1 00:00:01,020 --> 00:00:03,060 (THEME MUSIC PLAYS) 2 00:00:11,620 --> 00:00:13,820 (PA SYSTEM CHIMES) 3 00:00:13,820 --> 00:00:15,220 ANNOUNCEMENT: This is an announcement 4 00:00:15,220 --> 00:00:15,500 ANNOUNCEMENT: for all remaining Rex passengers This is an announcement that were originally on ZL68... 5 00:00:15,500 --> 00:00:20,220 for all remaining Rex passengers that were originally on ZL68... 6 00:00:20,220 --> 00:00:23,300 EMILY BAKER: Flying can be frustrating. 7 00:00:23,300 --> 00:00:23,540 EMILY BAKER: In Australia our choices are limited. 8 00:00:23,540 --> 00:00:26,860 In Australia our choices are limited. 9 00:00:27,940 --> 00:00:31,140 So, this is my fourth flight for this story, 10 00:00:31,140 --> 00:00:31,380 So, this is my fourth flight and it's my third delayed flight. 11 00:00:31,380 --> 00:00:33,620 and it's my third delayed flight. 12 00:00:34,580 --> 00:00:38,020 Late last night Qantas cancelled our flight for this morning, 13 00:00:38,020 --> 00:00:38,260 Late last night Qantas cancelled no explanation given. 14 00:00:38,260 --> 00:00:39,340 no explanation given. 15 00:00:40,300 --> 00:00:42,500 There's a graveyard of airlines 16 00:00:42,500 --> 00:00:45,860 that have tried and failed to give us more options. 17 00:00:45,860 --> 00:00:46,100 that have tried and failed Rex and Bonza are just the latest. 18 00:00:46,100 --> 00:00:50,100 Rex and Bonza are just the latest. 19 00:00:50,100 --> 00:00:55,060 More competition would mean better prices, better service. 20 00:00:56,940 --> 00:00:59,540 Australia's domestic aviation market 21 00:00:59,540 --> 00:01:02,260 is among the most concentrated in the world. 22 00:01:02,260 --> 00:01:02,500 is among the most concentrated (ENGINES WHINE) 23 00:01:02,500 --> 00:01:04,820 (ENGINES WHINE) 24 00:01:04,820 --> 00:01:05,060 I'll be there. (ENGINES WHINE) 25 00:01:05,060 --> 00:01:06,140 I'll be there. OK. 26 00:01:06,140 --> 00:01:09,660 Who is to blame for Rex's current situation? 27 00:01:09,660 --> 00:01:14,220 This is the inside story of what happened to Rex. 28 00:01:14,220 --> 00:01:17,220 Rex had an impeccable record. 29 00:01:17,220 --> 00:01:17,460 For the first time Rex had an impeccable record. 30 00:01:17,460 --> 00:01:21,420 For the first time we hear from the men in charge. 31 00:01:21,420 --> 00:01:24,780 You have to say that the buck stops somewhere, and it stops at the top, 32 00:01:24,780 --> 00:01:25,020 You have to say that the buck stops and he was at the top. 33 00:01:25,020 --> 00:01:27,260 and he was at the top. 34 00:01:28,860 --> 00:01:30,700 It's a journey that's taken us 35 00:01:30,700 --> 00:01:33,380 from remote South Australia 36 00:01:33,380 --> 00:01:36,300 to America's wild west. 37 00:01:37,740 --> 00:01:42,300 Did Rex steal four planes from a company in the US? 38 00:01:42,300 --> 00:01:44,340 How do you do that in broad daylight? 39 00:01:45,860 --> 00:01:49,180 From accusations of stolen aircraft 40 00:01:49,180 --> 00:01:52,540 to allegations of money laundering. 41 00:01:52,540 --> 00:01:54,060 It is incredibly bizarre. 42 00:01:55,020 --> 00:01:58,860 Aviation is dominated by big personalities. 43 00:01:58,860 --> 00:02:01,380 JOE ASTON: They war with each other like sky gods. 44 00:02:01,380 --> 00:02:07,100 They use their airlines as proxies for their ambitions of domination. 45 00:02:07,100 --> 00:02:10,180 When their dreams come crashing down, 46 00:02:10,180 --> 00:02:12,860 it's the rest of us who pay the price. 47 00:02:12,860 --> 00:02:13,100 it's the rest of us (ENGINE ZOOMS) 48 00:02:13,100 --> 00:02:15,380 (ENGINE ZOOMS) 49 00:02:23,660 --> 00:02:24,780 OK. 50 00:02:24,780 --> 00:02:28,060 So, tell me who you are and what we're doing, Ken. 51 00:02:28,060 --> 00:02:28,300 So, tell me who you are My name is Ken Maynard. 52 00:02:28,300 --> 00:02:29,860 My name is Ken Maynard. 53 00:02:29,860 --> 00:02:30,100 I'm the mayor My name is Ken Maynard. 54 00:02:30,100 --> 00:02:32,100 I'm the mayor of the district council of Ceduna. 55 00:02:32,100 --> 00:02:34,620 How would you describe the importance of aviation 56 00:02:34,620 --> 00:02:36,340 in a town like Ceduna? 57 00:02:36,340 --> 00:02:38,300 I consider it to be essential. 58 00:02:38,300 --> 00:02:41,140 (BIRDSONG) 59 00:02:43,540 --> 00:02:46,660 Ceduna, South Australia. 60 00:02:46,660 --> 00:02:48,860 (INDISTINCT CHATTER) 61 00:02:48,860 --> 00:02:51,820 Almost 800km from Adelaide 62 00:02:51,820 --> 00:02:55,980 and a world away from the country's busy east coast. 63 00:02:57,940 --> 00:03:01,660 Melbourne is closer to Adelaide than we are, just as an example. 64 00:03:01,660 --> 00:03:04,660 So, to go to Adelaide, it's a bit of a trip. 65 00:03:04,660 --> 00:03:08,660 In a motor vehicle it's about at least nine hours, 66 00:03:08,660 --> 00:03:10,940 whereas a plane, it's about an hour and 20 minutes. 67 00:03:12,820 --> 00:03:17,620 Mayor Ken Maynard describes it as the tyranny of distance. 68 00:03:17,620 --> 00:03:20,860 We are fortunate we do have a range of specialists that come to town, 69 00:03:20,860 --> 00:03:23,500 but a lot of people have to go to Adelaide for medical reasons. 70 00:03:23,500 --> 00:03:27,540 Obviously we've got some treatments here, but not everything. 71 00:03:39,900 --> 00:03:44,860 Ceduna's airport has been a lifeline for many who live in the region. 72 00:03:50,020 --> 00:03:51,620 Knock, knock! Hello! 73 00:03:51,620 --> 00:03:51,860 Knock, knock! Hi. Who have we got here? 74 00:03:51,860 --> 00:03:53,660 Hi. Who have we got here? 75 00:03:53,660 --> 00:03:53,900 Come in. Hi. Who have we got here? 76 00:03:53,900 --> 00:03:56,700 Come in. Oh, thank you. (CHUCKLES) Thanks. 77 00:03:57,660 --> 00:03:59,660 RENEE ELLIOTT: When I was going away for treatment, 78 00:03:59,660 --> 00:04:03,020 I'd be back on a Friday night just in time to watch Kaden play footy. 79 00:04:04,980 --> 00:04:06,460 You must have been pretty buggered, though. 80 00:04:06,460 --> 00:04:08,100 Yes, that's why it was always pizza night 81 00:04:08,100 --> 00:04:09,620 'cause I wasn't coming home and cooking. 82 00:04:11,940 --> 00:04:13,460 Are you ready to go? 83 00:04:14,420 --> 00:04:16,180 My name's Renee Elliott. 84 00:04:16,180 --> 00:04:18,100 I live in sunny old Streaky Bay. 85 00:04:18,100 --> 00:04:19,860 Come on, guys! 86 00:04:19,860 --> 00:04:21,500 Hold on! 87 00:04:26,100 --> 00:04:28,460 Been home here over 20 years now. 88 00:04:28,460 --> 00:04:31,220 So, eight and a half, nine hours from Adelaide. 89 00:04:31,220 --> 00:04:36,220 So, very remote when it comes to having medical attention. 90 00:04:38,580 --> 00:04:43,540 Renee Elliott has flown far more than she'd ever anticipated. 91 00:04:43,540 --> 00:04:47,180 She's been diagnosed with breast cancer twice. 92 00:04:47,180 --> 00:04:47,420 She's been diagnosed Ceduna is the closest airport. 93 00:04:47,420 --> 00:04:49,900 Ceduna is the closest airport. 94 00:04:50,860 --> 00:04:54,180 I've actually flown 38 times since January, 95 00:04:54,180 --> 00:04:54,420 so, having my fortnightly treatment I've actually flown 38 times since January, 96 00:04:54,420 --> 00:04:56,100 so, having my fortnightly treatment 97 00:04:56,100 --> 00:04:56,340 so, having my fortnightly treatment and then back for radio. 98 00:04:56,340 --> 00:04:58,660 and then my weekly and then back for radio. 99 00:04:58,660 --> 00:04:58,940 and then my weekly and then back for radio. What flavour milkshake are you having today? 100 00:04:58,940 --> 00:05:00,380 What flavour milkshake are you having today? 101 00:05:00,380 --> 00:05:02,580 Strawberry, please. Strawberry? And what else? 102 00:05:02,580 --> 00:05:04,700 At the end of the day it's about being home 103 00:05:04,700 --> 00:05:06,940 and try to get through as much as I could 104 00:05:06,940 --> 00:05:09,180 with the support of my kids and my family. 105 00:05:09,180 --> 00:05:11,580 So, yeah, not having Rex flying out of Ceduna 106 00:05:11,580 --> 00:05:15,380 would be very detrimental in that respect. 107 00:05:17,620 --> 00:05:20,300 It's a growing anxiety. 108 00:05:20,300 --> 00:05:24,100 Rex is the only airline servicing Ceduna, 109 00:05:24,100 --> 00:05:24,340 Rex is the only airline and its future is under a cloud. 110 00:05:24,340 --> 00:05:27,380 and its future is under a cloud. 111 00:05:27,380 --> 00:05:29,740 (RADIO NEWS THEME MUSIC PLAYS) 112 00:05:29,740 --> 00:05:33,340 NEWSREADER: Rex Airlines has entered voluntary administration 113 00:05:33,340 --> 00:05:33,580 NEWSREADER: Rex Airlines amid serious financial troubles 114 00:05:33,580 --> 00:05:35,220 amid serious financial troubles 115 00:05:35,220 --> 00:05:35,460 with questions amid serious financial troubles 116 00:05:35,460 --> 00:05:38,020 with questions about its future viability. 117 00:05:38,020 --> 00:05:42,340 NEWSREADER: The regional carrier has been losing $1 million a week. 118 00:05:42,340 --> 00:05:42,580 NEWSREADER: The regional carrier Maybe what we'll do is... 119 00:05:42,580 --> 00:05:43,580 Maybe what we'll do is... 120 00:05:43,580 --> 00:05:46,060 The airline is still flying in the regions 121 00:05:46,060 --> 00:05:49,820 while its administrators hunt for a new owner. 122 00:05:50,780 --> 00:05:54,980 For people like Renee, it's an unsettling time. 123 00:05:54,980 --> 00:05:57,300 People that live in the cities have got the alternative 124 00:05:57,300 --> 00:05:59,900 that they can either public-transport it to somewhere 125 00:05:59,900 --> 00:06:00,140 that they can either or train it, for instance, 126 00:06:00,140 --> 00:06:02,700 or train it, for instance, 127 00:06:02,700 --> 00:06:06,660 or they've got a vast array of flights that they can take. 128 00:06:06,660 --> 00:06:09,260 Yeah, we have no choice. We have Rex. 129 00:06:10,460 --> 00:06:14,420 (ENGINE BUZZES) 130 00:06:14,420 --> 00:06:16,740 Rex, short for 'Regional Express', 131 00:06:16,740 --> 00:06:21,340 was built from the collapse of Ansett in 2002. 