The Australian government has provided Regional Express (Rex) with an $80 million lifeline to keep the airline operating regional routes.

This funding comes after the airline collapsed in July and entered administration.

The decision has been met with anger from smaller airlines, who say they offered to take over Rex's routes but were rebuffed.

Rex's Collapse and its Impact

Rex collapsed following its unsuccessful expansion into capital city routes, where it faced stiff competition from Qantas and Virgin Australia.

However, the airline remains a major player in regional Australia, and its collapse has had a significant impact on airfares.

The Australian Competition and Consumer Commission (ACCC) reported that airfares have spiked since Rex’s exit from certain major city routes.

For example, fares between Adelaide and Melbourne have increased by 95 per cent.

Government Intervention and Criticism

Transport Minister Catherine King announced the $80 million funding package, which will support Rex’s operations until June, following the next federal election.

The government has not clarified whether the funding is a loan or a grant.

Smaller airlines have criticized the government’s decision, stating they had proposed solutions to maintain service to regional communities without requiring government funding.

Rejected Acquisition Bid

The sources reveal that Renaissance Partners submitted a bid to acquire Rex, but it was rejected by the administrators, EY, and the investment bank managing the sale, Houlihan Lokey.

Kym Lennox of Renaissance Partners claims their offer would have secured the airline's future without government intervention.

They expressed confusion over the government's decision to become financially involved.

Emails from a major investment bank, whose name was not disclosed, suggest their willingness to finance the acquisition, pending due diligence.

EY declined to comment on the matter.

Current Status

Since entering administration in July, EY has sold Rex's Pel-Air air ambulance business to Toll Holdings and property assets to the airline's majority shareholder.

EY administrator Sam Freeman said the $80 million from the government will allow Rex's regional network to continue operating uninterrupted and will lead to network enhancements during the extension period.