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The ASX-listed group launched a Sydney-Melbourne jet service in March, followed by flights to the Gold Coast and Adelaide, after securing $150 million in private equity funding to challenge Qantas and Virgin Australia on domestic air services.

Rex, which flies to around 60 regional and rural destinations, has leased six Boeing 737s and in June said it would fast-track the delivery of four more jets from the end of 2021 to September after receiving a better-than-expected response to its new services.

But on Tuesday Rex’s deputy chairman, John Sharp, said the airline had delayed delivery of those four planes until it knew it could operate without border restrictions or lockdowns.

“We’ve always said that we’ll scale up and scale down according to the circumstance,” Mr Sharp said, after the group reported an underlying after-tax loss of $12.7 million for the 2021 financial year.

“So we’ve delayed those [planes] until such time as things return to normal.”

Mr Sharp said the new jets would probably arrive by the middle of 2022, but warned the outlook for the travel industry remained highly uncertain despite the progress of Australia’s vaccine rollout

One would forgive Qantas shareholders for feeling an acute sense of déjà vu ahead of the airline’s full-year results on Thursday, when it will deliver its results along with more than 30 other ASX-listed companies.

Once again, lockdowns in the major engine rooms of its domestic network – Sydney and Melbourne – have clipped the carrier’s wings all while the international border is closed.

The last time the situation was comparable, Qantas fell to a $2 billion loss.

Qantas will launch its COVID-19 vaccination rewards campaign on Tuesday, giving frequent flyer members a choice of three different reward options.

Members who are 18 and over and fully vaccinated can choose either 1000 frequent flyer points, 15 status credits or a $20 flight discount voucher (for use with Qantas or Jetstar).

They will also be automatically entered in a draw to win one of 10 "mega prizes" - a year's worth of domestic flights, with free accommodation across 345 Accor hotels and free fuel from BP service stations.

Once international borders open, winners will also be able to take free flights on international routes with Qantas or Jetstar.

In order to claim the reward, members will need to upload their Medicare vaccination certificate via the Qantas app. Qantas said the certificate information would be deleted once it had been verified. The rewards will be available to people who have already been vaccinated, not just those who get vaccinated after the campaign begins.

Qantas chief executive Alan Joyce has been advocating for corporate Australia to push vaccinations for several months.

"Getting vaccinated is an important step that every Australian can take that brings us that little bit closer to life as we knew it," he said.

Qantas boss Alan Joyce says his airline’s plan to resume regular flights to London, North America and parts of Asia before Christmas hinges on whether the federal government will let travellers quarantine at home when they fly into Australia.

While outlining an optimistic course to restart his airline’s mothballed international operations, Mr Joyce on Thursday also said he expected NSW and Victoria will be shut off from the rest of Australia until early December, with vaccination the only way to bring the states’ spiralling COVID-19 outbreaks under control.

Trade and Tourism Minister Dan Tehan responded with caution, emphasising that Australia would have to hit 80 per cent vaccination levels before setting up travel bubbles with other countries that have high vaccination rates.

Mr Tehan praised the concept of at-home quarantine but noted only South Australia was trialling it so far. “Wouldn’t it be wonderful, especially for returning Australians, if there was an ability to be able to quarantine at home in the lead up to Christmas,” he said on Thursday.

The government in the federal budget said international travel would remain low until the middle of next year before gradually recovering. Mr Joyce forecast Australia’s two most populous states would not open up to the rest of the country until December.

“Our assumption for domestic [travel] is that both New South Wales and Victoria won’t see borders opening up to other states until December 1 … given that the path through this is to get to 70 to 80 per cent vaccination levels,” Mr Joyce told journalists after handing down a $1.7 billion statutory net loss for 2021.

The airline said it now intended to resume flights to “COVID-safe destinations” such as Singapore, the United States, Japan, the United Kingdom, Fiji, New Zealand and Canada from the middle of December when 80 per cent of Australia’s eligible population is expected to be vaccinated.

But demand would be very low if travellers still had to quarantine for 14 days in hotels when entering the country, Mr Joyce said, while many more Australians would be willing to travel if they could isolate at home. A quarantine-at-home trial is currently underway in South Australia for interstate travellers.

“The question we also need to resolve is what vaccinations are going to be acceptable,” he said, referring to international vaccines that aren’t approved for use in Australia.

It would be harder to think of a fuel that is any cleaner. Take air, add water, and by a miracle of engineering, power an aeroplane.

That is the vision scientists believe will come to fruition in just a few short years.

Synthetic fuel - made by combining carbon dioxide sucked out of the air with hydrogen extracted from water - offers what many believe to be the best chance of achieving net zero aviation.

