Regional airline Rex says it was left with no choice but to jack its fares up by at least $10 as surging fuel prices send operational costs into the clouds.
The regional carrier on Tuesday said it would increase fares across its regional and domestic networks by $10 – and by even more in some lower-priced promotional fares – in a bid to absorb the fuel price surge.
The company’s general manager of network strategy Warrick Lodge said the changes would come into effect on Friday.
It will be the first time Rex has increased fares in more than three years.
“With fuel prices shooting up by over 30 per cent in recent weeks and with supply chains being severely disrupted, the existing ticket prices are no longer tenable,” Mr Lodge said.
Aussies have been slugged at the bowser in recent weeks as petrol hovers around $2.20 a litre amid a global oil price surge, with airlines no doubt also feeling the pinch.
Conflict in Ukraine – and the associated sanctions on oil-rich Russia – has exacerbated an already dislocated supply chain, putting a premium on fuel.
Airlines such as Rex are already coming out of a tough two-year period in which Covid restrictions essentially ground the industry.
Rex was essentially saved from bankruptcy in late 2020 when Deputy Prime Minister Michael McCormack handed it a $67.7m funding package that included $54m in cash.
Meanwhile, the competition watchdog and major airlines such as Qantas this month had already warned consumers to expect higher airfares as the oil sure slows the sector’s recovery from the pandemic.
Mr Lodge said the new Rex fares were still “extremely affordable” with Sydney-Melbourne and Sydney-Brisbane starting from $109.
“Rex’s Business class starts from $299 and is often even cheaper than Qantas’ economy class which can well exceed $500, particularly during periods not competing directly with Rex,” he said.
“We will be bringing in additional aircraft shortly and more major cities in Australia will be able to benefit from Rex’s reliable and affordable air travel.”
Rex operates a fleet of 60 Saab 340 and six Boeing 737-800 NG aircraft to 62 Australian destinations.
Last year it moved to take the competition to Qantas and Virgin by adding a Brisbane to Sydney flight, solidifying a Golden Triangle service that also includes Melbourne.
The company swung to a loss of $36.7m in the first half of the 2022 financial year, having recorded a $9.9m profit the same period in FY21.
The airline’s loss would have been wider were it not for $16m in tax benefits and $28m in government grants and subsidies.
Shares in the company were down 1.6 per cent a $1.22 after two hours of trade on Wednesday despite a rise for other travel-aligned stocks.
