Speaker 1: Already and this is the daily This is the Daily OS. Oh,
Speaker 1: now it makes sense.
Speaker 2: Good morning and welcome to the Daily OS. It's Wednesday,
Speaker 2: the thirty first of July.
Speaker 1: I'm Zara, I'm emma.
Speaker 2: Another Australian airline is now on the brink of going bust.
Speaker 3: Well, we are concerned about Rex. It's an important regional airline.
Speaker 2: There has to be an opening up of our airspace
Speaker 2: so that we can have more than just two airlines
Speaker 2: to choose from.
Speaker 4: The Prime Minister has acknowledged his concerns about the future
Speaker 4: of the airline Rex after it paused trading on the
Speaker 4: Stock Exchange this week. The airline has also disabled some
Speaker 4: online bookings. Now, this all comes after budget airline Bonza
Speaker 4: entered voluntary administration earlier in the year. So is Australia
Speaker 4: about to lose its only airline not owned by Virgin
Speaker 4: or Quantis. In today's deep dive, we're going to unpack
Speaker 4: what the latest news about Rex means, if the airline
Speaker 4: is really going under, and what it says about how
Speaker 4: the commercial domestic aviation industry is going in Australia. But first, Zara,
Speaker 4: what's making headlines.
Speaker 2: National rates of human trafficking and slavery increased by twelve
Speaker 2: percent in the year to July. That's according to the
Speaker 2: Australian Federal Police. The AFP said it received three hundred
Speaker 2: and eighty two reports of crimes including people smuggling, forced
Speaker 2: marriage and forced labor in the twenty three to twenty
Speaker 2: four financial year. The AFP's Human Exploitation Commander Helen Schneider
Speaker 2: said the statistics represent innocent lives and said police are
Speaker 2: committed to ending trafficking and slavery.
Speaker 4: The Department of Foreign Affairs and Trade that's DEFAT, has
Speaker 4: reissued a warning to Australians, urging them not to travel
Speaker 4: to Lebanon. It comes as tensions between Israel and hesbler
Speaker 4: escalade after an attack that killed twelve children in the
Speaker 4: Golden Heights.
Speaker 1: Israel and the.
Speaker 4: US have accused Hesbela of the strike, which Hezbela denies.
Speaker 4: Defunct's Smart Traveler website warns the security situation could deteriorate rapidly.
Speaker 4: The agency has urged Australians in Lebanon to leave the
Speaker 4: region quote immediately while commercial flights remain available.
Speaker 2: Police have arrested a seventeen year old boy in connection
Speaker 2: to a stabbing attack on England's northwest coast that left
Speaker 2: two children dead and another nine injured. So alleged the
Speaker 2: teen attacked a group of children at a Taylor Swift
Speaker 2: themed dance event in Southport. Police said several adults were
Speaker 2: injured trying to protect the children. They've ruled out the
Speaker 2: incident as being terror related.
Speaker 4: And today's good news, American researchers have made a breakthrough
Speaker 4: discovery that could prevent a global lithium shortage. The chemical
Speaker 4: is found in almost everything from phones and laptops to
Speaker 4: large scale energy storage systems, but it's fear that with
Speaker 4: a forecasted boom and demand for lithium iine batteries, the
Speaker 4: chemical could be in short supply. But a team at
Speaker 4: Rice University in Texas have now found a fast and
Speaker 4: environmentally friendly way to extract lithium from battery waste. The
Speaker 4: new method can retrieve as much as fifty percent of
Speaker 4: the lithium in used batteries in as little as thirty seconds.
Speaker 2: Som earlier this week, we started to hear rumors about
Speaker 2: Rex and I just want to put out there I
Speaker 2: am such a REX loyalist. I am so sad to
Speaker 2: have read headlines that suggests that Rex might be going
Speaker 2: under Yep. I'm actually meant to be flying with them tomorrow.
