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View Full Version : Lim Kim Hai goes after the RFDS


neville_nobody
31st Aug 2009, 04:26
It looks like REX are trying take out the RFDS contracts in the NT and QLD. Reading between the lines REX would be of the belief that they can do it more efficiently than the RFDS. How this transpires will certainly be interesting.


Regional Express's medical pitch hits ill-wind

Steve Creedy, Aviation writer | August 28, 2009

REGIONAL Express is making a billion-dollar-plus push for patient transport contracts in three states and the Northern Territory as it seeks new business to underpin its growth.

Rex's Pel-Air subsidiary came under fire after it beat incumbent the Royal Flying Doctor Service to become the preferred tenderer for a $70million a year fixed-wing patient transport service with Ambulance Victoria.

The regional operator confirmed it had tendered for similar services in NSW and Queensland, as well as the provision of aero-medical evacuation and intra-hospital transfer services in the Northern Territory.

The move is part of a wider push to diversify the regional operator's business that includes mining contracts in Queensland that are underpinning new passenger services in the state.

But the move to expand the aero-medical business has not been without controversy. It has upset the RFDS and its supporters, prompting warnings from the medical service that it will have to seek increased donations and further government support for its remote-area services if it loses the contracts.

More recently, it caused a furore in Queensland that prompted Premier Anna Bligh to reassure the RFDS its existing contract was safe. But Ms Bligh said there was no guarantee the outback icon would win an additional tender for increased aerial medical services in the state's central and north.

NSW opposition spokeswoman on health Jillian Skinner also this week called on the Rees government to explain what was happening with the RFDS.

However, Rex executive chairman Lim Kim Hai said emotions should be taken out of the argument. "I think (that) the realistic governments have come to the view that this is something where we should see who can do it best," he said.

Mr Lim said he was unable to discuss how much individual contracts were worth, but estimated they collectively stood at more than $1 billion over 10 years.

He said the airline had been restrained in its response to the RFDS criticism because evaluations were still under way.

But the Flying Doctor had not always held the contracts, having won them from a commercial operator the last time they come up for tender.

The contracts were also for the provision of aircraft and pilots only.

"There's no medical content," Mr Lim said. "So we must not think that the Flying Doctor is any more skilled or any more equipped to perform this job than Rex.

"We know about pilots, we know about aircraft, we know about maintenance.

"Really, we must take the emotions out of this."

Mr Lim said both Rex and the RFDS provided good services to the bush and the government took the view that if Flying Doctor services to remote areas should be subsidised, that should happen.

"Let's be transparent," he said. "If you find certain other things are needed, pay for it separately and for this, a commercial contract, let's see who provides the best efficiency, which is what happens in the real world."

Rex this week defied wider airline industry trends to post an annual net profit of $23m, down 5.6 per cent, but said conditions remained too uncertain to provide an outlook.

The Rex chairman said a further fall in passenger numbers represented the biggest risk on the downside.

Passenger numbers fell 12.8 per cent in 2008-09 and while indications in the past two months were that numbers had stabilised, the airline was still unsure whether the decline had hit bottom.

"If it does come down further, it's going to hurt us," he said. "We have been able to cope with these (2008-09) reduced passenger numbers and if it stabilises, or if it improves of course, we can do much better."

Rex has also managed to increase average fares over the year after cutting them for the past six, although this was helped by lower fuel prices and surcharges.

Mr Lim said fares were still lower than they were six years ago, even with fuel prices fully costed in.

"I guess that we were fortunate that we were able to bring it down so much that when we needed it, we could maintain it at a higher level without too much damage on the passenger numbers," he said. "So it's a bit of payback for all the effort that we did over the past years."

Rex is not hedged against fuel and Mr Lim said rising prices continued to be a worry, although this had been offset by a higher Australian dollar.


Regional Express's medical pitch hits ill-wind | The Australian (http://www.theaustralian.news.com.au/business/story/0,28124,25989952-23349,00.html)

Cactus Jak
31st Aug 2009, 04:48
Mr Lim said both Rex and the RFDS provided good services to the bush and the government took the view that if Flying Doctor services to remote areas should be subsidised, that should happen.

