Policies of the Federal Government are hitting the regional aviation sector hard

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A Regional Express flight taking off

A Regional Express flight taking off

In a vindication of sorts of the forewarnings made during the Annual General Meeting on November 27th, 2012 the Regional Express (Rex) Group announced the results of the first half of 2012-2013 financial year. The results show a drop in Profit Before Tax of 32.6% down to $12.5 Million on a total turnover of $135 Million.

Speaking on the anticipated downturn of the company, Rex’s Executive Chairman Lim Kim Hai seemed not surprised and critical of the government policies that are crippling the regional aviation sector. He mentioned that right from the start of the current financial year the highly criticized policies set in motion by the government has come down like a whip on the struggling sector. For a case in the point he cited the example of the Carbon Tax which had a massive impact on their profitability. The result has been a loss in huge number of passengers. The government has in fact worked to make the current fragile economic situation worse by dissuading passengers with their negative policy making. Needless to say less people flying makes the situation worse for everybody. For a company like Rex, which runs Australia’s largest independent airline operating 40 Saab 340 aircrafts and 1300 flights per week, the impact has been catastrophic.

Additionally the government has also initiated a number of fiscal and regulatory measures which has tightened the room to develop for the industry and resulted in the loss in profitability of the company in particular and the industry in general. A number of regional carriers have been facing the brunt of these adverse measures, finding it hard to survive in a tough economic environment. If this is allowed to go on unabated, the damages done would be irreversible.

The Regional Airline Association of Australia (RAAA) is one organization that Rex looks forward to working closely with in order to rescue the regional aviation sector from utter and complete destruction. A broad outline coupled with finer policy framings will be discussed and then formulated as a suggestion to the government for consideration and perusal in an attempt to salvage the situation. Both the ruling government and the opposition will be approached to take a stand on these issues before the next election.

With steadily rising fuel prices, government’s recent imposition of costs has complimented the effects of a slowing market. It is highly probable that the results of the second half of 2012-2013 will be even more frightening. Already the profit guidance for the full year has been reviewed and brought down to 35-40% of the previous year.

About Author

Rory Mukherjee

Rory Mukherjee is a freelance article writer specialising in digital photography and travel related topics.He is also an avid traveller who loves to document his travels in his articles and through his lenses.Rory currently contributes the latest travel news to YouTravel.com.au and hope to expand his travel prowess in the not too distant future.