Are regional airlines being priced out of existence?
REX airlines claims "grandiose spending" on upgrading some regional airports was threatening the viability of regional air services.
When asked if the airports in Lismore and Ballina were amonsgt those accused of excessive upgrades, the company declined to say, saying instead, they supported "rational airport upgrades".
In a statement, the airline said while they supported "rational airport upgrades" , they were concerned government funding was being used in some cases to provide facilities that were excessive for the need, resulting in increased costs to airlines and passengers.
"This could be in the form of grandiose terminals or extension of runways when the current ones could easily support three times the current passenger numbers," the statement read.
"This results in ongoing airport costs, depreciation, operating and maintenance costs spiralling out of control. This in turn puts upward pressure on airport charges and regional ticket prices."
Rex called on State and Federal governments to consider the impact on carriers when allocating funding, saying failure to do so "has often resulted in the carrier withdrawing all or part of its services when the airport charges become unviable economically".
They gave the example of Kangaroo Island airport: "More than $20m of taxpayer funding has been spent on upgrading the airport with annual passengers barely exceeding 50,000. Rex is deeply concerned that in the future that the airport will pass the depreciation expense to passengers. Fewer passengers will travel and in turn the remaining passengers will face even higher ticket prices, causing a downward spiral in passenger numbers to a level where the regional air service is no longer viable".
REX said: "State and Federal governments should also exercise more economic discipline in evaluating requests for funding otherwise the funding could result in a white elephant or, worse still, in killing off the very service that the funding is meant to facilitate".
While REX didn't comment on Lismore and Ballina-Byron Gateway airports the councils responsible for running the airports said they maintained a good relationship with the airline.
REX was the only commercial airline flying out of Lismore airport and flew six trips per day, to and from Sydney.
Lismore City Council, who operate the airport, said they have an ongoing contract with REX and the only rise in costs to the company was the CPI.
"As a regional city, we value having a commercial passenger service. It is important for a city with a major hospital university and regional events to have a direct flight service," Commercial Services Business Manager Kevin Trustum said.
"We are fully committed to supporting REX to stay in Lismore and keeping our contract fees as low as possible is a reflection of that commitment."
Ballina Shire Council said the Ballina Byron Gateway Airport had been working closely with Rex Airlines to grow demand in the past 12 months, "in particular a marketing campaign based around a photo shoot for the airline, and activity to raise awareness of the benefits the airline provides to the local Northern Rivers community".
They said the airport's approach had been to "utilise and attract government funding to reduce our costs of vital CAPEX investment and reduce the burden on our airline partners by keeping our aeronautical charges as low as possible. Government funding is actually benefiting our local community by reducing congestion in the departure terminal, which has not undergone any major capital investment/expansion for some time".
They said REX was a key partner of the airport and they would continue to invest in marketing to support all their airlines, keep costs down and CAPEX to essentially investments only to enable and encourage airline growth.