Speaker 2: Don't know what's meant to happen, don't know if I
Speaker 2: should book another flight. But I've got you here to
Speaker 2: explain everything, So that's okay. Starting at the beginning, can
Speaker 2: you just break down the headlines that people might have
Speaker 2: been seeing and reading and hearing about Rex?
Speaker 4: Yep, and I back the devotion to Rex. I think
Speaker 4: there's probably a lot of people listening who are concerned.
Speaker 4: Maybe you've pivoted to towards Rex because.
Speaker 2: I've been laid down by other players.
Speaker 4: Because You've been let down by the players, and you
Speaker 4: might have been frustrated with delays, cancelations, etc. We will
Speaker 4: get to all of that, but Zara, I have to
Speaker 4: be honest with you up front. It's not looking great.
Speaker 4: We heard from a range of concerned stakeholders yesterday, including
Speaker 4: Anthony Albanzi, about the future of Rex. And this all
Speaker 4: started on Monday afternoon, so that's when we found out
Speaker 4: about an ASX trade pause. That's the Australian Securities Exchange
Speaker 4: and Rex is a publicly listed company on the ASX.
Speaker 4: It announced a temporary freeze on anyone buying or selling
Speaker 4: its shares. So that announcement was made ahead of markets
Speaker 4: opening on Tuesday and was set to last two days,
Speaker 4: so Tuesday and Wednesday. But before it ends, we're expecting
Speaker 4: to hear from the airline again about the future of Rex,
Speaker 4: and that's when the full scope of its troubles are
Speaker 4: probably going to become much clearer.
Speaker 2: Okay, So just to clarify, the first sense that we've
Speaker 2: got that something was wrong with Rex was that they
Speaker 2: announced a trade pause, which basically just meant no one
Speaker 2: could buy and sell their shares in Rex at this time,
Speaker 2: and that was an indication to the market and to
Speaker 2: Australia that something is up. What we don't know, but
Speaker 2: something is up. If we zoom out a bit to
Speaker 2: understand Rex's place in the sector, what does that look like?
Speaker 4: So for those people who aren't REX loyalists like us,
Speaker 4: Rex launched after two regional airlines merged in two thousand
Speaker 4: and two. Those airlines were called Hazelton and Kendall and
Speaker 4: it became a publicly listed company on the ASX three
Speaker 4: years later.
Speaker 2: That's quite surprising to me. I thought Rex was a
Speaker 2: fairly new company.
Speaker 4: Yes, so it's a firm player in the domestic aviation space.
Speaker 4: But it had really carved out this identity around a
Speaker 4: core belief that quote, the Bush needs and deserves an
Speaker 4: air service of quality to connect.
Speaker 1: Regional communities and bigger cities.
Speaker 4: So Rex's ethos as a carrier had always been about
Speaker 4: servicing remote and regional parts of Australia. It's operated as
Speaker 4: this standalone carrier in you know, really remote parts of
Speaker 4: the country or operating services that other carriers don't. It
Speaker 4: did expand in the last couple of years. So in
Speaker 4: June twenty twenty, Rex announced plans for the airline to
Speaker 4: expand its domestic routes from March twenty twenty one, and
Speaker 4: that's when it added a bunch more services, including capital
Speaker 4: city services. Sydney to Melbourne, for example, is the Rex
Speaker 4: route that I think you and I have flown on
Speaker 4: more recently. And that's around the time when you know,
Speaker 4: people in the cities started paying more attention to REXIT.
Speaker 4: Really emerged as this reliable player in a post COVID
Speaker 4: setting where as we know a lot of turbulence for
Speaker 4: lack of a better word, has bemoaned the industry cancelations,
Speaker 4: airfare issues, lost baggage, all the rest of it. Rex
Speaker 4: has kind of emerged as the underdog and the surprise
Speaker 4: in that market. As I mentioned at the top, it's
Speaker 4: the only commercial airline here not owned by Quantus or
Speaker 4: Virgin because Jetstar, the budget airline, is owned by Quantus.
