Already and this is the daily This is the Daily OS. Oh, now it makes sense.
Good morning and welcome to the Daily OS. It's Wednesday, the thirty first of July.
I'm Zara, I'm emma.
Another Australian airline is now on the brink of going bust.
Well, we are concerned about Rex. It's an important regional airline.
There has to be an opening up of our airspace so that we can have more than just two airlines to choose from.
The Prime Minister has acknowledged his concerns about the future of the airline Rex after it paused trading on the Stock Exchange this week. The airline has also disabled some online bookings. Now, this all comes after budget airline Bonza entered voluntary administration earlier in the year. So is Australia about to lose its only airline not owned by Virgin
or Quantis. In today's deep dive, we're going to unpack what the latest news about Rex means, if the airline is really going under, and what it says about how the commercial domestic aviation industry is going in Australia. But first, Zara, what's making headlines.
National rates of human trafficking and slavery increased by twelve percent in the year to July. That's according to the Australian Federal Police. The AFP said it received three hundred and eighty two reports of crimes including people smuggling, forced marriage and forced labor in the twenty three to twenty four financial year. The AFP's Human Exploitation Commander Helen Schneider said the statistics represent innocent lives and said police are committed to ending trafficking and slavery.
The Department of Foreign Affairs and Trade that's DEFAT, has reissued a warning to Australians, urging them not to travel to Lebanon. It comes as tensions between Israel and hesbler escalade after an attack that killed twelve children in the Golden Heights.
Israel and the.
US have accused Hesbela of the strike, which Hezbela denies. Defunct's Smart Traveler website warns the security situation could deteriorate rapidly. The agency has urged Australians in Lebanon to leave the region quote immediately while commercial flights remain available.
Police have arrested a seventeen year old boy in connection to a stabbing attack on England's northwest coast that left two children dead and another nine injured. So alleged the teen attacked a group of children at a Taylor Swift themed dance event in Southport. Police said several adults were injured trying to protect the children. They've ruled out the incident as being terror related.
And today's good news, American researchers have made a breakthrough discovery that could prevent a global lithium shortage. The chemical is found in almost everything from phones and laptops to large scale energy storage systems, but it's fear that with a forecasted boom and demand for lithium iine batteries, the chemical could be in short supply. But a team at Rice University in Texas have now found a fast and
environmentally friendly way to extract lithium from battery waste. The new method can retrieve as much as fifty percent of the lithium in used batteries in as little as thirty seconds.
Som earlier this week, we started to hear rumors about Rex and I just want to put out there I am such a REX loyalist. I am so sad to have read headlines that suggests that Rex might be going under Yep. I'm actually meant to be flying with them tomorrow. Don't know what's meant to happen, don't know if I should book another flight. But I've got you here to
explain everything, So that's okay. Starting at the beginning, can you just break down the headlines that people might have been seeing and reading and hearing about Rex?
Yep, and I back the devotion to Rex. I think there's probably a lot of people listening who are concerned. Maybe you've pivoted to towards Rex because.
I've been laid down by other players.
Because You've been let down by the players, and you might have been frustrated with delays, cancelations, etc. We will get to all of that, but Zara, I have to be honest with you up front. It's not looking great. We heard from a range of concerned stakeholders yesterday, including Anthony Albanzi, about the future of Rex. And this all started on Monday afternoon, so that's when we found out
about an ASX trade pause. That's the Australian Securities Exchange and Rex is a publicly listed company on the ASX. It announced a temporary freeze on anyone buying or selling its shares. So that announcement was made ahead of markets opening on Tuesday and was set to last two days, so Tuesday and Wednesday. But before it ends, we're expecting to hear from the airline again about the future of Rex, and that's when the full scope of its troubles are probably going to become much clearer.
Okay, So just to clarify, the first sense that we've got that something was wrong with Rex was that they announced a trade pause, which basically just meant no one could buy and sell their shares in Rex at this time, and that was an indication to the market and to Australia that something is up. What we don't know, but something is up. If we zoom out a bit to understand Rex's place in the sector, what does that look like?
So for those people who aren't REX loyalists like us, Rex launched after two regional airlines merged in two thousand and two. Those airlines were called Hazelton and Kendall and it became a publicly listed company on the ASX three years later.
That's quite surprising to me. I thought Rex was a fairly new company.
Yes, so it's a firm player in the domestic aviation space. But it had really carved out this identity around a core belief that quote, the Bush needs and deserves an air service of quality to connect.
