When Air T acquired Rex, it agreed to boost the Saab fleet in operation from 30 to 44 aircraft as part of a government-backed rescue plan. The arrangement also required a $50m equity injection from Air T to recapitalise Rex and a schedule to repay $90m in existing debt via a profit-sharing mechanism.
Under the Commonwealth support package, Rex has so far paid $367,857.53 in interest. Operational capacity has not improved, with only 30 Saabs still in the air despite access to a $60m loan tagged for “engine care and maintenance”.
Operational strain is now showing across Rex’s network as it tries to balance demand, high fuel prices and an ageing fleet that is not expanding as agreed. The airline has already axed the Melbourne–Devonport and King Island–Burnie routes, removing vital links for regional communities.
Flights on several other routes have been scaled back rather than increased, which undercuts the original justification for the government’s financial support. The gap between the promised 44 Saabs and the current 30 shows the difficulty of restoring capacity when maintenance, parts and fuel all cost more.
Canberra is increasingly alert to those difficulties, with the Transport Minister confirming the government is closely monitoring Rex’s progress under Air T’s stewardship. Oversight focuses on whether public funds, including the $60m engine-maintenance facility, actually deliver more reliable regional services.
The situation is a test case for how far governments should go in backing smaller carriers that struggle to meet turnaround commitments. Regional passengers are watching nervously, as more routes may be pared back if the recovery continues to lag.
