Rex Airlines, having received a letter, dated 13th June, 2017, from Bega Valley Council proposing a 4.5% airport head tax increase at Merimbula airport and offering REX the opportunity to make a submission to council by Close of Business (COB) the next day (14th June 2017) have responded in no uncertain terms. The BVSC Mayor ,Kristy McBain, has now received the response below from REX General Manager of Network Strategy & Sales, Warrick Lodge. In it he writes: "Rex puts Bega Valley Shire Council on notice that any increase of head tax beyond the CPI will result in proportional reduction in services and an increase in air fares to your local constituents." and "Our Chairman now considers the Merimbula council leadership to be two-faced, lacking in integrity, and personally disrespectful to our Chairman and the office he represents." The full letter is as follows:
15 June 2017 Cr Kristy McBain Mayor, Bega Valley Shire Council Merimbula Airport Draft Fees and Charges
Dear Cr McBain,
Thank you for your letter of 13 June 2017.
Regional Express (Rex) was disappointed to learn of the proposed Merimbula airport head tax increase via the Merimbula News Weekly on 30 May 2017. Rex is the largest single customer of Merimbula airport that generates in excess of $600,000.00 per year in airport head tax revenue and this should warrant consultation by council.
It is an insult to Rex to receive notification via the media and it is an even greater affront to receive your letter dated 13 June offering us the opportunity to make a submission to council by COB 14 June 2017. At our meeting back in March this year we discussed the importance of consultation under a spirit of partnership and following that meeting you wrote to Rex’s Executive Chairman and said “that the meeting was very positive and productive and we look forward to forging a pathway towards partnership and working together”.
Rex’s current annual passenger numbers through Merimbula airport have increased by 4% year on year and this should negate any requirement to increase the head tax rate by CPI. This also excludes passengers carried by another airline on the Melbourne route. Rex does not oppose an increase in accordance with CPI however the proposed increase represents a 4.5% increase on top of the 4% increase in Rex’s passenger numbers.
Just 24 hours prior to Rex being contacted by the local media on 30 May 2017, the Rex Board had given in-principle agreement to expand services from Merimbula to both Sydney and Melbourne.
This was subject to entering into a suitable partnership agreement with council. Our Chairman had then directed that Rex’s scarce resources be prioritised to Merimbula on the back of the solemn undertakings by the Mayor during the discussions that were held in March this year. The proposed Rex scheduling initiatives would add around 16,000 annual seats to Merimbula airport which only has around 56,000 annual passengers.
Our Chairman now considers the Merimbula council leadership to be two-faced, lacking in integrity, and personally disrespectful to our Chairman and the office he represents. I have been instructed to stop any initiatives to expand services and instead work on reducing Merimbula’s services for the benefit of those communities that value our services, especially at a time when pilot shortages result in tremendous pressures in keeping regional air services going.
Rex puts Bega Valley Shire Council on notice that any increase of head tax beyond the CPI will result in proportional reduction in services and an increase in air fares to your local constituents.
Consequently, unless we hear otherwise from Bega Valley Shire Council within 2 weeks, we will plan the reduction of services on the assumption that the increase in annual head tax revenue will be 8.5%.
Please also be reminded that Rex requires 3 months advance notice before implementing any increase in the passenger head tax in accordance with International Air Transport Association (IATA) regulations.
Yours Sincerely Warrick Lodge General Manager Network Strategy & Sales Regional Express (Rex)
Copy: Andrew Constance MP, Minister for Transport and Infrastructure, and Member for Bega Leanne Barnes, General Manager, Bega Valley Shire Council, Local Media