The risk of an Australian airline duopoly is real for regional tourism

News of Rex Airlines entering administration could be a heavy blow for Australian experience operators

1 August 2024 – The collapse of Bonza Airlines earlier this year dealt a severe blow to the tourism industry, leading to job losses and a projected $100 million shortfall for Queensland tourism alone. 

The recent administration of Rex Airlines this month compounds the challenges faced by domestic travellers and the broader tourism sector.

David Anderson, co-founder and CEO of Big Red Group, cautions that Rex Airlines’ financial troubles could have far-reaching implications, particularly for regional tourism.

“In March 2024, major airlines—including Rex—carried 4.9 million domestic passengers. With Bonza and now Rex ceasing operations, we can probably expect an increase in flight prices across domestic routes. This rise in airfares will deter tourists from visiting less-travelled regions, leading to reduced tourism activity in these areas.

“Aviation connectivity is crucial for many regional destinations. The loss of Rex’s services means fewer flight options, which can result in increased travel times and inconvenience for visitors. This can make it less appealing for tourists to explore regional areas, ultimately affecting their economic vitality. 

“Regional tourism economies rely heavily on visitor spending, and the reduction in tourist numbers can deprive these regions of essential revenue and diminish opportunities for cultural exchange. The overall impact could be a setback for the recovery and growth of Australia’s regional tourism industry.”

Mr Anderson also believes Government support is essential for operators should flights wind up completely. 

“Given the current cost-of-living crisis, Australians are increasingly seeking affordable holiday options, and exploring their own country could be a preferred choice. Without adequate air connectivity, though, many potential travellers might be discouraged from visiting regional areas. This could undermine the effectiveness of government spending aimed at promoting regional tourism and supporting local businesses.