The Cairns-based family owned and operated Skytrans Airline carried its last passenger on January 2. It appointed William Fletcher and Tracy Knight of Bentley Chartered Accountants as joint and several administrators on January 5.
The Queensland government has struck a deal with WestWing Aviation to maintain services to the Cape York townships of Aurukun, Bamaga, Coen, Edward River, Kowanyama and Lockhart River.
East coast airline Regional Express is understood to be seeking approvals to operate in the Cape York market.
In a statement Skytrans managing director Simon Wild said all staff had been made redundant but stressed that everybody had already been paid their entitlements.
“Over $4 million dollars paid out in staff entitlements – $2 million to 121 staff made redundant late November and early December due to the loss of a large contract and the remaining 67 staff were paid $2 million in entitlements today [January 2],” he said.
“We are all well aware that the aviation market has been tough and we knew it would get tougher with Skytrans in 2015.
“With the downturn in the aviation industry and the contraction in the resources sector over the past two years the business has been resizing itself to fit the market and lower its costs and dispose of surplus assets and retire debt.
“Unfortunately, with contraction of alternate revenue streams the business relied heavily upon its Queensland Department of Transport and Main Roads contract to underpin the airline during the current downturn.
“With the loss of the TMR contract, in mid-October, this forced us to make even larger cutbacks in the business resulting in excess of 121 additional staff being made redundant.
“These redundancies triggered the lawful imperative that all departing staff be paid their entitlements, which in Skytrans’ case meant provisioning for just on half our workforce.
“The net effect was that more than $4 million was required to make that happen, an event that no business provisions for, nor is expected to provision for under any regulations or standards.
“To compound the situation and to turn an extremely challenging situation into a catastrophe, or what is commonly called a ‘perfect storm’, the Australian dollar has continued its nose dive in recent months pushing up our operating costs.
“With the erosion of the company’s cash position due to the payout of staff and virtually no viable future for the airline we have elected to discontinue the business with a view to maximise cash and asset reserves.
“For the past two years we have watched as many other regional carriers have either been taken over by larger carriers or have exited the aviation business completely.
“During that time we have also worked diligently to reduce costs, explore other opportunities, rationalise our staff and operations to develop a truly competitive model but we too have now been caught by circumstances beyond our control or ability to counter.”
According to the Queensland Department of Transport and Main Roads, a review of government-supported air services led to three routes being deregulated and seven put out to tender.
It said those tenders were assessed independently, on the basis of service quality and value for Queensland and was the same as the tender process that occurred in 2009 when Skytrans was awarded several contracts.
Queensland Minister for Transport and Main Roads Scott Emerson said services would be maintained to the Cape York region.
“The Queensland government has come to an agreement with WestWing Aviation to ensure air services operate in these communities,” he said.
“This is a short-term arrangement while my department speaks to private operators about their plans for this region.
“I’m encouraged by the response from operators who believe there is a viable market to operate services across the Cape.
“Regional Express has indicated it will seek approvals to operate in these markets by late January.”