132 00:06:21,340 --> 00:06:25,540 It combined two smaller carriers - Kendell and Hazelton - 133 00:06:25,540 --> 00:06:25,780 It combined two smaller carriers - to pick up Ansett's regional routes. 134 00:06:25,780 --> 00:06:28,780 to pick up Ansett's regional routes. 135 00:06:28,780 --> 00:06:29,020 PHOTOGRAPHER: Alright, guys, to pick up Ansett's regional routes. 136 00:06:29,020 --> 00:06:32,140 PHOTOGRAPHER: Alright, guys, here we go! Big smiles! 137 00:06:32,140 --> 00:06:34,020 It's a bit hard looking at the sun, isn't it? 138 00:06:34,020 --> 00:06:34,260 It's a bit hard looking at the sun, It is. 139 00:06:34,260 --> 00:06:35,020 It is. 140 00:06:35,020 --> 00:06:39,540 Rex was launched by the then-federal transport minister... 141 00:06:39,540 --> 00:06:41,780 (ENGINE WHINES) 142 00:06:41,780 --> 00:06:45,620 ..while the airline's inaugural boss kept everyone on schedule. 143 00:06:45,620 --> 00:06:45,860 ..while the airline's inaugural boss Linda? Linda! 144 00:06:45,860 --> 00:06:47,420 Linda? Linda! 145 00:06:47,420 --> 00:06:49,060 Linda! We've gotta go. 146 00:06:49,060 --> 00:06:50,260 We've got to go, mate. 147 00:06:52,860 --> 00:06:55,540 (INDISTINCT CHATTER) 148 00:06:56,820 --> 00:07:01,300 The company's motto places its loyalties in regional Australia. 149 00:07:01,300 --> 00:07:04,780 VOICEOVER: Australia's friendliest and most reliable airline 150 00:07:04,780 --> 00:07:05,060 now brings you to Sydney VOICEOVER: Australia's friendliest and most reliable airline 151 00:07:05,060 --> 00:07:06,500 now brings you to Sydney 152 00:07:06,500 --> 00:07:07,540 three times a day. 153 00:07:07,540 --> 00:07:07,780 Rex. Our heart is in the country. three times a day. 154 00:07:07,780 --> 00:07:10,780 Rex. Our heart is in the country. 155 00:07:12,500 --> 00:07:16,500 But that's not the experience of every community. 156 00:07:16,500 --> 00:07:19,580 As the only carrier on many regional routes, 157 00:07:19,580 --> 00:07:19,820 As the only carrier the airline has built a fiefdom. 158 00:07:19,820 --> 00:07:22,260 the airline has built a fiefdom. 159 00:07:22,260 --> 00:07:27,740 Some will attest its leadership can display the behaviour to match. 160 00:07:27,740 --> 00:07:32,020 How would you describe Rex to deal with as a business? 161 00:07:32,020 --> 00:07:32,980 Um... 162 00:07:32,980 --> 00:07:34,500 Can we stop there for a second? 163 00:07:35,460 --> 00:07:38,180 How much bargaining power does the council have 164 00:07:38,180 --> 00:07:38,420 How much bargaining power when it comes to dealing with Rex? 165 00:07:38,420 --> 00:07:40,460 when it comes to dealing with Rex? 166 00:07:40,460 --> 00:07:41,820 Uh... I would say, 167 00:07:41,820 --> 00:07:42,020 in reality, very little. Uh... I would say, 168 00:07:42,020 --> 00:07:43,060 in reality, very little. 169 00:07:43,060 --> 00:07:45,540 We have to remember that, in my view, 170 00:07:45,540 --> 00:07:47,940 we need Rex more than they need us. 171 00:07:49,780 --> 00:07:54,100 Councils run many of the nation's vital regional airports. 172 00:07:54,100 --> 00:07:58,780 They charge fees to airlines for services like security screening. 173 00:08:03,420 --> 00:08:05,460 I'll just get you to introduce yourself, 174 00:08:05,460 --> 00:08:06,740 your name and your title for the tape. 175 00:08:06,740 --> 00:08:10,580 Sure. Murray Wood, Chief Executive Officer, Dubbo Regional Council. 176 00:08:11,980 --> 00:08:17,820 When it comes to negotiations, Rex has a reputation for playing tough. 177 00:08:18,780 --> 00:08:21,260 Councils are used to vigorous conversations, 178 00:08:21,260 --> 00:08:21,540 but that can be done respectfully and professionally. Councils are used to vigorous conversations, 179 00:08:21,540 --> 00:08:23,780 but that can be done respectfully and professionally. 180 00:08:23,780 --> 00:08:26,140 Um... To be honest, I haven't had... 181 00:08:26,140 --> 00:08:27,460 From what I can see, 182 00:08:27,460 --> 00:08:27,660 From what I can see, the relationship with Rex is unique. 183 00:08:27,660 --> 00:08:30,300 the relationship with Rex is unique. 184 00:08:33,100 --> 00:08:34,740 In 2019 185 00:08:34,740 --> 00:08:38,940 Dubbo announced a fee increase to help fund airport upgrades. 186 00:08:38,940 --> 00:08:44,580 Rex sent Dubbo residents a letter signed by the airline's chairman, 187 00:08:44,580 --> 00:08:48,860 describing the council as either "very corrupt or very incompetent," 188 00:08:48,860 --> 00:08:51,860 "self-serving" and "bigoted". 189 00:08:51,860 --> 00:08:55,900 It threatened to stop flying to the regional city. 190 00:08:56,860 --> 00:08:59,700 How much extra was Rex being asked to pay the council? 191 00:08:59,700 --> 00:08:59,940 How much extra was Rex It was $1.99 per passenger. 192 00:08:59,940 --> 00:09:01,660 It was $1.99 per passenger. 193 00:09:01,660 --> 00:09:05,820 The airline decided to wear the cost and stay in Dubbo. 194 00:09:05,820 --> 00:09:10,620 But this is not the only council to face the wrath of Rex. 195 00:09:12,620 --> 00:09:15,020 Ready to go? We're ready. 196 00:09:15,020 --> 00:09:19,940 My name is Phill Stone and I'm the mayor of the City of Whyalla. 197 00:09:21,660 --> 00:09:23,340 For almost a decade 198 00:09:23,340 --> 00:09:25,860 this steel town flanked by desert and sea 199 00:09:25,860 --> 00:09:26,100 this steel town had two airlines - 200 00:09:26,100 --> 00:09:27,940 had two airlines - 201 00:09:27,940 --> 00:09:30,220 Rex and QantasLink. 202 00:09:30,220 --> 00:09:34,020 When the council resolved to introduce security screening 203 00:09:34,020 --> 00:09:34,260 When the council resolved at a cost to both carriers, 204 00:09:34,260 --> 00:09:36,060 at a cost to both carriers, 205 00:09:36,060 --> 00:09:36,300 a service only required for at a cost to both carriers, 206 00:09:36,300 --> 00:09:40,140 a service only required for the type of planes flown by Qantas, 207 00:09:40,140 --> 00:09:40,380 a service only required for Rex's reaction was fierce. 208 00:09:40,380 --> 00:09:43,060 Rex's reaction was fierce. 209 00:09:44,820 --> 00:09:47,900 Mayor, I have two press releases here that Rex put out. 210 00:09:47,900 --> 00:09:51,780 I'll just get you to read the words that we've highlighted. 211 00:09:56,580 --> 00:09:58,940 (READS) "Devious and underhanded. 212 00:09:58,940 --> 00:10:00,860 "Ungrateful. 213 00:10:01,820 --> 00:10:05,180 "Council has been deliberately deceptive. 214 00:10:05,180 --> 00:10:10,220 "Rex believes that Whyalla Council has lost all of its credibility." 215 00:10:11,300 --> 00:10:16,740 I've never read anything so... dare I say spiteful, so aggressive? 216 00:10:16,740 --> 00:10:16,980 I've never read anything so... dare I say spiteful, so aggressive? Because at no stage 217 00:10:16,980 --> 00:10:19,380 Because at no stage 218 00:10:19,380 --> 00:10:23,940 was the council and those negotiating with Rex at the time 219 00:10:23,940 --> 00:10:25,300 devious and underhanded. 220 00:10:27,220 --> 00:10:30,700 Whyalla is now a one-airline town 221 00:10:30,700 --> 00:10:33,500 reliant on QantasLink. 222 00:10:37,220 --> 00:10:40,660 Regional monopolies can cost residents. 223 00:10:40,660 --> 00:10:40,900 Regional monopolies In Ceduna 224 00:10:40,900 --> 00:10:42,100 In Ceduna 225 00:10:42,100 --> 00:10:48,540 Rex can charge up to $600 one way for the 90-minute flight to Adelaide. 226 00:10:48,540 --> 00:10:51,460 KEN MAYNARD: They are hard business people. 227 00:10:51,460 --> 00:10:51,740 We haven't increased our fees, for example, in the last eight years, KEN MAYNARD: They are hard business people. 228 00:10:51,740 --> 00:10:54,820 We haven't increased our fees, for example, in the last eight years, 229 00:10:54,820 --> 00:10:58,180 with an aim to try and keep fares as low as possible. 230 00:10:58,180 --> 00:10:58,460 with an aim to try and keep fares as low as possible. But they are in the business of business and that's the way it is. 231 00:10:58,460 --> 00:11:02,100 But they are in the business of business and that's the way it is. 232 00:11:02,100 --> 00:11:03,340 They do have the upper hand, 233 00:11:03,340 --> 00:11:05,180 but that's just the cards we're dealt with. 234 00:11:05,180 --> 00:11:05,420 but that's just the cards We have to be realistic. Yep. 235 00:11:05,420 --> 00:11:07,260 We have to be realistic. Yep. 236 00:11:07,260 --> 00:11:08,540 We can't afford to lose them. 237 00:11:08,540 --> 00:11:12,500 Rex's motto is 'our heart is in the country'. 238 00:11:12,500 --> 00:11:15,540 Do you think they've been displaying that? 239 00:11:16,700 --> 00:11:18,900 We would say not. 240 00:11:22,500 --> 00:11:25,220 The route between Melbourne and Sydney 241 00:11:25,220 --> 00:11:27,140 is one of the busiest in the world 242 00:11:27,140 --> 00:11:29,740 and the most lucrative in Australia. 243 00:11:30,700 --> 00:11:35,380 In 2020 Rex declared it wanted a slice of the spoils. 244 00:11:36,860 --> 00:11:39,300 JOHN SHARP: We're now going to do a ribbon-cutting 245 00:11:39,300 --> 00:11:41,700 in a few moments' time in the archway. 