Speaker 4: And this is a point you're probably going to hear
Speaker 4: more and more about with the conversation around you know,
Speaker 4: market competition, dominance, whether or not there is a fair
Speaker 4: and regulated enough sector at play for Australian consumers.
Speaker 2: Well, I mean that does make me think about a
Speaker 2: conversation that we've already had this year, Like we've already
Speaker 2: had this conversation, but it was in regards to another airline.
Speaker 2: It was in regards to Bonsa, which launched fairly recently
Speaker 2: but has already gone under. There seems to be a
Speaker 2: conversation that keeps happening.
Speaker 4: Yeah, if this sort of language is sounding familiar, it's
Speaker 4: because it is. Rex is not the first casualty of
Speaker 4: the domestic aviation industry of late. As you mentioned, Bonsa
Speaker 4: went into liquidation. It entered voluntary administration, announced that in April.
Speaker 4: And for some context about where Bonsa came from It
Speaker 4: was Australia's first low cost independent airline to launch here
Speaker 4: in fifteen years Wow when its services began in January
Speaker 4: twenty twenty three, but less than a year after launching,
Speaker 4: it was never really able to compete with Jetstar and
Speaker 4: the others, and it cut a bunch of its services
Speaker 4: within that first year. Then last month confirmed that over
Speaker 4: three hundred employees' contracts were terminated. It had failed to
Speaker 4: find a buyer to potentially bail out the airline and
Speaker 4: we said farewell to Bonza.
Speaker 2: And now the same could be true of Rex. Has
Speaker 2: this news come out of the blue? People that are
Speaker 2: I guess more keenly watching this sector, have they anticipated
Speaker 2: that this could happen to Rex as well as BONSA.
Speaker 4: Yeah, so sadly there were some warning signs. We know
Speaker 4: that Rex has been struggling to recover from disruptions caused
Speaker 4: by the pandemic, and in the twenty twenty two twenty
Speaker 4: three financial year, Rex reported thirty million dollars in losses.
Speaker 4: Some other early signs of trouble came in September last year,
Speaker 4: when Rex cut a bunch of services. It said that
Speaker 4: they were set to resume in March, but then extended
Speaker 4: that pause on those services till October. So REX hasn't
Speaker 4: been operating at that full capacity to which it extended
Speaker 4: in twenty twenty one since September last year. This year,
Speaker 4: its board has undergone major reshuffles. We saw its executive
Speaker 4: chairman resigned. Several REX directors have also resigned, and that
Speaker 4: brings us to this week when Rex's ASX share price
Speaker 4: dropped to its lowest value since the start of the pandemic.
Speaker 1: So that's really significant.
Speaker 4: And then on Monday, we of course had the announcement
Speaker 4: of that trade pause that ends today.
Speaker 2: And what has the response been like to the news
Speaker 2: You know, I know that around the newsroom we've had
Speaker 2: very strong reactions, but what's kind of the political or
Speaker 2: commercial response to this.
Speaker 4: Yeah, we heard from the PM Anthony Alberanezi yesterday he
Speaker 4: acknowledged his concerns about the future of REX during a
Speaker 4: press conference.
Speaker 1: Here's a little bit of what he had to say.
Speaker 3: REX as a regional airline, of course, provides important links
Speaker 3: with regional communities, is important for those local economies. So
Speaker 3: we want to see the aviation industry in Australia continue
Speaker 3: to be one that provides that service and that access.
Speaker 2: Now, obviously this has created uncertainty for flyers, and we
Speaker 2: should know more later today when we hear that announcement.
Speaker 2: But the other very important part of this is about
Speaker 2: the workers, the people who work for REX, who operate
Speaker 2: and you fly the planes and everything else. Are we
Speaker 2: expecting job losses?
