DALLAS — Australia’s third-largest airline, Rex (ZL), has entered voluntary administration and canceled flights on several routes.

Australia’s Regional Express, known locally as Rex, has grounded all its Boeing 737 aircraft. The airline has suspended its flights between Australia’s major cities. However, ZL will continue to operate flights to and from regional cities, operated by its smaller Saab 340 turboprop aircraft.

This comes just months after the collapse of Australia’s Bonza. The Low-cost carrier went into administration earlier this year, leaving more than 300 Bonza employees jobless. A statement on Rex’s website says it appointed Ernst and Young as administrators. Trading the airline’s shares on the stock market has also been halted. Shares in ZL have roughly halved during the past 12 months.

Crucial Air Connectivity, Fleet

Rex provides essential air services within Australia. The airline connects regional centers with major cities, including Sydney (SYD) and Melbourne (MEL). As such, the collapse of ZL has severe consequences for Australia. Australia’s Prime Minister Anthony Albanese has called for more information from the airline. 

“Rex as a regional airline, provides important links with regional communities and particularly between capital cities and regional communities. It is important for those local economies,” Australian Prime Minister Anthony Albanese said.

According to news.com.au, ZL's flights operated with 737-800s have been grounded. However, its key services to regional destinations will continue to operate with turboprop aircraft.

Rex seized the opportunity to scale up operations during the COVID-19 pandemic when its competitor Virgin Australia’s (VA) future was hanging in the balance. It leased new aircraft and expanded its route network to include flights between major cities in Australia. 

The airline leased some Boeing 737-800 aircraft from VA in 2020 to operate newly added intercity routes. But with fewer frequencies, lower brand recognition, and two formidable competitors—Qantas (QF) and VA—the carrier has struggled to make a profit.

Government Prepared to Step in

Australia’s Transport Minister Catherine King said the government was prepared to work with the airline to prevent its demise. 

“We want to make sure that they have a future as part of aviation in this country, and we’re very determined to make sure that happens," King said.

Established in 2002 after the collapse of Ansett Australia, ZL serves around 56 airports in Australia. Its fleet consists of 66 aircraft, mostly 34-seater Saab 340 planes but also nine Boeing 737-800s.

Passengers who hold ZL bookings will not get refunds but can change their flights to travel with Virgin Australia. This will be free of charge. In a statement on Rex’s website, the airline says it is working with VA to overcome challenges for booked passengers. 

“An agreement has been reached with Virgin Australia to honour all prepaid tickets for the Rex Group’ direct services between domestic capital cities, at no additional cost to passengers,” Rex says.

However, affected passengers must rebook these flights by Wednesday, August 14. Customers can continue to make bookings at rex.com.au or via their travel agent.

“Regional flights are unaffected by the administration and will continue to operate as normal,” it stated.