The Canadian firm Carbon Engineering and LanzaTech UK have teamed up to make this dream reality. Backed by British Airways and Virgin Atlantic, and some government funding, in March they will publish a feasibility plan outlining how they will produce 100 million litres of zero-emission jet fuel each year by the end of the 2020s.

“This is really the starting point,” said Amy Ruddock, Carbon Engineering’s vice-president for Europe. The team is looking for a site to base a production plant - with Port Talbot in south Wales and St Fergus in northeast Scotland the most likely options.

Getting the project going could take four years, she says. “The 100 million litres that we’re proposing is about 1 per cent of the UK’s needs each year. But you develop the first plant, and you learn, and you start to reduce costs,” Ruddock adds.

How realistic is this vision? Carbon Engineering has demonstrated it can use technology to gather CO2 from the air, and electrolysis to split water into hydrogen and oxygen.

The company has even shown it can combine the elements to make a synthetic fuel that can be used as a like-for-like replacement for traditional jet fuel.

When the fuel is burnt in a plane’s engines, the carbon dioxide is released back into the atmosphere, but because it was removed from there to begin with, the net result is zero emissions.

“We have been doing it at our pilot plant in British Columbia since 2017,” Ruddock said. “To date we have produced 50 litres.”

The amount is so small that it would take a jumbo jet just 12 seconds to burn through the entire stock produced so far.

And scaling it up to commercial levels is no mean feat. Simply providing the green electricity to electrolyse enough water into hydrogen to make sufficient fuel for Britain’s aviation needs would require a doubling of the country’s renewable energy output. But Ruddock insists this is just the beginning.

It is a problem that needs a solution. Aviation makes up 2-3 per cent of global greenhouse gas emissions. By 2050, it is projected to have consumed 25 per cent of the global carbon budget. Last month the Department of Transport published its draft “jet zero strategy”, which aims to demonstrate zero-emission transatlantic flight “within a generation” and reduce emissions from aviation to net zero by 2050.

There are various potential to achieving this goal. Hydrogen fuel is one option. When fossil fuels are burnt, carbon dioxide is produced. When hydrogen is burnt, the by-product is simply water. And engineers know it works. After all, Nasa put a man on the moon using hydrogen rockets. But it takes up a lot of space, which would displace passengers.

Airbus is developing new hybrid-hydrogen aircraft designs, in which liquid hydrogen will be burnt by modified gas turbine engines. It aims to have one of its three “ZEROe” design concepts carrying commercial passengers by 2035. Electric-powered flight also holds potential. Trials are taking place to fly passengers between the Scottish islands and the mainland. But flying further distances proves problematic.

Finlay Asher, a former aircraft engineer who co-founded Safe Landing, a group for aviation workers concerned about climate change, said batteries and an electric motor were too heavy to replace jet fuel. As batteries improve, range will increase. But 80 per cent of aviation emissions come from flights longer than 1,450 kilometres.

Many critics believe that focusing on technological solutions which will not come to fruition for several years is a distraction. We simply need to fly less. “The big problem at the moment is the lack of policy,” Asher said. “The technology that is discussed is mainly a distraction, particularly in the short term. In the next 10 years none of these technologies are going to see any penetration.”

The problem is that jet fuel is cheap. So while aviation firms are happy to talk about technological solutions, there is no incentive for them to make the serious shift away from fossil fuels. Petrol and diesel are taxed at about 59 per cent, yet on jet fuel there is no tax at all.

“If we tax aviation fuel we could generate an extra pounds 10 billion a year,” said Asher. That would push companies away from fossil fuels while also generating revenue to be spent on green technologies.

The European Commission last month published a plan that would see aviation fuel duty gradually increased for ten years from 2023, though it did not propose a rate. New proposals by the UK last month did not include suggestions for a tax.

Rural carrier Regional Express is standing down hundreds of staff due to lockdowns and state border closures and expects to report an $18 million loss for the year to 30 June.

It leaves Virgin Australia as the final major domestic airline yet to stand down staff. However, Virgin is in consultation with unions about such action with a statement expected before the end of the week.

In a company-wide email seen by The Australian Financial Review, Regional Express’ management team told staff it would stand many down from August 16, with the “short-term measure” to last into September.

Affected workers will include pilots, engineers, ground handlers, sales, call centre, head office, and those in operational roles, according to the email.

The airline declined to say how many workers it would stand down.

Eyes are turning to Virgin Australia and how it approaches its staff after Qantas said it would stand down thousands across its main and Jetstar brands while grappling with the Sydney lockdown and other virus spot fires.

Virgin is expected to update its rosters as soon as Wednesday and has said before it will take all steps needed to “protect the airline for the long term”.