Speaker 4: Concern around this exact issue has been floated by the
Speaker 4: Transport Workers Union. They've been really vocal in the last
Speaker 4: day or two now. That's the union that represents workers
Speaker 4: in the airline industry, and it's said thousands of workers
Speaker 4: have been thrown into limbo by this uncertainty surrounding REX.
Speaker 4: It estimates some three thousand jobs could be on the
Speaker 4: line here if X can't pull through. But the TWU
Speaker 4: said it would support efforts to save REX. The national
Speaker 4: secretary of that union, Michael Caine, described REX as quote
Speaker 4: another victim of an unregulated industry. So that obviously is
Speaker 4: referencing what happened to Bonza and more broadly kind of
Speaker 4: the market of domestic aviation.
Speaker 2: So when we think about some of the responses or
Speaker 2: the solutions to this problem, like what are those solutions?
Speaker 2: What is available to REX in order to keep them afloat.
Speaker 4: To answer that question, we can look to the response
Speaker 4: for other airlines that have been in trouble in recent
Speaker 4: years and it could kind of go one of two ways. Virgin,
Speaker 4: Australia's second biggest carrier, faced an entire restructure after the
Speaker 4: airline collapse AAPS at the start of the pandemic. So
Speaker 4: at the very first wobble, Virgin did collapse, but was
Speaker 4: saved when administrators from Deloitte were tasked with rescuing it.
Speaker 4: They got it off the ground, sold it to a
Speaker 4: US investment firm and that saved the airline essentially. So
Speaker 4: voluntary administration is one kind of path that Rex could
Speaker 4: go down. Otherwise there could be government intervention and what
Speaker 4: would that look like. You might remember that in the
Speaker 4: wake of the early pandemic, the national carrier Quantus, did
Speaker 4: actually receive this kind of funding, more than two point
Speaker 4: seven billion dollars in government assistance after it faced uncertainty
Speaker 4: during the pandemic, and it's famously faced a lot of
Speaker 4: criticism in the years since Quantus surrounding its market dominance
Speaker 4: given the scale.
Speaker 1: Of that bailout as it was described.
Speaker 4: Anthony Albanesi hasn't ruled out a bailout option for REX,
Speaker 4: where the government would provide it with extra funding to
Speaker 4: keep it afloat. And I think what's really important to
Speaker 4: bear in mind here is the role that REX plays
Speaker 4: as a regional carrier.
Speaker 2: We're not just talking about like an economic value here.
Speaker 2: It's also of course that it connects regional and rural
Speaker 2: populations with the rest.
Speaker 4: Of Australia exactly, and so I think that makes it
Speaker 4: a unique case and I would suggest that there will
Speaker 4: be some pretty heavy hitters in government arguing a case
Speaker 4: for saving it on those grounds. In terms of where
Speaker 4: the opposition is on this one, Shadow Transport Minister Bridget
Speaker 4: McKenzie urged the government to quote not allow a repeat
Speaker 4: of BONSA.
Speaker 2: And the thing that I just can't quite get my
Speaker 2: head around, and I made a joke in the office
Speaker 2: the other day that the two industries you seemingly don't
Speaker 2: want to own a business in Australia are media and aviation.
Speaker 2: Obviously I ignore my own rule for that first one, but
Speaker 2: it just seems like it's really difficult for anyone that
Speaker 2: is not virgin or quantas to survive in Australia. And
Speaker 2: I mean even then Virgin struggled as well. Yeah, what
Speaker 2: is the issue here? Why can't they survive?
Speaker 4: So there are a few key reasons. Firstly, the A
Speaker 4: Triple C broadly attributes a lack of government policy to
Speaker 4: support these airlines to boost competition in domestic aviation. So overall,
Speaker 4: they kind of say that there is a blanket need
Speaker 4: for more regulation to help the little guys.
Speaker 2: And we're talking there about regulation perhaps that would allow
Speaker 2: for more competitive behavior. If we're talking about the A
Speaker 2: Triple C. They focus on competition. We know that there's
Speaker 2: this duopoly in Australia, so they're saying we need better
Speaker 2: protections for the smaller guys.
