For those who say that the 'market should sort it out' - the market won't. The 'market' is only interested in profit and to mount such services and make them sustainable would mean prices through the roof - that's why the government (of any stripe) subsidises it in the first place.
The market will sort it out. I don’t understand why the regions are always Koala Bears when it comes to aviation. City folk pay the ‘market’ price for everything including airfares. Yet the regions who have affordable housing, subsidised infrastructure with no toll roads, subsidised medicine also want government funded airfares as well?
It also creates moral hazard and a host of other issues along with pork barreling come election time. This whole REX saga is a classic example of why the government needs to stay out of business. They should go broke and let it start again with whomever wants to fly to these towns.
The issue with the whole subsidy concept is for how long and how much do you subsidise something that is unaffordable? Why don’t we subsidise the Sydney housing market because that is unaffordable too? If people want to live in the regions that’s fine, it’s cheap, great quality of life etc etc but due to low volume airfares will be relatively expensive. That’s just reality.