246 00:11:41,700 --> 00:11:43,980 (CHEERING, APPLAUSE) 247 00:11:43,980 --> 00:11:47,100 Using COVID grants to support its regional routes, 248 00:11:47,100 --> 00:11:50,660 it then secured private equity to lease jets. 249 00:11:51,620 --> 00:11:55,060 Its plan was to take on a pandemic-weakened Virgin 250 00:11:55,060 --> 00:11:55,300 Its plan was to take on by flying between capital cities. 251 00:11:55,300 --> 00:11:58,060 by flying between capital cities. 252 00:11:58,060 --> 00:12:01,300 Rex is really taking on the big guys. We are the underdog. 253 00:12:01,300 --> 00:12:01,540 They were good small-town operators, Rex is really taking on the big guys. We are the underdog. 254 00:12:01,540 --> 00:12:03,260 They were good small-town operators, 255 00:12:03,260 --> 00:12:03,500 and they should have stuck They were good small-town operators, 256 00:12:03,500 --> 00:12:06,220 and they should have stuck to their bread and butter 257 00:12:06,220 --> 00:12:06,460 and they should have stuck and consolidated in that way. 258 00:12:06,460 --> 00:12:08,700 and consolidated in that way. 259 00:12:08,700 --> 00:12:12,420 They were just... It was a bit like The Beverly Hillbillies. 260 00:12:12,420 --> 00:12:15,220 One, two, three. Here's to Compass. (CAMERA SHUTTERS CLICK) 261 00:12:15,220 --> 00:12:17,260 The so-called 'Golden Triangle' - 262 00:12:17,260 --> 00:12:20,740 the route between Sydney, Melbourne and Brisbane - 263 00:12:20,740 --> 00:12:24,380 is littered with the carcases of those who have gone before. 264 00:12:25,340 --> 00:12:30,420 Compass launched as Australia's first low-cost carrier in 1990. 265 00:12:30,420 --> 00:12:30,660 Compass launched as Australia's It failed twice. 266 00:12:30,660 --> 00:12:32,940 It failed twice. 267 00:12:32,940 --> 00:12:34,780 I don't believe that. 268 00:12:34,780 --> 00:12:36,980 Next came Impulse. 269 00:12:36,980 --> 00:12:39,780 It was eventually absorbed by Qantas. 270 00:12:41,100 --> 00:12:45,180 Tigerair tried to stake its claim in 2009. 271 00:12:47,060 --> 00:12:50,980 It was bought by Virgin and shut down in 2020. 272 00:12:53,540 --> 00:12:55,740 Australia once had legislation 273 00:12:55,740 --> 00:12:59,500 protecting the two incumbent airlines from new entrants. 274 00:12:59,500 --> 00:12:59,740 protecting the two incumbent It's no longer law, 275 00:12:59,740 --> 00:13:01,620 It's no longer law, 276 00:13:01,620 --> 00:13:03,300 and those carriers are long gone, 277 00:13:03,300 --> 00:13:07,140 but the duopoly remains our reality. 278 00:13:07,140 --> 00:13:11,780 Research tells us airfares fall when there's more competition. 279 00:13:12,740 --> 00:13:13,740 But today, 280 00:13:13,740 --> 00:13:18,260 9-out-of-10 domestic passengers fly with Qantas or Virgin. 281 00:13:19,100 --> 00:13:23,380 It's this context that makes Rex's entry on the Golden Triangle 282 00:13:23,380 --> 00:13:26,100 especially audacious. 283 00:13:26,100 --> 00:13:26,340 Why would you risk shareholders' money in a venture especially audacious. 284 00:13:26,340 --> 00:13:29,060 Why would you risk shareholders' money in a venture 285 00:13:29,060 --> 00:13:33,420 taking on two very established and financially fit competitors now 286 00:13:33,420 --> 00:13:33,660 taking on two very established and financially fit competitors now who'd just gone through... 287 00:13:33,660 --> 00:13:34,820 who'd just gone through... 288 00:13:34,820 --> 00:13:35,060 ..Virgin went through who'd just gone through... 289 00:13:35,060 --> 00:13:36,740 ..Virgin went through a reorganisation, 290 00:13:36,740 --> 00:13:36,980 ..Virgin went through Qantas got the chance to re... 291 00:13:36,980 --> 00:13:38,140 Qantas got the chance to re... 292 00:13:38,140 --> 00:13:42,500 They're as financially fit as they've probably ever been. 293 00:13:42,500 --> 00:13:44,260 And then you jump into their space? 294 00:13:44,260 --> 00:13:47,180 Well, you're going to get a competitor backlash. 295 00:13:49,100 --> 00:13:54,260 Both airlines are fiercely protective of their slice of the sky. 296 00:13:54,260 --> 00:13:55,500 I'm Joe Aston, 297 00:13:55,500 --> 00:13:59,300 I'm a former newspaper columnist at the Australian Financial Review, 298 00:13:59,300 --> 00:14:03,100 and now I'm about to be the author of a book about Qantas 299 00:14:03,100 --> 00:14:04,620 called The Chairman's Lounge. 300 00:14:04,620 --> 00:14:08,260 Qantas is a very aggressive competitor. Hyper-aggressive. 301 00:14:08,260 --> 00:14:11,020 Many of its competitors have found that out the hard way, 302 00:14:11,020 --> 00:14:11,260 Many of its competitors have found that out the fatal way. 303 00:14:11,260 --> 00:14:14,100 have found that out the fatal way. 304 00:14:14,100 --> 00:14:16,060 Rex is just the latest. 305 00:14:16,060 --> 00:14:18,300 Our investigation has found 306 00:14:18,300 --> 00:14:21,660 that, after Rex entered the lucrative Golden Triangle, 307 00:14:21,660 --> 00:14:24,780 Qantas increased the number of low-cost Jetstar seats 308 00:14:24,780 --> 00:14:25,020 Qantas increased the number available on its city routes 309 00:14:25,020 --> 00:14:27,260 available on its city routes 310 00:14:27,260 --> 00:14:31,180 while also entering 10 of Rex's regional routes. 311 00:14:32,460 --> 00:14:35,300 What Qantas does is use its superior scale 312 00:14:35,300 --> 00:14:39,420 to put unbearable pressure on the profits of their competitors. 313 00:14:39,420 --> 00:14:41,940 I mean, that's what big monopolies do. 314 00:14:41,940 --> 00:14:43,820 They have bigger pricing power, 315 00:14:43,820 --> 00:14:46,020 so, they can lower their prices 316 00:14:46,020 --> 00:14:49,540 and still either not lose money or not lose very much money 317 00:14:49,540 --> 00:14:49,780 and still either not lose money but crush the smaller operators. 318 00:14:49,780 --> 00:14:51,780 but crush the smaller operators. 319 00:14:53,620 --> 00:14:56,700 While Qantas circled with cheap seats, 320 00:14:56,700 --> 00:15:00,340 Virgin often matched Rex's lower pricing. 321 00:15:01,420 --> 00:15:04,300 BRETT GODFREY: Qantas are the dominant player in the market 322 00:15:04,300 --> 00:15:04,540 BRETT GODFREY: Qantas are and, respectfully, 323 00:15:04,540 --> 00:15:05,900 and, respectfully, 324 00:15:05,900 --> 00:15:09,820 they do whatever it takes, I would argue legally, 325 00:15:09,820 --> 00:15:10,060 they do whatever it takes, to protect that position. 326 00:15:10,060 --> 00:15:11,500 to protect that position. 327 00:15:11,500 --> 00:15:11,740 Virgin today to protect that position. 328 00:15:11,740 --> 00:15:14,180 Virgin today is the second carrier in the market, 329 00:15:14,180 --> 00:15:17,700 and they're doing their damnedest to protect that position. 330 00:15:17,700 --> 00:15:20,620 As long as the two don't do that in a coordinated fashion, 331 00:15:20,620 --> 00:15:20,860 As long as the two don't do that I think the market benefits. 332 00:15:20,860 --> 00:15:22,140 I think the market benefits. 333 00:15:22,140 --> 00:15:22,380 It's sort of a sign I think the market benefits. 334 00:15:22,380 --> 00:15:25,820 It's sort of a sign of, if you like, silent, 335 00:15:25,820 --> 00:15:26,060 not illegal, but silent cooperation It's sort of a sign of, if you like, silent, 336 00:15:26,060 --> 00:15:30,380 not illegal, but silent cooperation 337 00:15:30,380 --> 00:15:32,340 between Qantas and Virgin 338 00:15:32,340 --> 00:15:32,580 between Qantas and Virgin to drive the third player out of the market. 339 00:15:32,580 --> 00:15:35,380 to drive the third player out of the market. 340 00:15:36,340 --> 00:15:39,260 In a statement Qantas said Jetstar's growth 341 00:15:39,260 --> 00:15:42,860 reflects increased demand for low-cost leisure travel 342 00:15:42,860 --> 00:15:45,100 and was not directed at Rex. 343 00:15:45,100 --> 00:15:47,900 The airline also rejected the suggestion 344 00:15:47,900 --> 00:15:51,740 that it coordinates on pricing or network with Virgin. 345 00:15:51,740 --> 00:15:54,740 Virgin told us it welcomes competition. 346 00:15:58,780 --> 00:16:01,140 The airline giants have also been accused 347 00:16:01,140 --> 00:16:05,220 of blocking competitors' access to Sydney Airport. 348 00:16:05,220 --> 00:16:09,060 In the immediate aftermath of Rex's decline, 349 00:16:09,060 --> 00:16:10,780 partial blame was placed on the system 350 00:16:10,780 --> 00:16:14,500 that determines whose planes get to land and when. 351 00:16:14,500 --> 00:16:16,420 BRIDGET MCKENZIE: We need to make sure 352 00:16:16,420 --> 00:16:16,660 BRIDGET MCKENZIE: that our domestic aviation system 353 00:16:16,660 --> 00:16:19,180 that our domestic aviation system 354 00:16:19,180 --> 00:16:19,420 is open to new players to provide that competition, that our domestic aviation system 355 00:16:19,420 --> 00:16:22,740 is open to new players to provide that competition, 356 00:16:22,740 --> 00:16:26,660 and getting access into Sydney Airport is a key component of that. 357 00:16:32,580 --> 00:16:35,700 The company that hands out take-off and landing slots 358 00:16:35,700 --> 00:16:38,660 is majority-funded by Qantas and Virgin, 359 00:16:38,660 --> 00:16:38,900 is majority-funded but the person who runs it 360 00:16:38,900 --> 00:16:40,140 but the person who runs it 361 00:16:40,140 --> 00:16:43,660 disputes that they have any say in her decision-making. 