While Rex is seen as a critical counterbalance to the Qantas/Virgin duopoly, an Australian Competition and Consumer Commission (ACCC) report released today found real airline prices have increased since its collapse in July with its WA services hit by repeated cancellations and delays.

State government data indicated the airline has routinely failed to meet its required service standards, with the airline blaming pilot turnover for its struggle to meet passenger expectations.

Less than a day before the government's announcement, Carnarvon resident Kerri Robson was travelling home when her Rex flight was unexpectedly sent back to Perth.

Incidents like this have become commonplace on the airline's Gascoyne flight routes, with passengers to Monkey Mia landing 350 kilometres away in Carnarvon last year.

While recognising the importance of the route, Ms Robson said the poor service was having a serious impact on local residents.

"I've got a business to run, can I get the staff to cover myself?" she said.

"And if the flights get cancelled, how can I get from Perth all the way back?"

She said residents had become accustomed to flight delays.

"They're always watching the flight schedule," Ms Robson said.

"And if the plane's delayed, they're jumping in the cars and driving themselves [900km] to Perth.

"I would like to see the quality improve and make sure the flights get down on time."

Leaders want standards raised

The airline also owes hundreds of thousands of dollars in unpaid airport fees to councils in Esperance and Albany.

But despite the airline's poor reputation, local leaders said the importance of each route offsets the challenges.

In Esperance, 700 kilometres southeast of Perth, the only alternative to Rex's service is a near seven-hour drive.

"There's a lot of business, a lot of medical and a lot of other reasons people need to get to Perth," Shire of Esperance President Ron Chambers told ABC Radio Perth.

He said the airline's $435,000 airport bill remained unpaid, with ongoing costs covered by the airline's administrator.

Mr Chambers said he still held significant concerns about the airline's future.

"Why is the government giving them $80 million to extend it for another six months, is that because it's not profitable or not a sustainable business model?" he said.

"In that case, what are they going to do in June?"

He said the bailout needed to be accompanied by additional regulation, as well as long-term government support for the route.

In Albany, 500km to the west, the city's Mayor Greg Stocks said the airline had paid about $244,000 of its $700,000 in outstanding fees, leaving the council "pretty angry".

"We pushed Rex pretty hard before they went into administration because they were not paying their bills," Mr Stocks said.

"We at least got it down to $456,000, which is still completely unacceptable."

He said he felt comfortable the service would continue to operate, but said it needed to be reliable and affordable.

"This is not an airport where the main purpose is to get you to Bali for a holiday," Mr Stocks said.

"This is a regional lifeline, and if we don't have a viable airline, things stop pretty quickly."

Decision provides 'certainty'

Rex Administrator Sam Freeman told ABC News Radio the lifeline was "great news" for regional Australia.

"It provides an opportunity for the administrators to implement a business improvement plan to position the business for sale, which will include increasing the size of the fleet and the regional capacity," he said.

"I think it's a fantastic outcome for the communities that are served by Rex, because it provides them with certainty they can continue to book with competency in Rex."

The deal is conditional on Federal Court approval to extend the airline's administration period through to June next year.