other industries such as tourism and trade, which rely on aviation,” Mr McCormack said.
The Government has not set an end to the support measures and Mr McCormack said it will continue to work with the aviation industry as it faces ongoing challenges associated with the pandemic.
It comes after Qantas said it would ground 150 aircraft and regional airline Rex announced a voluntary trading halt to the ASX.
Regional airlines with ‘only weeks of reserves left’
Rex had been calling on the Government to waive domestic aviation charges and provide a sovereign guarantee for new bank loans sought by regional lines in order to continue operating.
It said small regional carriers had “only weeks of reserves left” and without government intervention, irreversible damage would occur to the across the industry.
In an open letter to the Deputy Prime Minister, Rex’s chief operating officer Neville Howell called for urgent action.
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“Rex does not believe that Rex, and all other regional carriers, will be able to pull through this crisis without significant assistance if the health authorities’ projections prove accurate,” Mr Howell wrote.
“If regional carriers collapse, so will many regional communities for which the air service is their lifeline.”
Mr Howell argued Rex was “one of the few airlines in the world and the only Australian carrier that has continued to maintain uninterrupted profitability when faced with the series of severe global economic and environmental shocks of the past two decades, including war, fuel prices above $US120 a barrel, volcanic ash, GFC, the worst drought in 120 years, catastrophic bushfires [and] crippling pilot shortages”.
The Regional Aviation Association of Australia’s (RAAA) chief executive Mike Higgins has told the ABC he “100 per cent endorses everything that Rex has said”.
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Mr Higgins said the airline reflected the concerns of many of the RAAA’s member organisations and added that the falling Australian dollar was further crippling his industry which relied on aircraft, parts and maintenance from the US.
Late last year the Productivity Commission made clear that the market for domestic air services in Australia was highly concentrated with Qantas Group, Virgin Australia Group and Rex accounting for more than 95 per cent of all domestic regular public transport flights.
Airlines around the world have struggled since the outbreak of COVID-19 with many asking for government bailouts.