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West Australian local governments want to strengthen payment arrangements on regulated airline routes, after being left hundreds of thousands of dollars out of pocket when Regional Express (Rex) collapsed.
In August 2023, the state government renewed the airline's monopoly rights to operate flights between Perth and four regional towns —Esperance, Albany, Carnarvon and Monkey Mia — until July 2028.
But a month ago, Rex was placed into voluntary administration.
Although regional flights are continuing to operate, administrators have revealed the airline owes $500 million to more than 4,800 creditors.
Among them is the Shire of Esperance, which told administrators it is owed $440,587 up to July 30.
The City of Albany said it was owed $456,000.
The Shire of Carnarvon said it was also out-of-pocket, but has not revealed how much.
About a week before Rex went into administration, Carnarvon councillors agreed to waive $46,000 in unpaid fees, after realising the airline had been undercharged for eight months.
The Monkey Mia airport is operated by RAC, which said it couldn't discuss the matter.
It is understood administrators have guaranteed payments from the time they took over, so debts are not accumulating.
The money owed to the three local governments, which operate their airports, is for landing fees and other services which are supposed to be monthly payments.
The Esperance Shire is owed money for landing fees and airport services. (ABC Esperance: Emily Smith)
Both Shire of Esperance and City of Albany didn't comment on the likelihood of getting the money back while the administration process is underway.
No precedence
A few years ago, the City of Kalgoorlie-Boulder was left in a similar position and received a pittance from administrators.
Virgin Australia went into voluntary administration in April 2020, owing the city $921,777.
It recovered $49,024, representing five cents in the dollar of total debt.
The city's CEO Andrew Brien said it had since developed a "stringent process for the monitoring and collection of outstanding payments".
"City staff proactively follow up on overdue debts and engage external debt collectors when necessary," he said.
The City of Kalgoorlie-Boulder was left severely out-of-pocket by Virgin Australia. (ABC Goldfields: Jarrod Lucas)
Esperance, Carnarvon and Albany want to follow suit.
The City of Albany said it would endeavour to include "rigorous protections" in future aviation agreements, while Carnarvon Shire President Eddie Smith called on the state government to ensure payments to local governments were paid more frequently and on time.
An Esperance Shire spokesperson said any loss of money would be significant for ratepayers, as it was used to offset operating costs and goes towards airport maintenance.
Burden on ratepayers
Nationals MP and Member for Roe Peter Rundle said the state government should better protect local governments through the regulated route contract.
Nationals MP Peter Rundle believed the state government should offer regional airport operators more protection. (ABC News: Keane Bourke)
"I just don't think it's fair on our local governments and their ratepayers to have to pick up the pieces," he said.
He said if the administration process did not deliver the money owed to local governments, he "didn't think it was unreasonable" that state government cover the shortfall.
A state government spokesperson said it conducted financial capacity checks when it awarded Rex the regulated route contract.
He did not comment on whether state government would be open to reimbursing local governments, if the administration process did not deliver.