A lack of buyer interest in embattled regional carrier Rex suggests a major flaw with the business that could leave taxpayers facing a hefty bill if the airline is nationalised, experts say.
After an unsuccessful sale process in late-2024, a potential government takeover is on the table if the ailing airline's administrators can't find a buyer on the second try.
The government has already bought $50 million of debt from Rex's largest creditor and loaned it up to $80 million to keep regional routes running, but no serious suitor has emerged.
“This suggests something fundamentally wrong with Rex's business model and that there are further costs and risks involved - like having to renew Rex's very old fleet of Saab 340 in the not-so-distant future - that no investor is prepared to take,” Sydney University transport professor Rico Merkert told AAP.
“The question then is why the taxpayer should take that risk, whether this will distort competition with (other) airlines and what the taxpayer will get in return.”
Prof Merkert acknowledged one of those returns was lower airfares and better connectivity through regional routes, but he questioned if there were other ways to achieve that aim.
Better market regulation and profit guarantees for other players were also options for the government to bolster the regional travel game.
But in Victoria's northwest corner, news of a potential buyout was great relief for residents in Mildura, home to the state's second-busiest airport after Melbourne's Tullamarine.
"Air travel is a lifeline for us," Mildura Rural City Council Mayor Helen Healy said.
Mildura has no passenger train and is 600km from the state's capital, while its airport is served solely by Rex and Qantas.
"If we only had one airline, we'd be at the mercy of whatever a single airline wanted to charge," Ms Healy said.
Rex was given substantial government help in the form of JobKeeper payments and direct funds under the former coalition government, but it spent much of that money on an ill-fated expansion into capital-city routes.
Transport Workers Union national secretary Michael Kaine welcomed the government's announcement and said questions over whether Australia was big enough for three major airlines missed the point.
“The right question is, what do we have to do as an Australian community to ensure there are three airlines, and that one of them is a good regional operator?” he said.
But if the Commonwealth was going to get in on the embattled airline, it must also have a plan to get out, Swinburne University law and corporate governance specialist Helen Bird said.
"It needs to be until a buyer can be found ... they need to make the business viable and appropriate, and then there will be interest,” she said.
