Regional Express aims for new national airline launch in early 2021 but impact on Wagga unclear

The airline, which currently offers prop-driven flights in and out of Wagga, entered a share trading halt on Tuesday following reports it was seeking $200 million to lease 10 passenger jets and hire new staff.

REX has declined to comment in response to questions from The Daily Advertiser about how the new national airline might affect its current regional services and its pilot training academy at Wagga.

The airline's proposed new venture would see it compete with Qantas, Jetstar and whatever remains of post-collapse Virgin Australia for routes between Sydney, Melbourne, Brisbane, Adelaide and Perth.

In a statement to the Australian Securities Exchange, REX executive chairman Lim Kim Hai said the airline would make a decision on the new venture over the next eight weeks.

"REX discloses that it is has been approached by several parties interested in providing the equity needed for REX to start domestic operations in Australia. The preliminary estimate of equity required is in the vicinity of $200 million dollars and the structure of equity raising is yet to be determined.

"The Rex Board is exploring the feasibility of this endeavour and has begun talks with potential equity partners to extend its operations to establish domestic operations, in addition to its regional services.

"At this juncture the Rex Board believes that with sufficient capital injection, there is a confluence of circumstances which render the start of domestic operations by Rex to be a particularly compelling proposition.

"The Board is expected to make a decision on whether or not to proceed within the next eight weeks. Should the Board decide to proceed, the domestic operations are expected to commence on March 1, 2021."

The airline has also been potentially saved from higher security costs at Wagga airport after the federal government changed its model for planned upgrades.

Nationals Senate leader Bridget McKenzie said yesterday that the party had "negotiated changes to the cost recovery model proposed by the government to ensure travellers did not face disproportionate cost increases".

"When travel restrictions are lifted we want people visiting the regions and we don't want costs to replace COVID as an impediment to those visits," Senator McKenzie said.

"We support the security screening, but right now regional tourism is stagnant. We need to kick start it again and adding costs to regional air travel is the wrong thing to do in a post COVID-19 environment."

South Australian Centre Alliance Senator Rex Patrick last week described Wagga airport as being in a "lottery" of regional cities that could be forced to upgrade security and face passing on "unviable" costs to passengers.

Rex did not respond to a request to comment on the government's costs decision.

Regional Express is currently maintaining a handful of weekly return flights between Wagga and Melbourne and Sydney because of financial assistance from the federal government.

The cut back its Wagga flights during the coronavirus pandemic and had said it was facing closure without external help.

Qantas also cut its weekly Wagga services by half in response to the crisis.

Regional Express was formed in 2002 via a merger of Wagga-based Kendell Airlines with Hazelton Airlines in the Central West.