A Rex spokesperson told The Daily Advertiser that the airline had previously discussed a program offering discount tickets to residents with Wagga City Council, which operates Wagga Airport.

Passengers on the Rex's Albury to Melbourne service already have access to $99 discount fares, though any Community Fare prices in Wagga could vary.

The airline said the two parties did not reach a deal but Rex would be willing to offer the discounts in return for a five-year guaranteed airport tax agreement with the council as "incentive" for the discounts.

"Rex proposed the Rex Community Fare Scheme to Wagga City Council on November 15, 2019. In mid-December council advised that it would look at the proposal in the New Year," the spokesperson said.

"Rex advised that this would not allow enough time for the Rex Community Fare to stimulate passenger numbers within financial year 2019/2020 as Rex had committed to guaranteeing the airport head tax revenue that it paid to Wagga City Council in financial year 2020.

"As a result Rex was forced to withdraw the Rex Community Fare proposal, but advised the council that Rex was willing to enter into an agreement that guaranteed the annual airport revenue paid by REX (plus Consumer Price Index) equal to the 12 months prior of entering into an agreement.

Council general manager Peter Thompson said further discussions with the airline would follow a review of Wagga airport's performance against other regional facilities.

"Discussions have been held with Regional Express around its Community Fare Scheme and Council has received a draft agreement for review," Mr Thompson said.

"Council is undertaking a benchmarking exercise on its airport fees and charges.

"While Council will pursue discussions with Rex in relation to the Community Fares Scheme, it wants to finalise the outcome of the benchmarking exercise first."

In August, Albury City Council became the 37th local government in sign up to Rex's Community Fare program, locking in a $99 ticket price for a one-way flight between the border city and Melbourne for the next three years.

The discounted fares are be available outside of 30 days before departure subject to community fare availability and all remaining unsold seats within 24 hours before departure.

The council and Rex have a history of disagreements over airport tax rates.

The Rex spokesperson said an airport tax deal would provide "an incentive for Rex to grow passenger numbers to the mutual benefit of Rex and the City of Wagga Wagga".