REX - Regional Express (ZL, Wagga Wagga) gave up on its planned increase in services to Merimbula airport after the local council decided to continue with the airport's expansion plans. The airline fears that a runway extension it deems unnecessary might lead to higher airport charges, ABC News reported.

The carrier ditched its plan to increase frequencies on the service to Melbourne Tullamarine and Sydney Kingsford Smith, instead adding a new morning rotation from Sydney to Moruya.

The Bega Valley Shire Council wants to invest AUD50 million (USD38 million) in a series of investments, including extending the runway by 320 metres. This will allow larger aircraft to operate from Merimbula. The current 1.6-kilometre strip is too short for passenger jets.

The council hopes that the expansion will attract new airlines able to offer cheaper fares geared towards tourists rather than business-focused REX service. REX is a Saab 340B only operator and can only carry up to thirty-four passengers onboard its flights.

However, the airline is concerned that it will have to cover some of the expansion costs through higher airport charges, although the council denies it plans an increase, ABC News reported. REX underlines that the market at Merimbula is too thin to support competing airlines.

The local council wants to seize the opportunity of expanding the airport now that the budget is available in preparation for the traffic growth expected in the future.

"We do have serious concerns in regard to regional airports embarking on expansion plans that are unnecessary and over and above what the airport requires," REX general manager of network strategy Warrick Lodge told ABC News.

REX is the main airline at the airport with twenty-seven departures weekly, according to the ch-aviation capacity database. The airline is the only one serving the key route to Sydney Kingsford Smith with some flights operated via Moruya and dominates on the route to Melbourne Tullamarine, which is also operated by Free Spirit Airlines (Melbourne Essendon). The regional specialist in total serves sixty Australian airports, many of them in small and remote communities.