Virgin Australia has agreed to honour prepaid bookings after upstart rival Regional Express abandoned its capital city ambitions and called in administrators.

Regional Express, which trades across Australia as Rex Airlines, revealed on Tuesday night it had grounded its high-cost fleet of Boeing 737 jets providing services between major national airports.

Administrators from Ernst & Young will oversee attempts by the group to deal with financiers and leasing companies owed upwards of $300 million and to focus back on Rex’s traditional strength in regional aviation.

This comes less than five weeks after Rex all but completed its major airport expansion ambitions by commencing services to Perth from Adelaide and Melbourne.

Rex’s Perth services were officially axed last night along with services between Melbourne and all state capitals.

But Rex said it would continue to operate its regional Saab 340 flights until further notice.

Virgin CEO Jayne Hrdlicka said it was offering immediate support to Rex.

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