First Bonza, now Rex: How the collapse of key rivals Qantas and Virgin Australia will cause ticket prices to skyrocket – and what will happen to those who have already paid for their tickets?

Airfares are likely to rise as Rex prepares to file for bankruptcy and could become the next airline to go under after Bonnie, an expert warns.

Ernst & Young will be named as Rex’s manager by Wednesday, Bloomberg reports, spelling bad news for travelers.

Greg Bamber, a professor at Monash University and author of Up in the Air, said the move would “reduce competition” and encourage Virgin and Qantas, “who form an oligopoly” in the market, to raise prices.

“That’s what usually happens when there’s less competition – dominant players raise prices,” he told Daily Mail Australia.

Professor Bamber said that when Bonza Airlines collapsed in early July, “Virgin and Qantas were offering passengers free tickets on the routes they flew”.

“What a challenge “The disadvantage for Bonza and Rex customers is that they were typically flying regional routes, which in most cases were not operated by Qantas and Virgin,” he said.

“So it didn’t always work. That kind of offer didn’t help most passengers in practice.”

If Rex fails, it could be a long time before another airline emerges in Australia that can challenge the dominance of Qantas and Virgin.

There have been many cases of new airlines failing in Australia in recent years, not only Bonza and Rex but also before that,“We saw the collapse of Ansett (in 2002), which was not a new player in the market,” Prof Bamber said.

The problem is that we have an oligopoly in Australia with one very strong player – a quasi-monopolist – Qantas, which has too much market power.

“Regulators have failed to stop a dominant player like Qantas. I think we deserve a higher degree of regulation in Australia to stop Qantas’s massive market dominance.”

Professor Bamber said a strong and competitive aviation industry was essential to Australia’s prosperity.

“It’s a huge country and the distances between our major population centres are enormous,” he said.

We have no alternative way of travelling between centres as there is no high-speed rail system and the roads between major cities which are very far apart are not up to world-class standards.

“So aviation is a very important industry in Australia.”

Faced with the potential collapse of a second airline in a month, Prime Minister Anthony Albanese said he was “worried about Rex”.

“It’s an important regional airline. But what we will do is we will investigate any proposals (to keep it flying).”

He added that “Rex, as a regional airline, provides important connections to regional communities and in particular between capital cities and regional communities, which is important for local economies.”

“That’s why we want the aviation industry in Australia to continue to provide that kind of service and that kind of access.”

Opposition MP Simon Birmingham said on Tuesday the government “must act with urgency but also be clear-headed about its actions”.

Mr Birmingham told Sky News that Labour needed to get its priorities right.

“The government’s responsibility is to taxpayers and travellers, not to shareholders. That was certainly the (Coalition’s) approach in the Virgin difficulties (in 2020).

There are a number of ways the Government can support and maintain critical routes for travellers, particularly in regional areas.

‘There are ways they can act to protect travellers.

“However, they must act in a way that is responsible to taxpayers and not in a way that provides protection to shareholders or creates an environment in which taxpayers are exposed to potentially significant losses.”

Will my Rex flight take place?

As of Tuesday afternoon, the Rex website was not accepting bookings for flights between capital cities such as Sydney, Melbourne and Brisbane.

Regional services, many of which are operated exclusively by Rex, are still available to book.

Unlike Bonza, Rex owns its own aircraft, which increases the likelihood, though not certainty, that flight obligations will be met while the company goes through bankruptcy proceedings.

More details will be provided later today or Wednesday morning.

If you have a flight booked in the coming days or weeks, please contact the airline or your travel agent directly to check whether your flight will still go ahead.

How can I get a refund if Rex goes bankrupt?

On April 30, when it became clear that Bonza was on the brink of bankruptcy, customers received text messages informing them they would get their money back within three weeks if they filled out an online form within 24 hours.

But this promise proved illusory and the administrators at Hall Chadwick had other ideas.

On May 1, it was announced that processing customer refunds was not a priority.

Those who had flights booked were to be treated as unsecured creditors until administrators considered what to do with the business.

Unsecured creditors are usually the last to get their money back, while secured creditors, such as banks, are first in line for the rest of the money.

If Rex goes bust completely, the situation will likely be very similar to what happened with Bonza – customers will be at the end of the line for a refund.