Speaker 4: Yeah, and one of those protections, or what it describes
Speaker 4: as one of the most effective ways that the government
Speaker 4: can promote better competition would be to quote help new
Speaker 4: and existing airlines to better access takeoff and landing slots
Speaker 4: at Sydney Airport.
Speaker 1: Now, check me through this.
Speaker 4: This might sound boring, but it comes up time and
Speaker 4: time again as being really critical to driving competition or
Speaker 4: seeing unfair competition. This is about slot hoarding. Now, that's
Speaker 4: when major airlines book as many arrivals and departure spots
Speaker 4: at popular airports as possible to maintain priority runway access.
Speaker 4: So it's kind of about politicking between the airlines and
Speaker 4: the airports. But the problem with slot hoarding that the
Speaker 4: A Triple C found and that has been responded to
Speaker 4: by the government with some reforms that we'll get to,
Speaker 4: is that that removes the opportunity for new players to
Speaker 4: get runway space during peak times in busy places, so
Speaker 4: you know, a new airline can't then schedule flights to
Speaker 4: in demand places at in demand times. And that there's
Speaker 4: also evidence that the A Triple C detailed about the
Speaker 4: bigger airlines using these slots or booking these slots up
Speaker 4: and then canceling flights, so hoarding them for preserving that
Speaker 4: priority access with no intention of running all of those services.
Speaker 4: So we have seen a little bit of reform here.
Speaker 4: In February, the government announced plans to improve how slots
Speaker 4: are managed at Sydney Airport in response to those calls
Speaker 4: from the A TRIBLEC. This is Sydney Airport, the biggest,
Speaker 4: most busy airport, and the concerns around slot hoarding have
Speaker 4: been echoed within the aviation industry from experts themselves. So
Speaker 4: someone like Professor Ian Douglas. He's from the unsw School
Speaker 4: of Aviation. He's argued that the practice of slot hoarding
Speaker 4: stops smaller airlines like Bonser and Rex from scheduling more flights,
Speaker 4: and he told TDA earlier this year that the practice
Speaker 4: has resulted directly in less competition in domestic aviation and
Speaker 4: that that also drives up higher airfares for customers. As
Speaker 4: I mentioned, the A Triple C has broadly called for
Speaker 4: more regulation in the industry, and some of that involves
Speaker 4: facilitating negotiations between airports and airlines. So what we kind
Speaker 4: of touched on there with the politics between airports and
Speaker 4: airlines that an imbalance exists at the moment and that
Speaker 4: if the government regulated that space a little bit more,
Speaker 4: it would give smaller airlines and up and comers a
Speaker 4: bit of a leg up. Obviously, those are just some
Speaker 4: of the issues play when people are talking about concern
Speaker 4: around competition in the domestic aviation space. Back to Rex, though,
Speaker 4: we will be waiting today for that announcement later on
Speaker 4: and we will keep you across it on the Daily OS.
Speaker 1: So stay tuned.
Speaker 2: Thanks so much for listening to today's episode of The
Speaker 2: Daily OS. You might even be listening to us on
Speaker 2: a REX flight right now. Who knows. If you enjoyed
Speaker 2: this episode, make sure you review it on whatever platform
Speaker 2: you're listening on, and if you're watching us on YouTube,
Speaker 2: hello and hit subscribe. We'll be back again tomorrow, but
Speaker 2: until then, have a great day. My name is Lily
Speaker 2: Madden and I'm a proud Dunda Bungelung Kalkutin woman from
Speaker 2: Gadigol Country.
Speaker 3: The Daily oz acknowledges that this podcast is recorded on
Speaker 3: the lands of the Gadighl people and pays respect to
Speaker 3: all Aboriginal and Torres Strait island and nations. We pay
Speaker 3: our respects to the first peoples of these countries, both
Speaker 3: past and present,