"Let's be transparent," he said. "If you find certain other things are needed, pay for it separately and for this, a commercial contract, let's see who provides the best efficiency, which is what happens in the real world."


The thing is, existing surplus from these contracts goes straight back into subsidising the traditional RFDS services, negating the need for govt. to dip into the coffers to cover that amount in funding.

With REX driving the show, surplus will go off shore and the govt. will have the RFDS knoking on its' door for additional taxpayers money.

On another note.

"There's no medical content," Mr Lim said. "So we must not think that the Flying Doctor is any more skilled or any more equipped to perform this job than Rex.


This argument wont stick with the NSW contract as the Flight Nurses on that ambulance operation i believe are RFDS staff.

Captain Nomad
31st Aug 2009, 04:57
Oh no... :rolleyes:

"We know about pilots, we know about aircraft, we know about maintenance.



"If you find certain other things are needed, pay for it separately and for this, a commercial contract, let's see who provides the best efficiency, which is what happens in the real world."


Maybe I don't live in the real world but Aeromed ain't ALWAYS about best efficiency (I presume he's talking 'financial' efficiency here...)

The Butcher's Dog
31st Aug 2009, 05:26
"We know about pilots, we know about aircraft, we know about maintenance."

Human Resource relations, customer satisfaction and departure reliability on country sectors prove this statement do they?

Under Dog
31st Aug 2009, 06:04
Cactus Jack
The flight nurses in the NSWAA contract are employed by the ambulance service.The RFDS only supplies aircraft,pilots and engineers.

The Dog

Cactus Jak
31st Aug 2009, 06:28
thanks for the correction. wasn't quite sure. they're still pushing a very weak argument regardless.

A31J
31st Aug 2009, 07:08
the 'efficiency' argument is a furphy in itself.

the (current) contract was 'won' by the RFDS after having been accepted as a satisfactory option by the govt/health dept/ambulance service at the time

hours are flown and paid for under that contract without any requirement for 'efficiency'. any contractor seeking to perform any service for anyone could or may see different ways of doing the same job, but it is the one contracting the labour (pilots and aircraft in this case) who ultimately get the say as to how what's done

the efficiency of the service provided to the people of NSW depends entirely on the tasking by the NSW ambulance service :ugh:

"Economic efficiency is used to refer to a number of related concepts...More output cannot be obtained without increasing the amount of inputs.
Production proceeds at the lowest possible per-unit cost.." Wiki p

Do more with more?? Sure..anyone can do that
Do it as cheaply as one possibly can? hmmm..people having been trying that in aviation since there were aeroplanes! And for a cash-strapped state gov't, this must be the most pressing query of any prospective tenderer :yuk:

j3pipercub
31st Aug 2009, 09:46
Direct Anywhere,

However, the devil's advocate in me says that the taxpayers of Vic and NSW have essentially been subsidising services to remote rural and outback QLD, SA, NT and WA.

Those are different sections. Qld runs Qld, NT + SA are central section and WA is Western Section. There is no swapping of funds (As far as I'm aware), therefore the taxpayers of NSW and Vic were paying for their own state members...not old mate out of Bedourie like you were thinking.

But anyway in keeping with your argument, isn't it better to keep the money in the country instead of it going offshore to Singapore Inc???

There are a lot of things that the Federal government 'should' do, however the state goverment awarding the contract to an overseas company is simply ridiculous.

I think Qld Section will be a tougher nut to crack for the Singaporean empire builder though...

j3

The Green Goblin
31st Aug 2009, 11:35
I don't like where this is headed. Next they will be going after the Airforce :}

an3_bolt
31st Aug 2009, 20:48
However, the devil's advocate in me says that the taxpayers of Vic and NSW have essentially been subsidising services to remote rural and outback QLD, SA, NT and WA.

But devils advocate can also say that we have been also paying for overseas study trips for politicians. Please prove to me how these taxpayer trips have improved our country.........or provided a service to our community!!:ugh:

No need to put the heat on the RFDS - simply put the heat on the politicians' sensitive spots and see what happens!!!!