362 00:16:45,060 --> 00:16:47,820 PETRA POPOVAC: The CEO, which is myself, I'm the slot manager, 363 00:16:47,820 --> 00:16:50,860 is responsible for the allocation of slots 364 00:16:50,860 --> 00:16:51,140 and to ensure that we are abiding by the rules provided to us is responsible for the allocation of slots 365 00:16:51,140 --> 00:16:55,660 and to ensure that we are abiding by the rules provided to us 366 00:16:55,660 --> 00:16:55,900 and to ensure that we are abiding by the Australian Government 367 00:16:55,900 --> 00:16:57,380 by the Australian Government 368 00:16:57,380 --> 00:16:57,620 by the Australian Government and by the World Airport Slots board as well. 369 00:16:57,620 --> 00:17:00,260 and by the World Airport Slots board as well. 370 00:17:02,300 --> 00:17:07,020 Petra Popovac says it's not her fault Rex struggled to compete. 371 00:17:07,020 --> 00:17:10,700 It received most of the slots that they applied for 372 00:17:10,700 --> 00:17:12,820 and all of the slots in the peak period 373 00:17:12,820 --> 00:17:15,900 that they were wanting to operate. 374 00:17:15,900 --> 00:17:18,580 They had too many in the peak, so, they handed some back. 375 00:17:18,580 --> 00:17:18,820 They had too many in the peak, The slots are not the problem here. 376 00:17:18,820 --> 00:17:20,620 The slots are not the problem here. 377 00:17:22,500 --> 00:17:25,900 The government has announced reform to Sydney's slot system 378 00:17:25,900 --> 00:17:28,780 since Rex entered voluntary administration. 379 00:17:29,740 --> 00:17:34,860 But what happened at the airline goes way beyond airport access. 380 00:17:34,860 --> 00:17:38,820 This sort of half-baked venture of taking on Qantas 381 00:17:38,820 --> 00:17:42,420 and being the third major domestic airline 382 00:17:42,420 --> 00:17:42,700 was just such a strategic error, but such an obvious strategic error. and being the third major domestic airline 383 00:17:42,700 --> 00:17:47,060 was just such a strategic error, but such an obvious strategic error. 384 00:17:47,060 --> 00:17:48,820 Um... It sort of 385 00:17:48,820 --> 00:17:49,020 Um... It sort of smelled of fantasy 386 00:17:49,020 --> 00:17:50,620 smelled of fantasy 387 00:17:50,620 --> 00:17:54,020 or of, um...of... 388 00:17:54,020 --> 00:17:56,580 Well, it's always ego. (CHUCKLES) 389 00:17:56,580 --> 00:17:56,820 So, A and B. Mark. Well, it's always ego. (CHUCKLES) 390 00:17:56,820 --> 00:17:59,100 So, A and B. Mark. K, rolling? 391 00:17:59,100 --> 00:18:00,540 Good to go? Yes, please. 392 00:18:00,540 --> 00:18:00,780 Good to go? Emily, where will you be sitting? 393 00:18:00,780 --> 00:18:01,900 Emily, where will you be sitting? 394 00:18:01,900 --> 00:18:03,740 I'll be there. Over here. OK. 395 00:18:03,740 --> 00:18:04,980 Hi, Emily. Hi, Mr Lim. 396 00:18:04,980 --> 00:18:05,220 Hi, Emily. Thank you so much for joining us. 397 00:18:05,220 --> 00:18:06,780 Thank you so much for joining us. 398 00:18:06,780 --> 00:18:09,260 Yeah. How's it all been going? It's been goodish. 399 00:18:09,260 --> 00:18:10,860 Did you have a good time with Kim Hai? 400 00:18:10,860 --> 00:18:14,460 Coffee? Are you ready to go? Yes, I'm totally ready to go. 401 00:18:16,500 --> 00:18:20,500 Rex was run by the same two men for almost two decades - 402 00:18:20,500 --> 00:18:20,740 Rex was run by the same two men Singaporean businessman Lim Kim Hai 403 00:18:20,740 --> 00:18:23,220 Singaporean businessman Lim Kim Hai 404 00:18:23,220 --> 00:18:23,460 and former federal Transport Minister Singaporean businessman Lim Kim Hai 405 00:18:23,460 --> 00:18:26,860 and former federal Transport Minister John Sharp. 406 00:18:26,860 --> 00:18:27,100 and former federal Transport Minister Why would a Singaporean businessman 407 00:18:27,100 --> 00:18:30,060 Why would a Singaporean businessman 408 00:18:30,060 --> 00:18:33,740 get involved in a regional Australian airline? 409 00:18:33,740 --> 00:18:35,620 Very good question. 410 00:18:35,620 --> 00:18:38,020 I have only two words. 411 00:18:38,020 --> 00:18:40,740 I was stupid and I was naive. 412 00:18:41,700 --> 00:18:45,980 This is the first time since Rex entered voluntary administration 413 00:18:45,980 --> 00:18:48,540 that the men have gone public. 414 00:18:48,540 --> 00:18:51,420 They're no longer on speaking terms. 415 00:18:52,380 --> 00:18:54,900 How would you describe Mr Lim now? 416 00:18:54,900 --> 00:18:55,140 Well, it's a difficult thing to describe Mr Lim now without, um... How would you describe Mr Lim now? 417 00:18:55,140 --> 00:19:00,340 Well, it's a difficult thing to describe Mr Lim now without, um... 418 00:19:00,340 --> 00:19:00,580 ..expressing views describe Mr Lim now without, um... 419 00:19:00,580 --> 00:19:01,820 ..expressing views 420 00:19:01,820 --> 00:19:02,060 ..expressing views that are probably best not said in a public place. 421 00:19:02,060 --> 00:19:04,860 that are probably best not said in a public place. 422 00:19:06,460 --> 00:19:11,020 There's one thing that Lim Kim Hai and John Sharp agree on - 423 00:19:11,020 --> 00:19:15,220 that Qantas was a factor in the troubles facing Rex. 424 00:19:16,420 --> 00:19:20,020 Was it a mistake to go into domestic market? 425 00:19:20,020 --> 00:19:20,260 It was a mistake to assume Was it a mistake to go into domestic market? 426 00:19:20,260 --> 00:19:25,020 It was a mistake to assume 427 00:19:25,020 --> 00:19:29,540 that Qantas would behave responsibly. 428 00:19:29,540 --> 00:19:33,460 What they did was to try to cut us off at the roots, 429 00:19:33,460 --> 00:19:35,980 and they went into the regional markets 430 00:19:35,980 --> 00:19:39,260 to make sure that we do not get any profits. 431 00:19:39,260 --> 00:19:43,300 What I don't think we had taken into account 432 00:19:43,300 --> 00:19:47,620 was just the...if you like, the vindictiveness of Qantas, 433 00:19:47,620 --> 00:19:52,340 who decided, "Right, OK, we're going to really teach Rex a lesson. 434 00:19:52,340 --> 00:19:54,700 "We're going to go into these markets, 435 00:19:54,700 --> 00:19:56,420 "undermine their regional business, 436 00:19:56,420 --> 00:19:59,820 "take away the income that they have in that regional business 437 00:19:59,820 --> 00:20:02,620 "which can support their domestic business start-up, 438 00:20:02,620 --> 00:20:04,260 "and that will kill them off." 439 00:20:04,260 --> 00:20:07,620 And they did it ruthlessly. 440 00:20:07,620 --> 00:20:10,820 And they were successful. 441 00:20:11,780 --> 00:20:15,140 Qantas says its move into Rex's regional routes 442 00:20:15,140 --> 00:20:15,380 Qantas says was in response to demand. 443 00:20:15,380 --> 00:20:17,660 was in response to demand. 444 00:20:17,660 --> 00:20:20,060 The ACCC told Four Corners 445 00:20:20,060 --> 00:20:22,900 it has investigated concerns raised by Rex 446 00:20:22,900 --> 00:20:26,420 and that they did not meet the threshold for further action. 447 00:20:26,420 --> 00:20:30,700 John Sharp admits Rex should have been better prepared. 448 00:20:30,700 --> 00:20:34,620 Was the gamble on intercity operations worth it? 449 00:20:34,620 --> 00:20:34,860 Was the gamble Hindsight would say no. 450 00:20:34,860 --> 00:20:36,540 Hindsight would say no. 451 00:20:36,540 --> 00:20:38,140 I think it was the beginning 452 00:20:38,140 --> 00:20:41,980 of what became a very bad chapter 453 00:20:41,980 --> 00:20:43,860 in the history of the company. 454 00:20:45,220 --> 00:20:49,140 Rex was a company with an unusual structure. 455 00:20:49,140 --> 00:20:52,140 Lim Kim Hai was not only the executive chairman 456 00:20:52,140 --> 00:20:52,380 Lim Kim Hai was not only but also the largest shareholder. 457 00:20:52,380 --> 00:20:54,980 but also the largest shareholder. 458 00:20:54,980 --> 00:20:55,220 He had a hand but also the largest shareholder. 459 00:20:55,220 --> 00:20:58,380 He had a hand in every aspect of the business. 460 00:20:58,380 --> 00:21:02,340 The words that stung regional councils were his. 461 00:21:02,340 --> 00:21:04,860 You've been described in different ways. 462 00:21:04,860 --> 00:21:07,300 A micromanager. A strategist. 463 00:21:07,300 --> 00:21:09,580 Sometimes rude. Successful. 464 00:21:09,580 --> 00:21:10,860 Unhinged. 465 00:21:10,860 --> 00:21:12,340 Also generous. 466 00:21:12,340 --> 00:21:14,820 I tend to agree to all the adjectives 467 00:21:14,820 --> 00:21:16,260 that you have mentioned. 468 00:21:16,260 --> 00:21:17,980 With 'unhinged'? 469 00:21:20,180 --> 00:21:22,700 That depends on your definition of 'unhinged'. 470 00:21:22,700 --> 00:21:26,060 The reason why I managed to be successful 471 00:21:26,060 --> 00:21:30,900 is because some of these so-called unhinged decisions 472 00:21:30,900 --> 00:21:34,660 are decisions that most people wouldn't make. 473 00:21:34,660 --> 00:21:37,460 Rex had an impeccable record 474 00:21:37,460 --> 00:21:39,620 both in terms of its operations 475 00:21:39,620 --> 00:21:43,220 and in terms of its financial capability. 476 00:21:43,220 --> 00:21:49,340 So, obviously I did something right for over 20 years. 477 00:21:51,700 --> 00:21:56,900 As his deputy, John Sharp has long appeared loyal to Lim Kim Hai. 478 00:21:56,900 --> 00:21:57,140 As his deputy, John Sharp has long But, with the airline in trouble, 479 00:21:57,140 --> 00:21:59,060 But, with the airline in trouble, 480 00:21:59,060 --> 00:22:02,380 the former Nationals MP is now distancing himself 481 00:22:02,380 --> 00:22:04,900 from how the boss did business. 482 00:22:04,900 --> 00:22:05,140 The language that's been used has been used...uh... from how the boss did business. 483 00:22:05,140 --> 00:22:08,660 The language that's been used has been used...uh... 484 00:22:08,660 --> 00:22:11,220 ..primarily, it's Kim Hai's way of doing things. 