The carrier declined to comment on Tuesday but The Australian Financial Review understands it is working through the implications of the Morrison government’s new help program for domestic air crews before making a final decision on standing down staff.

Flight Attendants Association of Australia federal secretary Teri O’Toole said Virgin took a hit at the beginning of the Sydney lockdown in late June by not standing down staff and she did not expect a similar outcome this time.

“I just don’t think they’ll be able to afford it this time,” Ms O’Toole said.

The focus follows an announcement from Qantas that it would stand down 2500 domestic pilots, cabin crew and airport workers for an estimated two months in a move foreshadowed by chief executive Alan Joyce last month.

The stand-downs will take effect in the next fortnight and staff will be paid until mid-August. Qantas did not expect any permanent job losses.

Mr Joyce said this was the “last thing we want to do” and admitted the stand-downs could stretch past October. Other states may also lock Sydney residents out if the NSW government opens the state up again and they are not satisfied that the spread of COVID-19 in the largest state has been sufficiently eliminated.

Taxpayer-funded help on the way

“Two months is a reasonable assumption at the moment but that can change ... We will be doing this on a month-to-month basis so that we will have the flexibility if it does get better to activate people earlier [or] if it gets worse to extend the stand-downs for longer,” Mr Joyce said on Tuesday.

He commended the Morrison government’s latest retention package for the domestic aviation sector, which ensures that the airline gets the equivalent of $750 a week for 50 per cent of pilots and cabin crew once it is able to show a 30 per cent fall in turnover since Greater Sydney has been declared a hotspot.

Qantas means to pass the cash on to crew outside of NSW facing stand-down, and rely on idled NSW-based staff applying for the government’s enhanced COVID-19 disaster payment of $750 a week.

Ms O’Toole said this approach had created “incredible confusion” over whether people should access the disaster payment or must wait for the retention package to kick in.

She was furious that the members found out about the stand-downs in the news without prior notice to the union of the decision.

Ms O’Toole said the domestic retention package had created two classes of Qantas workers as idled international air crew – who are being paid under a similar retention scheme – are receiving only $500 a week.

Australian and International Pilots Association president Murray Butt was also concerned about the haste with which the stand-down decisions were made after the new support was announced.

“We have no idea why there is a disparity between the two schemes,” Mr Butt said. “And we weren’t aware the government subsidies was directly related to an announcement that stand-downs were occurring.

“A lot of the problem with this is that decisions are made on the run and people are scrambling to understand it. We would just like to understand the intention of these subsidies and who they’re targeting.”

About 8500 Qantas workers are now stood down – a total that includes 6000 international staff – or just over a third of the airline’s remaining staff.

Qantas sacked 8500 workers last year as it plotted the recovery from COVID-19 and stood down 20,000 workers at the height of the crisis.

Mr Joyce said this time it was very different, with Qantas not planning to hibernate jets as it did earlier in the pandemic.

He hoped the vaccine rollout would accelerate and that the 80 per cent inoculation threshold for international travel to return might still be reached by Christmas.

Mr Joyce said Qantas was operating at less than 40 per cent of its pre-pandemic capacity – a sharp turnaround from the close to 100 per cent level it was operating at just a few months ago – because of the rolling lockdown in Greater Sydney.

He hoped the new Brisbane outbreak would soon come under control and said an end to the crisis was in sight with the vaccine rollout under way.

“Hopefully, once other states open back up to South Australia and Victoria in the next week or so, and the current outbreak in Brisbane is brought under control, our domestic flying will come back to around 50 to 60 per cent of normal levels,” Mr Joyce said.

“We know that once borders do reopen, travel is at the top of people’s list and flying tends to come back quickly, so we can get our employees back to work.

“Higher vaccination rates are also key to being able to fly overseas again, and finally getting all our people back to work.”

• Qantas is exploring a mandate that would require aviation workers to get a COVID-19 vaccine.
• The airline said it had already strongly encouraged workers to get the jab and offered paid time off for appointments.
• Just last week, a Qantas cabin crew member worked on six Queensland flights before testing positive for the virus.

Qantas is exploring a mandate that would require aviation workers to get a COVID-19 vaccine and is surveying staff about introducing the requirement itself.

The airline said it had already strongly encouraged workers to get the jab and offered paid time off for appointments because it was an essential service and had to guard against “severe disruptions”.

Qantas said vaccine mandates for airline workers were already in place in New Zealand as well as in NSW and South Australia.

But just last week, a Qantas cabin crew member worked on six Queensland flights before testing positive for the virus.

“Other states are looking at taking similar steps, including for domestic.”

“We welcome this, but without a national approach we’ll wind up with a patchwork of rules between the borders that our people cross multiple times a day,” Qantas said, pointing out that the mandate was something under consideration at national cabinet for airline workers and others.

