Rex grounds two routes 10 months after $60m rescue package

Less than a year after it was sold with the aid of a federal government rescue package, embattled airline Regional Express (Rex) has grounded flights to two NSW destinations.

The carrier announced that flights to and from Sydney and Port Macquarie on the Mid North Coast and Orange in the Central West will be indefinitely halted from October 25.

Independent MP Andrew Gee, whose federal electorate takes in Orange, described the decision as a "real shock".

"It feels like a slap in the face or a kick in the guts for the whole region after everyone called for so much support and so much pressure was put on the government to deliver it," he said.

A Commonwealth bailout allowed the airline to keep flying its regional routes and, in late 2025, it was bought by US-based air services company Air T.

The sale was endorsed by the federal government, which backed the bid with a $60 million support package and an additional $108 million to help restructure existing Commonwealth debt.

In exchange for that support Air T made commitments to increase the number of aircraft in service, maintain an ongoing level of service to regional Australia, and increase frequencies of profitable flights across its network.

The ABC has contacted Air T for comment.

'Disappointing for many'

A spokesperson for Federal Transport Minister Catherine King issued a statement acknowledging the Rex decision would be "be disappointing for many".

"In return for support from the Australian Government, Air T agreed to a set of regional commitments aimed at maintaining Rex's services to regional Australia," the spokesperson said.

"Notwithstanding these changes, Rex continues to operate one of Australia's largest regional air networks.

"The Government continues to work closely with Rex to understand market challenges and to monitor Rex's compliance with regional commitments."

The statement noted that customers in both regional destinations would still be able to fly to and from Sydney on different carriers.

A statement issued by Rex said the suspensions were indefinite, and affected customers would be offered "refunds or re-bookings".

"The environment of entrenched high fuel prices driven by the ongoing conflict in the Middle East, together with lack of demand, do not make these routes commercially viable at this time," the statement said.

REX said it would monitor the situation and consider reinstating the routes "once fuel prices decrease to a level that makes it commercially viable for flights to resume".

The carrier said it remained "committed to serving regional and remote Australia".

In May, the airline cut two services in Tasmania and scaled back a service to Mildura in Victoria's north-west.

'Significant flow-on effect'

Port Macquarie Mayor Adam Roberts said the area's $700 million annual visitor economy would be hit by the Rex decision.

"The reality is that it has a significant flow-on effect to our community," he said.

"Living in a regional area, we absolutely need these vital services."

Cr Adams said whether airport staff would lose jobs remained unclear, but discussions were underway to mitigate impacts.

"The state and federal governments need to look at what's happening here and ask the question [whether] they could potentially help us stabilise our potential for travel," he said.

"If it's a grant fund or if it's a carrot to entice more airlines to use this airport, we're already having some peripheral conversations."

Orange Mayor Tony Mileto is pessimistic about the prospect of the service ever being reinstated.

"I don't think they'll be backflipping on the decision," he said.

Cr Mileto said there was clearly demand among the other airlines that serviced the airport, including Qantas and Link Airways.

"I think it's for Rex to answer as to why more people weren't taking up their flights," he said.

Cr Mileto said the council would request a meeting with those competitors to ensure their services were at least maintained.

"Air travel is vitally important to Orange and we want to ensure that people feel confident there will be flights available should they require them," he said.

Earlier this year, the Orange City Council received a slice of $4.8 million from the Commonwealth to cover Rex's unpaid debts to regional councils.