Regional communities and bigger cities.
So Rex's ethos as a carrier had always been about servicing remote and regional parts of Australia. It's operated as this standalone carrier in you know, really remote parts of the country or operating services that other carriers don't. It did expand in the last couple of years. So in June twenty twenty, Rex announced plans for the airline to expand its domestic routes from March twenty twenty one, and that's when it added a bunch more services, including capital
city services. Sydney to Melbourne, for example, is the Rex route that I think you and I have flown on more recently. And that's around the time when you know, people in the cities started paying more attention to REXIT. Really emerged as this reliable player in a post COVID setting where as we know a lot of turbulence for lack of a better word, has bemoaned the industry cancelations, airfare issues, lost baggage, all the rest of it. Rex has kind of emerged as the underdog and the surprise
in that market. As I mentioned at the top, it's the only commercial airline here not owned by Quantus or Virgin because Jetstar, the budget airline, is owned by Quantus. And this is a point you're probably going to hear more and more about with the conversation around you know, market competition, dominance, whether or not there is a fair and regulated enough sector at play for Australian consumers.
Well, I mean that does make me think about a conversation that we've already had this year, Like we've already had this conversation, but it was in regards to another airline. It was in regards to Bonsa, which launched fairly recently but has already gone under. There seems to be a conversation that keeps happening.
Yeah, if this sort of language is sounding familiar, it's because it is. Rex is not the first casualty of the domestic aviation industry of late. As you mentioned, Bonsa went into liquidation. It entered voluntary administration, announced that in April.
And for some context about where Bonsa came from It was Australia's first low cost independent airline to launch here in fifteen years Wow when its services began in January twenty twenty three, but less than a year after launching, it was never really able to compete with Jetstar and the others, and it cut a bunch of its services within that first year. Then last month confirmed that over
three hundred employees' contracts were terminated. It had failed to find a buyer to potentially bail out the airline and we said farewell to Bonza.
And now the same could be true of Rex. Has this news come out of the blue? People that are I guess more keenly watching this sector, have they anticipated that this could happen to Rex as well as BONSA.
Yeah, so sadly there were some warning signs. We know that Rex has been struggling to recover from disruptions caused by the pandemic, and in the twenty twenty two twenty three financial year, Rex reported thirty million dollars in losses. Some other early signs of trouble came in September last year, when Rex cut a bunch of services. It said that they were set to resume in March, but then extended
that pause on those services till October. So REX hasn't been operating at that full capacity to which it extended in twenty twenty one since September last year. This year, its board has undergone major reshuffles. We saw its executive chairman resigned. Several REX directors have also resigned, and that brings us to this week when Rex's ASX share price dropped to its lowest value since the start of the pandemic.
So that's really significant.
And then on Monday, we of course had the announcement of that trade pause that ends today.
And what has the response been like to the news You know, I know that around the newsroom we've had very strong reactions, but what's kind of the political or commercial response to this.
Yeah, we heard from the PM Anthony Alberanezi yesterday he acknowledged his concerns about the future of REX during a press conference.
Here's a little bit of what he had to say.
REX as a regional airline, of course, provides important links with regional communities, is important for those local economies. So we want to see the aviation industry in Australia continue to be one that provides that service and that access.
Now, obviously this has created uncertainty for flyers, and we should know more later today when we hear that announcement. But the other very important part of this is about the workers, the people who work for REX, who operate and you fly the planes and everything else. Are we expecting job losses?
Concern around this exact issue has been floated by the Transport Workers Union. They've been really vocal in the last day or two now. That's the union that represents workers in the airline industry, and it's said thousands of workers have been thrown into limbo by this uncertainty surrounding REX. It estimates some three thousand jobs could be on the line here if X can't pull through. But the TWU
said it would support efforts to save REX. The national secretary of that union, Michael Caine, described REX as quote another victim of an unregulated industry. So that obviously is referencing what happened to Bonza and more broadly kind of the market of domestic aviation.
So when we think about some of the responses or the solutions to this problem, like what are those solutions? What is available to REX in order to keep them afloat.