“We’ve seen that just one COVID-positive employee can inadvertently shut down a freight facility or passenger terminal, which can have a big impact on the broader community and economy,” the carrier said in a statement.

“These are some of the key reasons why we believe a COVID vaccine should be a requirement for all aviation workers in Australia.”

“The Qantas group supports vaccination because we’re focused on creating the safest environment we can.

“We understand there are a lot of complicating factors for our people – including access to the vaccine and those who don’t want the vaccine or still have unanswered questions about it.

“But we need to find a path through those challenges if aviation is to return to normal.”

One of the questions in the survey will ask staff what stage in the vaccine program they are at. Qantas does not have a comprehensive account of how many of its workers are vaccinated, but is confident the proportion is higher than in the general population.

The Transport Workers Union this month said one in two aviation workers were fully vaccinated, according to a survey of its membership.

The airline is also mulling whether to offer incentives to passengers to get vaccinated through its frequent-flyer arm – Qantas Frequent Flyer is one of the largest loyalty programs in Australia – something that its primary rival Virgin Australia is about to do  with its VA-X program.

In June Virgin said it planned to give away free business class flights and 1 million Velocity frequent-flyer points. The promotion will open later in 2021, when all adults in Australia are eligible for vaccination.

Virgin Australia said at the time 65 per cent of its flight crews and airport teams had been vaccinated against COVID-19, while 52 per cent of its corporate teams were already vaccinated or had registered for appointments.

Passengers travelling overseas with Qantas or Jetstar when international borders reopen will be required to carry a new “digital health pass” with information about Covid tests and vaccination status.

A day after Qantas appealed to the federal government to mandate Covid vaccinations for aviation workers, the airline has revealed what will be required of travellers in future.

The travel pass developed by the International Air Transport Association has been trialled by Qantas on overseas repatriation flights this year and is considered the most secure and convenient way to verify a passenger’s Covid status.

Delivered in the form of a free smart phone app, the pass allows vaccine certificates and proof of a negative Covid test from a certified testing lab to be uploaded before a flight.

The pass also ensures the passenger’s health information meets the requirements of the country to which they are travelling, and provides clearance to board the flight.

Qantas group chief customer officer Steph Tully said the digital health pass would be the key to getting international flights back into the air, and the airline’s employees back to work.

“Many governments are already requiring proof of vaccine or a negative Covid test result for international travel,” said Ms Tully.

“Even if it wasn’t a government requirement, Qantas has always been a leader in safety and we have a responsibility to our customers and crew.

“A digital health pass will connect customers with Covid testing facilities, health authorities and airlines, and ultimately enable the opening of more travel bubbles and borders.”

Already a number of countries where Qantas and Jetstar operate have announced requirements of either a proof of vaccine or negative Covid test result to enter without quarantine, including the UK, the US and Canada.

Ms Tully said final development work was underway to ensure the pass was ready when international flights resumed.

“We’re working closely with IATA to develop their travel pass to make the process as seamless as possible for Qantas and Jetstar customers as international borders start to re-open,” she said.

IATA senior vice president for operations, safety and security Nick Careen welcomed the Qantas Group’s decision to use the travel pass.

“IATA Travel Pass delivers an advantage over other solutions in that the app enables travellers to create a digital ID derived from a government issued document such as a passport,” Mr Careen said.

“This means that airlines and governments can have full confidence in the test/vaccine results both from a content and identity perspective. Being able to validate the vaccination status of Australians returning from overseas is critical to enable Australia’s four-phase national Covid response plan announced earlier this month.”

Qantas and Jetstar have previously announced plans to resume regular international flights from mid-December but doubt remains over whether borders will reopen by then.

The federal budget indicated the government did not expect Australia to allow international travel until mid-2022.

Senior Qantas executives, including chief executive Alan Joyce, will see their take home pay pinched from July 1 after the superannuation rate rises from 9.5 per cent to 10 per cent.

Qantas workers will be broadly unaffected as many enterprise agreements include 10 per cent superannuation contributions already. The remaining employees currently on 9.5 per cent contributions covered by an industrial deal will get the boost without a hit to their take-home pay.

“Executives, who have super contributions included as part of a total wage package, will see a slight reduction in their take home pay as a result of the legislative changes,” an airline spokeswoman said.

The Australian Financial Review understands the carve out is inclusive of the entire group management committee and chief executive Mr Joyce as well.

Qantas has experienced an immense financial toll during the COVID-19 pandemic, tripping to a $1.1 billion loss in the half-year to December 31, shedding nearly a third of its workforce and grounding much of its fleet.

The company has raised about $2.6 billion of debt through the crisis and raised another $1.4 billion from shareholders to help it remain in the air too.