Monday's shock announcement comes just four days after their decision to drastically reduce Wagga's services in a desperate bid to preserve cash in the face of the coronavirus pandemic.

However following an emergency meeting on Sunday Rex has decided to take those cuts one step further.

The airline will cancel passenger flights everywhere except Queensland, where the state government underwrites their losses. It wants the state and federal governments to do the same across the country.

The airline will not give refunds to passengers with bookings after April 6, however they will put their bookings on credit for a future flight if Rex ever resumes its passenger services.

Rex deputy chairman John Sharp said it was a "tragic" decision, but one made necessary in light of plummeting passenger numbers and steep financial losses made by the company.

"There is a tipping point in the airline business beyond which it will no longer be sustainable to operate reduced services," Mr Sharp said.

"We believe that with only 20% of our passenger numbers left we have reached that point and the Rex Group has decided that the quasi suspension of all services at this stage presents the best option to preserve its cash."

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Last week the federal government announced a $715 million package to bail out the floundering airline industry, however Mr Sharp said it was "grossly insufficient" to keep their airline afloat given the sheer magnitude of the crisis.

The package would have benefited Rex about $1 million per month, however the company estimates it would lose $10 million per month even under the drastically reduced timetable announced on Thursday.

He went on to slam the state government and local councils for not doing enough to keep the airlines alive, threatening to suspend services for many months ahead unless more assistance packages are delivered.

"If an assistance package of sufficient magnitude and viability can be negotiated by the end of the week, Rex may be able to reconsider its plans to suspend services," Mr Sharp said.

"Failure to achieve any traction in this regard will see regional communities lose their air services for many months ahead and even after this is all over, we are afraid that some of the more marginal communities will no longer have an air service."

The airline will continue to operate their charter contracts with mining companies, freight services, and pilot training academies in Victoria and New South Wales.

Qantas still runs flights out of Wagga Airport, however it too is taking a major financial hammering

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