Regional Express has threatened to scrap flights or reduce their frequency on its popular route from Sydney to Dubbo in the New South Wales central west.

Key points: Regional Express is threatening to cut services on its Sydney-to-Dubbo route due to higher taxes imposed by the local council

Regional Express is threatening to cut services on its Sydney-to-Dubbo route due to higher taxes imposed by the local council Dubbo Regional Council says the increased charges are an essential part of realising its airport master plan

Dubbo Regional Council says the increased charges are an essential part of realising its airport master plan Earlier talks between the airline and council to lower fares on the route broke down

It comes amid a broader battle between airlines and airports over who is to blame for the high price of flights in regional Australia.

In a letter to Dubbo residents, Rex's chief operating officer, Neville Howell, said the local council's increased passenger taxes and security costs were jeopardising the commercial viability of its services.

"Rex has solemnly put the council on notice that its intended actions ... could result in Rex deploying all its 61 weekly flights and associated Sydney Airport slots to another region," Mr Howell said.

"This would mean that Dubbo will lose these peak slots forever."

Increased charges 'unnecessary'

Dubbo Regional Council increased its passenger tax for the 2019-20 financial year by 13 per cent, or $1.99 per passenger.

In a statement, council chief executive Michael McMahon said the rise came after nil or minimum increases in previous years and was needed to help realise the draft airport master plan.

"The $1.99 increase is a critical increase to support the future renewal of the upgraded runway," he said.

"We feel the $1.99 increase is not unreasonable considering the ongoing investment Dubbo Regional Council is making to its airport."

Dubbo Regional Council says it needed to increase airport taxes to fund infrastructure upgrades. ( ABC Western Plains: Patrick Bell )

But in a letter to the council, Warrick Lodge, Rex's general manager of network strategy and sales, questioned the likelihood of larger aircraft flying into Dubbo in the future.

"RPT (regular public transport) operators should not be responsible for funding non-RPT-related infrastructure requirements," Mr Lodge said.

"Such planning decisions need to be supported by facts and definitive plans."

He was also critical of the council's requirement that Rex pay costs for security screening, when it is not legally required to screen passengers on smaller aircraft.

"It is illogical that the 28 weekly QantasLink departures to Sydney are dictating the security screening requirements for all RPT services," Mr Lodge said.

The council said screening was in place due to the varying airlines using the airport and the large number of passengers.

Prior talks have broken down

The council previously met with Rex to discuss lowering fares on the route but said it was not able to meet the airline's demands.

"Council was not open to entering an agreement that resulted in the general ratepayer subsidising flights," a council spokesperson said last month.

Mr Howell, however, said the council's actions were irresponsible.

"Rex has given up on the current leadership of the council, having tried our best to reason with them over the past several years."