485 00:22:11,220 --> 00:22:11,460 ..primarily, it's Kim Hai's way of doing things. We've had many arguments 486 00:22:11,460 --> 00:22:12,780 We've had many arguments 487 00:22:12,780 --> 00:22:15,540 as to how those comments and statements should be made. 488 00:22:15,540 --> 00:22:18,060 With respect, it sounds like a bit of a cop-out, doesn't it, 489 00:22:18,060 --> 00:22:19,940 to say that it's all on him - 490 00:22:19,940 --> 00:22:20,180 "He just did his own thing, there's to say that it's all on him - 491 00:22:20,180 --> 00:22:23,340 "He just did his own thing, there's nothing we could do about it"? 492 00:22:23,340 --> 00:22:23,580 "He just did his own thing, there's Well...you can call it a cop-out, 493 00:22:23,580 --> 00:22:25,980 Well...you can call it a cop-out, 494 00:22:25,980 --> 00:22:29,420 but I would say to you it's an explanation of how it worked. 495 00:22:29,420 --> 00:22:30,660 Maybe we should have done more. 496 00:22:30,660 --> 00:22:32,580 I don't know what we could have done more. 497 00:22:32,580 --> 00:22:35,660 Because at the end of the day, he holds the power within the company. 498 00:22:35,660 --> 00:22:35,900 I've always taken the stand Because at the end of the day, he holds the power within the company. 499 00:22:35,900 --> 00:22:38,660 I've always taken the stand 500 00:22:38,660 --> 00:22:38,900 I've always taken the stand a public remark about Rex, 501 00:22:38,900 --> 00:22:44,300 that if you make a public remark about Rex, 502 00:22:44,300 --> 00:22:44,540 that if you make a public remark about Rex, we will hold you accountable to it. 503 00:22:44,540 --> 00:22:46,820 we will hold you accountable to it. 504 00:22:46,820 --> 00:22:51,500 It became an issue when we started to lose money. 505 00:22:51,500 --> 00:22:54,580 So, it was an issue, 506 00:22:54,580 --> 00:22:59,300 but they grudgingly accepted it 507 00:22:59,300 --> 00:23:01,260 when the airline is doing well. 508 00:23:03,140 --> 00:23:07,420 And Rex, when it was a regional carrier run by Lim Kim Hai, 509 00:23:07,420 --> 00:23:08,620 was profitable. 510 00:23:08,620 --> 00:23:12,060 (ENGINE BUZZES) 511 00:23:12,060 --> 00:23:13,700 But its financials show 512 00:23:13,700 --> 00:23:15,580 that, after entering the city routes, 513 00:23:15,580 --> 00:23:18,500 the passenger service began bleeding cash. 514 00:23:18,500 --> 00:23:18,740 the passenger service John Sharp says 515 00:23:18,740 --> 00:23:20,420 John Sharp says 516 00:23:20,420 --> 00:23:24,420 earlier this year the board proposed changes in strategy, 517 00:23:24,420 --> 00:23:27,020 in particular better marketing. 518 00:23:28,700 --> 00:23:31,340 All of those were rejected at the time 519 00:23:31,340 --> 00:23:33,740 by the then-executive chairman. 520 00:23:33,740 --> 00:23:36,620 This was the beginning of the end. 521 00:23:37,700 --> 00:23:41,380 When it became apparent there were problems and he wasn't fixing them, 522 00:23:41,380 --> 00:23:43,420 that's when everybody on the board 523 00:23:43,420 --> 00:23:46,380 decided it was time to do something that we had never done before, 524 00:23:46,380 --> 00:23:48,500 and that is to ask Kim Hai to step down. 525 00:23:48,500 --> 00:23:53,420 There was another thing that increased tensions at the top of Rex. 526 00:23:54,380 --> 00:23:58,060 Did Rex steal four planes from a company in the US? 527 00:23:58,060 --> 00:23:58,300 Did Rex steal four planes I'm aware of this allegation. 528 00:23:58,300 --> 00:24:00,980 I'm aware of this allegation. 529 00:24:05,220 --> 00:24:07,700 In the dry desert of Arizona 530 00:24:07,700 --> 00:24:09,740 just off Route 66 531 00:24:09,740 --> 00:24:09,980 sits a storage facility just off Route 66 532 00:24:09,980 --> 00:24:13,220 sits a storage facility holding planes, 533 00:24:13,220 --> 00:24:17,060 including those Rex needed for spare parts. 534 00:24:20,140 --> 00:24:25,620 The regional carrier paid a deposit on four of these aircraft in 2019. 535 00:24:26,940 --> 00:24:30,580 What happened next is now playing out in court. 536 00:24:30,580 --> 00:24:30,820 What happened next Jet Midwest alleges 537 00:24:30,820 --> 00:24:32,300 Jet Midwest alleges 538 00:24:32,300 --> 00:24:36,580 Rex arranged to have the aircraft collected, their wings sawn off 539 00:24:36,580 --> 00:24:38,340 and the parts shipped to Australia 540 00:24:38,340 --> 00:24:40,100 without its knowledge. 541 00:24:40,100 --> 00:24:44,700 Lim Kim Hai says Rex didn't steal the planes. 542 00:24:46,020 --> 00:24:49,020 When you accuse somebody of theft, 543 00:24:49,020 --> 00:24:53,140 it must mean that I come without your knowledge 544 00:24:53,140 --> 00:24:53,380 it must mean to take something from you. 545 00:24:53,380 --> 00:24:55,140 to take something from you. 546 00:24:55,140 --> 00:24:55,380 How do you do that to take something from you. 547 00:24:55,380 --> 00:24:57,820 How do you do that in broad daylight 548 00:24:57,820 --> 00:24:58,060 How do you do that over several weeks 549 00:24:58,060 --> 00:24:59,780 over several weeks 550 00:24:59,780 --> 00:25:02,740 on an aircraft that is so big? 551 00:25:02,740 --> 00:25:06,820 John Sharp claims the first he heard of the situation 552 00:25:06,820 --> 00:25:09,980 was when the directors received a legal threat in March. 553 00:25:09,980 --> 00:25:10,220 You can imagine - was when the directors received a legal threat in March. 554 00:25:10,220 --> 00:25:11,460 You can imagine - 555 00:25:11,460 --> 00:25:14,820 here we are, you know, the business is not trading well, 556 00:25:14,820 --> 00:25:15,100 here we are, you know, the business is not trading well, there's no plan to turn the business around, 557 00:25:15,100 --> 00:25:18,340 there's no plan to turn the business around, 558 00:25:18,340 --> 00:25:22,260 and all of a sudden we get this letter land on our doorstep 559 00:25:22,260 --> 00:25:26,460 saying these aircraft allegedly have been bought by you 560 00:25:26,460 --> 00:25:26,700 saying these aircraft and have now not been paid for. 561 00:25:26,700 --> 00:25:28,700 and have now not been paid for. 562 00:25:28,700 --> 00:25:28,940 And you can almost argue that and have now not been paid for. 563 00:25:28,940 --> 00:25:31,580 And you can almost argue that was the straw or one of the straws 564 00:25:31,580 --> 00:25:31,820 And you can almost argue that that broke the camel's back. 565 00:25:31,820 --> 00:25:33,380 that broke the camel's back. 566 00:25:34,340 --> 00:25:36,180 We've obtained a shipping receipt 567 00:25:36,180 --> 00:25:38,420 showing parts at the centre of the dispute 568 00:25:38,420 --> 00:25:41,420 were destined for Rex's base in Wagga Wagga. 569 00:25:41,420 --> 00:25:45,700 Lim Kim Hai denies they're in the custody of Rex. 570 00:25:46,740 --> 00:25:48,300 But do you know where the aircraft are? 571 00:25:48,300 --> 00:25:50,020 I've got no idea where the aircraft is now. 572 00:25:50,020 --> 00:25:50,260 I've got no idea We've heard that they're in Wagga. 573 00:25:50,260 --> 00:25:52,100 We've heard that they're in Wagga. 574 00:25:52,100 --> 00:25:54,060 The aircraft is not in Wagga. 575 00:25:54,060 --> 00:25:56,180 You can go to Wagga yourself 576 00:25:56,180 --> 00:25:58,900 and look and see whether the aircraft is there. 577 00:25:58,900 --> 00:26:00,620 It sounds like you DO know where they are. 578 00:26:00,620 --> 00:26:01,860 I do not know where they are. 579 00:26:01,860 --> 00:26:03,300 Well, you know where they're NOT. 580 00:26:03,300 --> 00:26:05,500 I really do not know where they are not. 581 00:26:05,500 --> 00:26:05,740 Ultimately, there is a contract, I really do not know where they are not. 582 00:26:05,740 --> 00:26:10,100 Ultimately, there is a contract, 583 00:26:10,100 --> 00:26:11,860 we honoured our contract. 584 00:26:11,860 --> 00:26:12,060 we honoured our contract. And, so, what happened after that? 585 00:26:12,060 --> 00:26:13,580 And, so, what happened after that? 586 00:26:13,580 --> 00:26:17,380 If we followed the normal contractual process, 587 00:26:17,380 --> 00:26:18,780 we would have gotten it done. 588 00:26:18,780 --> 00:26:21,420 But now they start this allegation, 589 00:26:21,420 --> 00:26:25,300 we will have to let the courts sort it out. 590 00:26:26,820 --> 00:26:30,620 One thing in all of this is indisputable. 591 00:26:30,620 --> 00:26:36,220 The issues at Rex have left almost 670 people without a job. 592 00:26:36,220 --> 00:26:40,780 John Sharp believes this could have been avoided. 593 00:26:40,780 --> 00:26:46,260 The board was negotiating to sell its intercity operations to Virgin. 594 00:26:46,260 --> 00:26:48,500 We put in place a rescue plan, 595 00:26:48,500 --> 00:26:50,380 and we thought that rescue plan 596 00:26:50,380 --> 00:26:53,620 would avoid the need for administration, 597 00:26:53,620 --> 00:26:54,980 it would avoid job losses, 598 00:26:54,980 --> 00:26:57,620 but, unfortunately, that plan was torpedoed. 599 00:26:57,620 --> 00:26:57,860 but, unfortunately, Who torpedoed it? 600 00:26:57,860 --> 00:26:58,740 Who torpedoed it? 601 00:26:58,740 --> 00:27:01,020 Well, again, the former chairman. 602 00:27:01,020 --> 00:27:03,220 Virgin and its owner, Bain, 603 00:27:03,220 --> 00:27:05,740 declined to comment on their dealings with Rex. 604 00:27:06,700 --> 00:27:08,620 As the largest shareholder, 605 00:27:08,620 --> 00:27:08,860 Lim Kim Hai had demanded As the largest shareholder, 606 00:27:08,860 --> 00:27:13,140 Lim Kim Hai had demanded a seat at the negotiating table. 607 00:27:13,140 --> 00:27:14,700 What happened is this - 608 00:27:14,700 --> 00:27:19,300 I said that, as a shareholder, 609 00:27:19,300 --> 00:27:22,980 if I'm not involved in it, 610 00:27:22,980 --> 00:27:24,260 I wouldn't accept it. 611 00:27:24,260 --> 00:27:25,700 It sounds like a threat. 