Rex warns of regional cuts

Rex warns of regional cuts
By admin

Regional centres around Australia could be starved of flights before long as Regional Express outlined a grim future for the aviation industry.

The carrier posted improved first half results this morning, with pre-tax profits rising $6.3 million to $18.5 million.

But the gain was attributed largely to its Pel Air subsidiary which saw strong demand in the mining sector.

The outlook for passenger services operated by Rex was “less rosy” the airline said with carryings down 4% on the same period the previous year and the cost per available seat kilometre rising 8% as fuel prices continued to bite.

Executive chairman Lim Kim Hai warned that the introduction of the carbon tax in July was also likely to hammer regional services.

“The twin effects of the impending global economic slowdown and the Federal Government’s draconian policies on regional aviation will no doubt succeed in wiping out regional air services to all but the biggest regional centres over the next few years,” he said. “Rex will be monitoring the situation closely and in the absence of a more favourable environment will be compelled to divert its resources from marginal routes to more lucrative mining charters in order to protect shareholders returns.”

The airline environment worldwide is becoming “toxic”, he said.

Total revenue in the six months to December 31 climbed $20m to $139.1m with fuel costs rising from $16m to $19.3m.

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