The Green Goblin
31st Aug 2009, 22:14
However, the devil's advocate in me says that the taxpayers of Vic and NSW have essentially been subsidising services to remote rural and outback QLD, SA, NT and WA.

Typical Sydneycentric attitude.

If you look a little deeper you will discover QLD and particularly WA subsidize the rest of Australia. WA is the richest state and it is a particular issue within WA that the money from mining activity is re distributed to the east to help out cash strapped states (like NSW) meet their budget.

I reckon if WA separated from the rest of AU they would be better off (and could piss off this new airspace crap and get away from the CASA & ASA bureaucracy is the east.

Captain Nomad
1st Sep 2009, 03:45
RFDS through its corporate sponsorship and fundraising effectively subsidises the taxpayer! Take WA for example. RFDS has both inter hospital and evac contracts wrapped up with all staff (docs, nurses, pilots) all under the one RFDS umbrella. Instead of the total cost of all this being billed to the Gov (and paid by the taxpayer) only some of the expense is funded by the Government money. Therefore the Gov (and everyone in WA) is receiving a SUBSIDISED service. Bit hard to undercut that sort of arrangement only possible with a 'not for profit' service... And that is without even making mention of the other big freebie in WA - masses of dedicated volunteer ambos.

clear to land
1st Sep 2009, 03:55
Goblin, a very good point. Yes it is true that the majority of the population live in the J curve, but it is equally true that without the income from WA and QLD the southern states would have been bankrupt long ago. At the same time both WA and QLD have absolutely no need for the southern states, they are a financial liability. The attitude that people living in remote towns should get no help shows no appreciation of the contribution that rural communities make to the economic health of the nation as a whole. When I flew for the RFDS a reasonable percentage of 'pax' were city dwellers who needed, for various reasons to receive care. Without fail all of those people, and their families subsequently made at least one donation (and usually became regular donors) to the RFDS, as they realised that it is for everyone. Unfortunately, similar to police, military etc, the general population don't appreciate them until they are needed. Whats the point of my post? It is that it is of major benefit to rural Australia-therfore the nation- that RFDS uses any profit made to support/subsidise traditional and allied health service provision. This revenue, lost to an offshore company, will now have to be made up from other Govt sources ie the taxpayer. So, what is the real cost to the community as a whole of awarding contracts to REX???? Far more than the tender I would suggest. :=

The Green Goblin
1st Sep 2009, 04:19
Goblin, a very good point. Yes it is true that the majority of the population live in the J curve, but it is equally true that without the income from WA and QLD the southern states would have been bankrupt long ago. At the same time both WA and QLD have absolutely no need for the southern states, they are a financial liability.

Could not agree more. I think the sooner WA separates from the rest of Australia the better. We will take the NT with us, call it Northern Australia giving it the statehood it was promised eons ago so we can still get fireworks for pissups over Christmas (We could even invite QLD too, their sheilas are next best to WA). We would then get rid of the GST which the majority of WA taxpayers don't see as it gets sent back to the eastern state coffers via Canberra under population redistibution ratios that only Canberra understands, then remove the tax on all liquor and petrol with our savings.

If only

From Wikipedia

At the October 22, 2008 Vista Public Lecture, former Western Australian Premier, Richard Court, indicated that the case for a secessionist movement is only strengthened while the Commonwealth government continues to exploit the State's resource-rich economy and fails to share the prosperity evenly.[6] He argued that Western Australia accounts for 35% of the nation's export income yet most of the revenue is used to strengthen the "financial muscle growing in Canberra". The state has approximately 9-10% of the nation's population, generates over 10% of the GST revenue, but receives only 6% of what is being distributed.[citation needed] Court highlighted that if the current Federation path continues, then by the year 2020, Western Australia will be receiving only 5% of what is being distributed by the Commonwealth Grants Commission.

clear to land
1st Sep 2009, 05:09
Would be a wonderful country QLD/NT/WA. Wouldn't be long before the southern neighbours would be asking for aid!!!!!! After all they already move to Qld at around 100 per week nett! They would achieve the Hawke/Keating banana republic in about 2 months!!!! The hard part would be convincing WA that Rugby is a real game and aerial ping pong isn't!!! :}