612 00:27:25,700 --> 00:27:27,580 It's not a threat. 613 00:27:27,580 --> 00:27:27,820 A shareholder needs It's not a threat. 614 00:27:27,820 --> 00:27:31,620 A shareholder needs to act in his own best interests. 615 00:27:31,620 --> 00:27:34,540 You can't think that Rex is in a good position now. 616 00:27:34,540 --> 00:27:34,780 You can't think that Rex Rex is not in a good position. 617 00:27:34,780 --> 00:27:37,020 Rex is not in a good position. 618 00:27:37,020 --> 00:27:42,420 But how would we know what would be the position of Rex? 619 00:27:42,420 --> 00:27:45,460 Just because you say that Virgin might or might not step in 620 00:27:45,460 --> 00:27:48,260 doesn't mean that the airline will be in a good position. 621 00:27:48,260 --> 00:27:48,500 doesn't mean that the airline (BLADES WHIRR) 622 00:27:48,500 --> 00:27:51,420 (BLADES WHIRR) 623 00:27:51,420 --> 00:27:51,660 Sometimes people (BLADES WHIRR) 624 00:27:51,660 --> 00:27:53,900 Sometimes people can be the sort of people who think 625 00:27:53,900 --> 00:27:57,060 that, if it's not their idea, it's a bad idea 626 00:27:57,060 --> 00:27:59,580 and will reject it because it's not their idea. 627 00:27:59,580 --> 00:28:02,460 And that's the situation we found ourselves in. 628 00:28:02,460 --> 00:28:04,700 (ENGINES WHINE) 629 00:28:04,700 --> 00:28:07,100 Some of the same people 630 00:28:07,100 --> 00:28:13,420 who today be accusing me of, you know, various bad things 631 00:28:13,420 --> 00:28:19,220 are the same ones that have stuck by me since 2005 and before. 632 00:28:19,220 --> 00:28:19,460 are the same ones that have So, if I'm all that bad, 633 00:28:19,460 --> 00:28:21,980 So, if I'm all that bad, 634 00:28:21,980 --> 00:28:24,420 why did you stick around? 635 00:28:30,020 --> 00:28:33,340 From one troubled airline to another. 636 00:28:42,540 --> 00:28:44,780 Queensland's Sunshine Coast - 637 00:28:44,780 --> 00:28:48,340 home to beaches, bathers and holidaymakers. 638 00:28:49,580 --> 00:28:53,020 This was the home of Bonza. 639 00:28:53,020 --> 00:28:55,900 Bonza pledged to do things differently. 640 00:28:57,340 --> 00:29:00,380 (BIG-BAND MUSIC PLAYS) 641 00:29:07,940 --> 00:29:10,740 Wasn't that a bonza flight?! 642 00:29:10,740 --> 00:29:13,060 (CHEERING, APPLAUSE) 643 00:29:13,060 --> 00:29:16,180 A proudly bogan business flying big jets 644 00:29:16,180 --> 00:29:16,420 A proudly bogan business between regional centres 645 00:29:16,420 --> 00:29:18,180 between regional centres 646 00:29:18,180 --> 00:29:20,820 boasting ultra-cheap fares. 647 00:29:20,820 --> 00:29:23,500 Founder, Tim Jordan, had a dream. 648 00:29:23,500 --> 00:29:28,140 Bonza's DNA is about creating market growth, 649 00:29:28,140 --> 00:29:28,420 giving everybody, no matter where you live, Bonza's DNA is about creating market growth, 650 00:29:28,420 --> 00:29:30,780 giving everybody, no matter where you live, 651 00:29:30,780 --> 00:29:31,060 giving everybody, no matter where you live, the same opportunities to connect with friends and family. 652 00:29:31,060 --> 00:29:34,180 the same opportunities to connect with friends and family. 653 00:29:34,180 --> 00:29:37,020 BRETT GODFREY: If Qantas or Virgin thought it was a great idea 654 00:29:37,020 --> 00:29:40,420 to fly 180-seat aeroplanes between Maroochy and Cairns, 655 00:29:40,420 --> 00:29:40,700 well, they probably would have done it. to fly 180-seat aeroplanes between Maroochy and Cairns, 656 00:29:40,700 --> 00:29:42,420 well, they probably would have done it. 657 00:29:42,420 --> 00:29:44,340 There just wasn't the market there. 658 00:29:44,340 --> 00:29:44,580 There just wasn't the market there. It was just... It was economic suicide from the outset. 659 00:29:44,580 --> 00:29:47,100 It was just... It was economic suicide from the outset. 660 00:29:47,100 --> 00:29:47,340 It was just... It was Bonza. 661 00:29:47,340 --> 00:29:48,540 Bonza. 662 00:29:49,780 --> 00:29:52,500 Pff. It was doomed from the beginning. 663 00:29:55,220 --> 00:29:57,980 That depends on who you talk to. 664 00:29:57,980 --> 00:30:00,620 (ENGINE RUMBLES) 665 00:30:00,620 --> 00:30:02,380 PAUL MCKEOWN: I was a naysayer as well. 666 00:30:02,380 --> 00:30:03,980 I thought, "Oh, who wants to go to Aubrey?" 667 00:30:03,980 --> 00:30:06,580 But when we saw that it was so popular, 668 00:30:06,580 --> 00:30:09,340 I thought, "Well, why hasn't anyone done that before?" 669 00:30:09,340 --> 00:30:09,580 I thought, "Well, why hasn't anyone (ENGINE ZOOMS) 670 00:30:09,580 --> 00:30:12,380 (ENGINE ZOOMS) 671 00:30:16,860 --> 00:30:18,540 My name is Paul McKeown. 672 00:30:18,540 --> 00:30:20,980 I'm a commercial pilot 673 00:30:20,980 --> 00:30:23,500 and I live on the Sunshine Coast. 674 00:30:25,140 --> 00:30:29,420 Paul McKeown had a front-row seat to the early Bonza bonanza 675 00:30:29,420 --> 00:30:32,540 and to what he says was its preventable collapse 676 00:30:32,540 --> 00:30:32,780 and to what he says in just over a year. 677 00:30:32,780 --> 00:30:34,340 in just over a year. 678 00:30:34,340 --> 00:30:38,860 The start-up of Bonza went tremendously well. 679 00:30:38,860 --> 00:30:41,820 We really generated an airline from nothing, 680 00:30:41,820 --> 00:30:45,700 and we had a great wave of public support 681 00:30:45,700 --> 00:30:45,940 and we had a great wave of public support and our loads were really good, 682 00:30:45,940 --> 00:30:48,740 and our loads were really good, 683 00:30:48,740 --> 00:30:50,020 which flew in the face 684 00:30:50,020 --> 00:30:53,540 of some of the negative commentary we got before we started. 685 00:30:53,540 --> 00:30:53,780 of some of the negative commentary (LIVELY MUSIC PLAYS) 686 00:30:53,780 --> 00:30:54,940 (LIVELY MUSIC PLAYS) 687 00:30:54,940 --> 00:30:58,340 Bonza soon announced plans for expansion - 688 00:30:58,340 --> 00:31:02,660 a new base on the glitzy Gold Coast by the end of 2023. 689 00:31:02,660 --> 00:31:02,900 a new base on the glitzy Gold Coast (PLAYS ROCK MUSIC) 690 00:31:02,900 --> 00:31:06,060 (PLAYS ROCK MUSIC) 691 00:31:06,060 --> 00:31:10,060 (CHEERING, APPLAUSE) 692 00:31:10,060 --> 00:31:12,420 But there was a problem. 693 00:31:13,380 --> 00:31:18,180 The airline barely had enough planes for its existing network. 694 00:31:19,260 --> 00:31:24,100 Management decided to bring in jets and crew from Canada. 695 00:31:24,100 --> 00:31:28,260 Local staff feared Bonza wouldn't get regulatory approvals 696 00:31:28,260 --> 00:31:28,500 Local staff feared Bonza in time for take-off. 697 00:31:28,500 --> 00:31:29,780 in time for take-off. 698 00:31:30,740 --> 00:31:32,700 I know for a fact that some of the senior pilots 699 00:31:32,700 --> 00:31:35,300 were bringing these points to the attention of the management 700 00:31:35,300 --> 00:31:35,540 were bringing these points in quite strong terms. 701 00:31:35,540 --> 00:31:36,900 in quite strong terms. 702 00:31:36,900 --> 00:31:40,020 Of course, what did happen is we started selling seats 703 00:31:40,020 --> 00:31:44,300 on tickets that we were never, ever going to be able to supply. 704 00:31:46,060 --> 00:31:50,060 Regulators' sign-off came much later than expected. 705 00:31:51,460 --> 00:31:54,620 The delay was catastrophic for the airline. 706 00:31:54,620 --> 00:31:58,700 15,000 passengers' flights cancelled near Christmas. 707 00:32:00,020 --> 00:32:03,740 We saw this Shakespearean tragedy evolving before our eyes. 708 00:32:03,740 --> 00:32:03,980 We saw this Shakespearean tragedy You know, everyone was thrilled 709 00:32:03,980 --> 00:32:05,220 You know, everyone was thrilled 710 00:32:05,220 --> 00:32:08,380 to have a low-cost option for air travel. 711 00:32:08,380 --> 00:32:11,540 And, you know, we would find that energy 712 00:32:11,540 --> 00:32:13,300 at barbecues and in social settings. 713 00:32:13,300 --> 00:32:15,780 People would say, "Oh, you work for Bonzo. Isn't that great? 714 00:32:15,780 --> 00:32:17,420 "Isn't it so good for the Sunshine Coast?" 715 00:32:17,420 --> 00:32:23,260 Well, after the disaster of the Gold Coast base, um... 716 00:32:23,260 --> 00:32:24,940 ..that mood totally changed. 717 00:32:24,940 --> 00:32:28,980 Do you have any sense then of why they would push on with this plan 718 00:32:28,980 --> 00:32:32,500 that it sounds like most people were saying may not work? 719 00:32:32,500 --> 00:32:33,980 Yeah, that's a good question. 720 00:32:33,980 --> 00:32:35,900 None of us have any idea. 721 00:32:35,900 --> 00:32:38,380 And we don't know what, um... 722 00:32:38,380 --> 00:32:42,900 ..what pressures were being forced on management by our funders. 723 00:32:43,940 --> 00:32:48,220 The answer to that takes us to the other side of the world. 724 00:32:54,460 --> 00:32:57,980 After more than a decade planning his airline dream 725 00:32:57,980 --> 00:33:01,700 Tim Jordan found open minds and pockets in Miami 726 00:33:01,700 --> 00:33:01,940 Tim Jordan in investment firm 777 Partners. 727 00:33:01,940 --> 00:33:05,020 in investment firm 777 Partners. 728 00:33:05,980 --> 00:33:10,180 VOICEOVER: We believe that the old way of doing things was broken. 729 00:33:10,180 --> 00:33:12,660 We had a vision of a better way. 730 00:33:15,020 --> 00:33:19,620 777 affected an air of money and celebrity. 731 00:33:19,620 --> 00:33:21,620 Its investments were varied, 732 00:33:21,620 --> 00:33:23,380 from personal-injury payouts 733 00:33:23,380 --> 00:33:23,620 from personal-injury payouts to aviation and financially-stricken football clubs. 