To answer that question, we can look to the response for other airlines that have been in trouble in recent years and it could kind of go one of two ways. Virgin, Australia's second biggest carrier, faced an entire restructure after the airline collapse AAPS at the start of the pandemic. So at the very first wobble, Virgin did collapse, but was saved when administrators from Deloitte were tasked with rescuing it. They got it off the ground, sold it to a
US investment firm and that saved the airline essentially. So voluntary administration is one kind of path that Rex could go down. Otherwise there could be government intervention and what
would that look like. You might remember that in the wake of the early pandemic, the national carrier Quantus, did actually receive this kind of funding, more than two point seven billion dollars in government assistance after it faced uncertainty during the pandemic, and it's famously faced a lot of criticism in the years since Quantus surrounding its market dominance given the scale.
Of that bailout as it was described.
Anthony Albanesi hasn't ruled out a bailout option for REX, where the government would provide it with extra funding to keep it afloat. And I think what's really important to bear in mind here is the role that REX plays as a regional carrier.
We're not just talking about like an economic value here. It's also of course that it connects regional and rural populations with the rest.
Of Australia exactly, and so I think that makes it a unique case and I would suggest that there will be some pretty heavy hitters in government arguing a case for saving it on those grounds. In terms of where the opposition is on this one, Shadow Transport Minister Bridget McKenzie urged the government to quote not allow a repeat of BONSA.
And the thing that I just can't quite get my head around, and I made a joke in the office the other day that the two industries you seemingly don't want to own a business in Australia are media and aviation. Obviously I ignore my own rule for that first one, but it just seems like it's really difficult for anyone that is not virgin or quantas to survive in Australia. And I mean even then Virgin struggled as well. Yeah, what is the issue here? Why can't they survive?
So there are a few key reasons. Firstly, the A Triple C broadly attributes a lack of government policy to support these airlines to boost competition in domestic aviation. So overall, they kind of say that there is a blanket need for more regulation to help the little guys.
And we're talking there about regulation perhaps that would allow for more competitive behavior. If we're talking about the A Triple C. They focus on competition. We know that there's this duopoly in Australia, so they're saying we need better protections for the smaller guys.
Yeah, and one of those protections, or what it describes as one of the most effective ways that the government can promote better competition would be to quote help new and existing airlines to better access takeoff and landing slots at Sydney Airport.
Now, check me through this.
This might sound boring, but it comes up time and time again as being really critical to driving competition or seeing unfair competition. This is about slot hoarding. Now, that's when major airlines book as many arrivals and departure spots at popular airports as possible to maintain priority runway access. So it's kind of about politicking between the airlines and
the airports. But the problem with slot hoarding that the A Triple C found and that has been responded to by the government with some reforms that we'll get to, is that that removes the opportunity for new players to get runway space during peak times in busy places, so you know, a new airline can't then schedule flights to
in demand places at in demand times. And that there's also evidence that the A Triple C detailed about the bigger airlines using these slots or booking these slots up and then canceling flights, so hoarding them for preserving that priority access with no intention of running all of those services. So we have seen a little bit of reform here. In February, the government announced plans to improve how slots are managed at Sydney Airport in response to those calls
from the A TRIBLEC. This is Sydney Airport, the biggest, most busy airport, and the concerns around slot hoarding have been echoed within the aviation industry from experts themselves. So someone like Professor Ian Douglas. He's from the unsw School
of Aviation. He's argued that the practice of slot hoarding stops smaller airlines like Bonser and Rex from scheduling more flights, and he told TDA earlier this year that the practice has resulted directly in less competition in domestic aviation and that that also drives up higher airfares for customers. As I mentioned, the A Triple C has broadly called for more regulation in the industry, and some of that involves
facilitating negotiations between airports and airlines. So what we kind of touched on there with the politics between airports and airlines that an imbalance exists at the moment and that if the government regulated that space a little bit more, it would give smaller airlines and up and comers a bit of a leg up. Obviously, those are just some of the issues play when people are talking about concern
around competition in the domestic aviation space. Back to Rex, though, we will be waiting today for that announcement later on and we will keep you across it on the Daily OS.
So stay tuned.
Thanks so much for listening to today's episode of The Daily OS. You might even be listening to us on a REX flight right now. Who knows. If you enjoyed this episode, make sure you review it on whatever platform you're listening on, and if you're watching us on YouTube, hello and hit subscribe. We'll be back again tomorrow, but until then, have a great day. My name is Lily Madden and I'm a proud Dunda Bungelung Kalkutin woman from Gadigol Country.
The Daily oz acknowledges that this podcast is recorded on the lands of the Gadighl people and pays respect to all Aboriginal and Torres Strait island and nations. We pay our respects to the first peoples of these countries, both past and present,