Friday, 16th May, 2014
By Andrew Robertson
Regional Express has threatened to axe all direct services to capital cities and reduce flight frequency in response to a proposed increase to the passenger head tax.
City Council has said the planned increase - which would see the head tax rise from $12 to $12.30 under changes to its scheduled fees and charges - is in line with the Consumer Price Index (CPI).
But the airline’s general manager of network strategy and sales, Warrick Lodge, has labelled the proposed hike “a blatant greedy grab for money”.
In an open letter to Council, Mr Lodge last month said head tax revenue had increased by an average of 9 per cent a year since 2003 and jumped by 30 per cent in 12 months alone on the back of passenger growth.
He said the increased cost impost to Rex came at a time when the airline industry as a whole was in “crisis” and its own profits were in steep decline.
It’s now been revealed Mr Lodge wrote to Council last month warning it to return to the terms of a previous five year partnership arrangement, or face the consequences.
In a letter to a residents group, a copy of which has been sent to the BDT, Mr Lodge said he had given the council until May 27 to change its position.
“Our Board meets on 27 May and will need to review the resources allocated to Broken Hill and make a decision that will allow us to service the routes in a sustainable and commercially viable manner,” he said in the letter.
“If there is no change in Council’s position, then I will be compelled to recommend to my Board an end to all direct services to the capital cities as well as a reduction in flight frequency.”
Mr Lodge did not say when the changes would likely take effect.
Under the five-year agreement, the airline and council agreed to split the additional revenue generated from the introduction of new and additional services, which included flights to Melbourne via Mildura.
Four months after the new services started Rex pulled out of the agreement when Council resolved to lobby the State Government to scrap the NSW route licensing regime.
Rex had not long secured the licence which gives exclusive rights to operate the Broken Hill to Sydney service for five years.
“Council continues to benefit from Rex’s investment and services and will generate additional revenue ... this current financial year,” Mr Lodge said in the letter to the BH Residents Association.
“Consequently, Council is now enjoying the full fruits of Rex’s investment with zero returns to Rex.”
Council’s general manager Therese Manns said yesterday she had arranged to meet with the airline at the end of the month.
“I have made arrangements to meet with members of the Rex board to re-start the conversation of how we can work in partnership and bring about the best outcome for the city,” she said.
“Council is aware that Rex is reviewing all regional services at its board meeting.
“Air services to Broken Hill are dependent on planes being filled, where they are not, I fully expect that some changes will occur to air services, despite any concession Council may enter into.
“The objective of any partnership should be to increase passenger numbers, and as I’ve said before, I hope that both Council and REX can build a mutually beneficial and respectful relationship.
“I believe it is important to negotiate in good faith and I look forward to a reasonable hearing with the board at the end of this month.”