734 00:33:23,620 --> 00:33:27,300 to aviation and financially-stricken football clubs. 735 00:33:28,900 --> 00:33:35,220 Investigative journalist Paul Brown knows more than most about 777. 736 00:33:35,220 --> 00:33:37,460 PAUL BROWN: This seemed to be a company 737 00:33:37,460 --> 00:33:43,300 with serious ambitions to change the Australian airline market. 738 00:33:43,300 --> 00:33:45,580 However, um... 739 00:33:45,580 --> 00:33:49,620 ..for anyone who accepted this deal at Bonza, 740 00:33:49,620 --> 00:33:52,220 I think there are questions to be asked 741 00:33:52,220 --> 00:33:56,780 because from the beginning there were a series of red flags. 742 00:33:58,220 --> 00:34:02,740 Bonza relied on 777 for money and aircraft, 743 00:34:02,740 --> 00:34:02,980 Bonza relied on 777 but its administrators 744 00:34:02,980 --> 00:34:04,660 but its administrators 745 00:34:04,660 --> 00:34:04,900 have been unable but its administrators 746 00:34:04,900 --> 00:34:07,660 have been unable to find a formal funding agreement 747 00:34:07,660 --> 00:34:11,740 setting out how much cash they'd be given and when. 748 00:34:11,740 --> 00:34:14,780 We've been told there were also no contracts 749 00:34:14,780 --> 00:34:18,460 that specified how many planes they'd receive. 750 00:34:18,460 --> 00:34:20,700 VOICEOVER: It's our people, our brands, our culture. 751 00:34:20,700 --> 00:34:20,940 VOICEOVER: It's our people, Bonza's funding came in bursts, 752 00:34:20,940 --> 00:34:23,180 Bonza's funding came in bursts, 753 00:34:23,180 --> 00:34:23,380 sometimes late, Bonza's funding came in bursts, 754 00:34:23,380 --> 00:34:24,380 sometimes late, 755 00:34:24,380 --> 00:34:28,900 but management maintained their faith in 777 founders, 756 00:34:28,900 --> 00:34:31,140 Josh Wander and Steven Pasko. 757 00:34:33,460 --> 00:34:36,220 Josh Wander has a chequered history. 758 00:34:37,260 --> 00:34:41,860 He was the subject of drugs-trafficking charges, 759 00:34:41,860 --> 00:34:44,620 to which he pleaded no contest in college. 760 00:34:44,620 --> 00:34:47,820 That resulted in him being put on probation 761 00:34:47,820 --> 00:34:50,500 for a period of more than 10 years. 762 00:34:51,460 --> 00:34:55,260 777's founders claimed they were personally bankrolling 763 00:34:55,260 --> 00:34:55,500 777's founders claimed the firm's investments. 764 00:34:55,500 --> 00:34:57,740 the firm's investments. 765 00:34:57,740 --> 00:34:59,060 It has since emerged 766 00:34:59,060 --> 00:35:02,340 a large insurance firm sat above the company, 767 00:35:02,340 --> 00:35:06,300 but its other sources of funding remain unclear. 768 00:35:07,660 --> 00:35:10,500 There are a series of Russian oligarchs, for instance, 769 00:35:10,500 --> 00:35:10,740 There are a series who invested money with 777. 770 00:35:10,740 --> 00:35:13,740 who invested money with 777. 771 00:35:15,060 --> 00:35:19,820 777 is now embroiled in multiple court cases, 772 00:35:19,820 --> 00:35:24,900 including one alleging $500 million worth of fraud. 773 00:35:24,900 --> 00:35:28,540 We've confirmed the firm's investment in Bonza 774 00:35:28,540 --> 00:35:31,500 forms part of a US Department of Justice investigation 775 00:35:31,500 --> 00:35:31,740 forms part of a US Department into money laundering. 776 00:35:31,740 --> 00:35:33,740 into money laundering. 777 00:35:33,740 --> 00:35:38,380 777 and its founders did not respond to our requests for comment. 778 00:35:38,380 --> 00:35:38,620 777 and its founders did not respond This is who Bonza did business with. 779 00:35:38,620 --> 00:35:42,100 This is who Bonza did business with. 780 00:35:43,380 --> 00:35:46,220 Any responsible director obviously has duties. 781 00:35:46,220 --> 00:35:50,460 They have a duty of care both to the business and to its customers 782 00:35:50,460 --> 00:35:52,980 to make sure that the money you're accepting 783 00:35:52,980 --> 00:35:54,300 comes from a reputable source. 784 00:35:54,300 --> 00:35:56,460 And I think that is where the failing occurred 785 00:35:56,460 --> 00:35:56,700 And I think on the part of Bonza's directors. 786 00:35:56,700 --> 00:35:58,540 on the part of Bonza's directors. 787 00:35:59,500 --> 00:36:01,700 Bonza collapsed in April. 788 00:36:01,700 --> 00:36:03,260 NEWSREADER: The financial woes 789 00:36:03,260 --> 00:36:06,340 come after the company that owns its aircraft lessor 790 00:36:06,340 --> 00:36:07,980 tried to repossess its planes. 791 00:36:07,980 --> 00:36:11,180 And I can't get onto a support line because everybody else is calling. 792 00:36:11,180 --> 00:36:14,740 With the company now in voluntary administration, 793 00:36:14,740 --> 00:36:18,260 it will have a hard time living up to its name. 794 00:36:19,980 --> 00:36:24,020 ASIC is now examining whether Bonza was trading insolvent. 795 00:36:24,020 --> 00:36:27,980 The airline's founder and chief executive, Tim Jordan, 796 00:36:27,980 --> 00:36:30,660 declined an interview with Four Corners. 797 00:36:30,660 --> 00:36:33,660 He instead referred to a statement given in June 798 00:36:33,660 --> 00:36:38,020 that said the airline's progression was stymied by under-capitalisation 799 00:36:38,020 --> 00:36:38,260 that said the airline's progression and the repossession of its aircraft. 800 00:36:38,260 --> 00:36:40,940 and the repossession of its aircraft. 801 00:36:40,940 --> 00:36:43,380 (INSECTS CHIRP) 802 00:36:43,380 --> 00:36:49,100 Bonza's liquidation left more than 300 people out of a job. 803 00:36:49,100 --> 00:36:53,300 Paul McKeown believes the airline could have worked. 804 00:36:53,300 --> 00:36:55,620 PAUL MCKEOWN: If another airline was going to try the same model, 805 00:36:55,620 --> 00:36:58,580 and I hope they do because the Bonza model was a winner, 806 00:36:58,580 --> 00:37:01,140 I just hope, one, that they've got good backing, 807 00:37:01,140 --> 00:37:06,540 but also that they listen to the voice of experience in the company. 808 00:37:07,500 --> 00:37:09,100 You had to be there, you had to be there 809 00:37:09,100 --> 00:37:12,220 and be involved with the company to realise that, "You know what? 810 00:37:12,220 --> 00:37:14,540 "No, it didn't need to fail. It shouldn't have failed. 811 00:37:14,540 --> 00:37:14,820 "No, it didn't need to fail. It shouldn't have failed. "It was a fantastic airline, a great product." 812 00:37:14,820 --> 00:37:17,660 "It was a fantastic airline, a great product." 813 00:37:17,660 --> 00:37:22,860 And it's just such a shame that it went the way it did. 814 00:37:26,340 --> 00:37:30,620 There is one Australian who can lay claim to getting it right. 815 00:37:32,860 --> 00:37:35,100 Brett, I'll get you to introduce yourself. 816 00:37:35,100 --> 00:37:35,980 Sure. 817 00:37:35,980 --> 00:37:36,220 Brett Godfrey, former important Sure. 818 00:37:36,220 --> 00:37:39,980 Brett Godfrey, former important person in aviation. No longer. 819 00:37:39,980 --> 00:37:42,220 How about that? (LAUGHS) 820 00:37:43,500 --> 00:37:46,740 Brett Godfrey co-founded Virgin Blue, 821 00:37:46,740 --> 00:37:46,980 the airline launched Brett Godfrey co-founded Virgin Blue, 822 00:37:46,980 --> 00:37:50,700 the airline launched with great fanfare in 2000. 823 00:37:50,700 --> 00:37:53,540 Funded by British billionaire Richard Branson, 824 00:37:53,540 --> 00:37:57,060 its origin story is more bar than boardroom. 825 00:37:57,060 --> 00:38:00,300 It was literally a few too many pints in a London pub, 826 00:38:00,300 --> 00:38:03,540 and there was a dozen beer coasters where it just got knocked up. 827 00:38:03,540 --> 00:38:03,780 and there was a dozen beer coasters The vision was quite simple. 828 00:38:03,780 --> 00:38:05,620 The vision was quite simple. 829 00:38:05,620 --> 00:38:07,180 We knew coming into the market 830 00:38:07,180 --> 00:38:11,100 that one of the incumbents, being Qantas or Ansett, 831 00:38:11,100 --> 00:38:13,140 were susceptible to failure. 832 00:38:13,140 --> 00:38:14,500 They had uncontested markets, 833 00:38:14,500 --> 00:38:16,540 and they'd got to a point 834 00:38:16,540 --> 00:38:16,780 where they were both and they'd got to a point 835 00:38:16,780 --> 00:38:19,300 where they were both financially a bit strained. 836 00:38:19,300 --> 00:38:24,340 Brett Godfrey was sure his airline had a competitive edge. 837 00:38:24,340 --> 00:38:26,100 (BELL DONGS) (CHEERING, APPLAUSE) 838 00:38:26,100 --> 00:38:29,140 We just knew that we could sell every seat on our aeroplane 839 00:38:29,140 --> 00:38:31,380 for about $79 and make money, 840 00:38:31,380 --> 00:38:32,940 and we knew if they matched us 841 00:38:32,940 --> 00:38:35,620 they'd be losing about $1 million to $2 million a day. 842 00:38:35,620 --> 00:38:35,860 they'd be losing about And that was unsustainable. 843 00:38:35,860 --> 00:38:37,140 And that was unsustainable. 844 00:38:40,820 --> 00:38:42,580 (INDISTINCT CHATTER) 845 00:38:42,580 --> 00:38:45,780 After more than 65 years in the sky, 846 00:38:45,780 --> 00:38:49,500 Ansett was the one to fail. 847 00:38:49,500 --> 00:38:49,740 PASSENGER: Are any of the flights Ansett was the one to fail. 848 00:38:49,740 --> 00:38:52,100 PASSENGER: Are any of the flights still flying at all? 849 00:38:52,100 --> 00:38:54,060 Nothing? REPORTER: All grounded. 850 00:38:54,060 --> 00:38:55,780 Why's that? Everything's grounded. 851 00:38:55,780 --> 00:38:58,460 They've gone into liquidation. No more money. 852 00:38:59,500 --> 00:39:03,140 Its collapse paved the way for Virgin's success. 853 00:39:03,140 --> 00:39:06,420 Virgin came in with a brand, a different model, 854 00:39:06,420 --> 00:39:08,780 a preparedness to take on the big guys 855 00:39:08,780 --> 00:39:09,020 a preparedness and a consumer-facing brand 856 00:39:09,020 --> 00:39:11,420 and a consumer-facing brand 857 00:39:11,420 --> 00:39:14,660 that was always deemed to be the underdog. 858 00:39:15,620 --> 00:39:16,620 Guess what. 859 00:39:16,620 --> 00:39:19,660 Australians, like nobody else on the planet, love an underdog. 860 00:39:21,220 --> 00:39:25,060 That underdog is now an aviation overlord. 861 00:39:25,060 --> 00:39:30,620 Its founder believes this duopoly works for consumers. 862 00:39:30,620 --> 00:39:30,860 Its founder believes I think the market is different, 863 00:39:30,860 --> 00:39:32,340 I think the market is different, 864 00:39:32,340 --> 00:39:32,580 but both airlines I think the market is different, 865 00:39:32,580 --> 00:39:35,140 but both airlines need to be very, very cognisant 866 00:39:35,140 --> 00:39:37,460 that, you know, it is a slippery slope. 867 00:39:37,460 --> 00:39:37,700 that, you know, They've got to keep innovating, 868 00:39:37,700 --> 00:39:38,780 They've got to keep innovating, 869 00:39:38,780 --> 00:39:40,460 they've got to keep lowering their costs 870 00:39:40,460 --> 00:39:42,700 and they've got to keep financially fit 871 00:39:42,700 --> 00:39:44,020 or they will fail. 872 00:39:44,020 --> 00:39:47,860 I mean, all across the world that's happened with airlines. 873 00:39:51,100 --> 00:39:54,060 Even with the threat of fierce competition 874 00:39:54,060 --> 00:39:54,300 Even with the threat and the ghosts of airlines past, 875 00:39:54,300 --> 00:39:55,980 and the ghosts of airlines past, 876 00:39:55,980 --> 00:39:59,820 there's at least one new company willing to try its luck. 877 00:39:59,820 --> 00:40:00,060 there's at least one new company Bill, I'd like to ask you something 878 00:40:00,060 --> 00:40:01,780 Bill, I'd like to ask you something 879 00:40:01,780 --> 00:40:02,020 that I think many Australians Bill, I'd like to ask you something 880 00:40:02,020 --> 00:40:03,980 that I think many Australians will be wondering. 881 00:40:03,980 --> 00:40:08,340 How nuts do you have to be to start a new airline in this environment? 882 00:40:08,340 --> 00:40:08,580 How nuts do you have to be to start You have to be insane. 883 00:40:08,580 --> 00:40:10,140 You have to be insane. 884 00:40:10,140 --> 00:40:10,380 So, you have to have You have to be insane. 885 00:40:10,380 --> 00:40:12,740 So, you have to have a degree of insanity. 886 00:40:12,740 --> 00:40:16,740 I'm Bill Astling. I'm the CEO of Koala Airlines. 887 00:40:18,180 --> 00:40:21,940 Bill Astling has been in aviation for decades 888 00:40:21,940 --> 00:40:24,980 and he's no stranger to taking on major players. 889 00:40:24,980 --> 00:40:25,220 and he's no stranger In the 1970s 890 00:40:25,220 --> 00:40:26,700 In the 1970s 891 00:40:26,700 --> 00:40:29,580 he stared down a court challenge from Ansett 892 00:40:29,580 --> 00:40:29,820 he stared down a court challenge to launch cargo carrier Air Express. 893 00:40:29,820 --> 00:40:33,300 to launch cargo carrier Air Express. 894 00:40:33,300 --> 00:40:33,540 For anybody to launch cargo carrier Air Express. 895 00:40:33,540 --> 00:40:35,460 For anybody to turn around to me and say, 896 00:40:35,460 --> 00:40:38,260 "There's not room for a third airline," 897 00:40:38,260 --> 00:40:38,500 "There's not room really isn't looking at the figures 898 00:40:38,500 --> 00:40:40,740 really isn't looking at the figures 899 00:40:40,740 --> 00:40:43,860 or looking at the projections. 900 00:40:43,860 --> 00:40:45,340 This is a growth, 901 00:40:45,340 --> 00:40:48,500 and there are more people coming in from overseas, 902 00:40:48,500 --> 00:40:51,540 and it can't all be done by two airlines. 903 00:40:52,500 --> 00:40:56,820 Exactly where Koala Airlines will fly, when it will launch, 904 00:40:56,820 --> 00:40:57,060 Exactly where Koala Airlines how it will compete and who's paying 905 00:40:57,060 --> 00:40:58,780 how it will compete and who's paying 906 00:40:58,780 --> 00:41:00,260 isn't clear. 907 00:41:00,260 --> 00:41:00,500 At this stage Bill Astling doesn't isn't clear. 908 00:41:00,500 --> 00:41:04,900 At this stage Bill Astling doesn't want to reveal his business model. 909 00:41:04,900 --> 00:41:09,460 We're just not prepared to give away what our strategy is 910 00:41:09,460 --> 00:41:11,700 and allow competitors to be able to think, 911 00:41:11,700 --> 00:41:15,140 "Right, well, we can work on this or work on that." 912 00:41:15,140 --> 00:41:16,940 We've got a lot of support. 913 00:41:16,940 --> 00:41:18,540 Um... 914 00:41:18,540 --> 00:41:20,740 We've also got a lot of sceptics. 915 00:41:20,740 --> 00:41:23,980 I've had a few people who've said, 916 00:41:23,980 --> 00:41:26,620 "Have you appointed the liquidator yet?" 917 00:41:26,620 --> 00:41:29,900 So, I've had to tell him we're putting him out to tender. 918 00:41:29,900 --> 00:41:30,140 So, I've had to tell him (CHUCKLES) 919 00:41:30,140 --> 00:41:31,100 (CHUCKLES) 920 00:41:31,100 --> 00:41:34,060 (ENGINES WHINE) 921 00:41:38,460 --> 00:41:39,940 It's been argued 922 00:41:39,940 --> 00:41:44,140 Australia's landmass is too big and its population too small 923 00:41:44,140 --> 00:41:46,100 to sustain more carriers. 924 00:41:46,100 --> 00:41:49,180 JOE ASTON: This country is big enough for three airlines. 925 00:41:49,180 --> 00:41:53,500 The problem is that one company owns two of them. 926 00:41:53,500 --> 00:41:55,980 I mean, the ultimate solution, if you cared for the consumer, 927 00:41:55,980 --> 00:41:58,580 would be that Jetstar should not be owned by Qantas. 928 00:41:59,540 --> 00:42:00,820 Running Jetstar 929 00:42:00,820 --> 00:42:01,060 allows Qantas to compete Running Jetstar 930 00:42:01,060 --> 00:42:05,420 allows Qantas to compete on both ends of the aviation market. 931 00:42:05,420 --> 00:42:10,300 Professor Allan Fels believes even the threat of forced divestiture 932 00:42:10,300 --> 00:42:10,540 Professor Allan Fels believes even could benefit consumers. 933 00:42:10,540 --> 00:42:12,780 could benefit consumers. 934 00:42:12,780 --> 00:42:15,660 (ENGINES WHINE) 935 00:42:15,660 --> 00:42:18,700 ALLAN FELS: I think it would be highly desirable 936 00:42:18,700 --> 00:42:23,460 for our aviation market to be aware there's such a power. 937 00:42:23,460 --> 00:42:23,700 for our aviation market It would be up to the courts 938 00:42:23,700 --> 00:42:25,940 It would be up to the courts 939 00:42:25,940 --> 00:42:26,180 to determine It would be up to the courts 940 00:42:26,180 --> 00:42:29,700 to determine if there is illegal behaviour. 941 00:42:29,700 --> 00:42:29,940 to determine It's possible in some cases 942 00:42:29,940 --> 00:42:32,420 It's possible in some cases 943 00:42:32,420 --> 00:42:35,260 the best remedy is break up. 944 00:42:35,260 --> 00:42:38,980 And if Qantas and Jetstar were competing with each other 945 00:42:38,980 --> 00:42:42,300 instead of using each other at both ends of the market 946 00:42:42,300 --> 00:42:42,540 instead of using each other to sort of manoeuvre, 947 00:42:42,540 --> 00:42:44,780 to sort of manoeuvre, 948 00:42:44,780 --> 00:42:46,180 um... 949 00:42:46,180 --> 00:42:49,660 ..I think we'd have a very, very different set of outcomes. 950 00:42:49,660 --> 00:42:52,660 But, of course, Qantas will be forced to divest Jetstar 951 00:42:52,660 --> 00:42:56,460 on the day that pigs fly over the east-west runway. 952 00:42:57,420 --> 00:43:00,420 A Qantas spokesperson said breaking up Qantas Group 953 00:43:00,420 --> 00:43:04,300 would increase costs and put upward pressure on fares. 954 00:43:05,260 --> 00:43:09,020 The ACCC declined our interview request. 955 00:43:09,020 --> 00:43:13,380 Transport Minister Catherine King also declined to be interviewed, 956 00:43:13,380 --> 00:43:17,300 but in a statement referenced the government's Aviation White Paper, 957 00:43:17,300 --> 00:43:22,540 which she said includes significant reforms to boost competition. 958 00:43:22,540 --> 00:43:22,780 which she said includes significant (ENGINES WHINE) 959 00:43:22,780 --> 00:43:25,580 (ENGINES WHINE) 960 00:43:27,860 --> 00:43:30,980 Australia has a rich aviation history 961 00:43:30,980 --> 00:43:34,020 and a reliance on planes to keep us connected, 962 00:43:34,020 --> 00:43:38,860 but big ambitions undercut by poor judgement and flawed policy 963 00:43:38,860 --> 00:43:42,860 have left us with a market that doesn't always serve consumers. 964 00:43:42,860 --> 00:43:45,900 JOE ASTON: Australians in the small towns, 965 00:43:45,900 --> 00:43:46,140 JOE ASTON: they understand 966 00:43:46,140 --> 00:43:47,700 they understand 967 00:43:47,700 --> 00:43:47,940 the competition issues they understand 968 00:43:47,940 --> 00:43:50,180 the competition issues that we're talking about here. 969 00:43:50,180 --> 00:43:51,900 This is a matter of life and death. 970 00:43:52,860 --> 00:43:57,940 The federal government says it wants to enable greater competition, 971 00:43:57,940 --> 00:44:01,060 but, without action to match political words, 972 00:44:01,060 --> 00:44:06,380 we're at the mercy of an industry that's allowed to put us last. 973 00:44:12,820 --> 00:44:14,860 (THEME MUSIC PLAYS) 974 00:44:29,740 --> 00:44:31,740 Captions by Red Bee Media 975 00:44:31,740 --> 00:44:31,980 Copyright Australian Broadcasting Corporation Captions by Red Bee Media 976 00:44:31,980 --> 00:44:33,940 Copyright Australian Broadcasting Corporation