Rex has announced that it will cut flights to five regional destinations, while adding more services on routes currently served by Qantas in response to what it’s calling “aggressive predatory moves by Qantas”. It has also called on the ACCC yet again to take “enforcement actions against Qantas”.
But Qantas has hit back, calling the latest announcement a “classic Rex tantrum”.
Rex, which will next week launch Boeing 737 flights between Melbourne and Sydney, accuses Qantas of deliberately launching new flights on thin regional routes where Rex is currently the sole operator, in an attempt to hurt the smaller regional carrier financially or push them out of the route.
Qantas recently launched flights on numerous regional routes including Sydney-Merimbula, Sydney-Griffith, Adelaide-Mt Gambier, Melbourne-Albury and Melbourne-Wagga Wagga.
In response, Rex Deputy Chairman John Sharp says the airline’s board has decided to stand its ground and continue serving all of the routes recently launched by Qantas, even though Rex describes the current passenger numbers on many of these routes as “laughable” and says it will sustain losses in doing so.
“Qantas has clearly embarked on a deliberate strategy of moving into Rex’s routes that can only support one regional carrier in an attempt to intimidate and damage Rex in its traditional regional market, hoping that Rex would be a less formidable competitor in the domestic market,” Mr Sharp said.
“Qantas is making record losses during COVID and has received an estimated $1.2 billion in Commonwealth assistance to stay solvent but, despite this, feels it is appropriate to use taxpayers’ funds to finance the losses on new services whose sole objective is to weaken the competitor.
“The Rex Board has decided to stand its ground in these routes even if inevitably both carriers will be making significant losses. Unfortunately, the expected drag on Rex’s financial position from the losses [the eight routes recently launched by Qantas] will mean that Rex will be unable to continue subsidising marginal routes that we have serviced for the past 20 years. It is with a heavy heart that we are announcing the cessation of services to [five routes] once the government support through the RANS program is discontinued at the end of March.”
The five routes that Rex says it will have to withdraw from are:
- Sydney-Cooma/Snowy Mountains
Of these routes, only Adelaide-Kingscote is currently served by Qantas. Rex is currently the only commerical airline flying to the airline four regional towns.
Rex previously withdrew from the Sydney-Grafton route in July 2020 after it took offence to a comment made by a local councillor, but restored the flights in the following month.
Furthermore, Rex says that it will launch new services on other routes currently served by Qantas.
“In order to recover from the losses, Rex will, from April, commence new services to ports where Virgin Australia has retreated, leaving Qantas as the sole or dominant operator,” Sharp said.
These routes are Sydney-Coffs Harbour and Sydney-Port Macquarie. While Virgin Australia has ceased service to Port Macquarie (following the retirment of the ATR72s previously used on that route), both Qantas and Virgin currently fly to Coffs Harbour. Rex plans to commence 3x daily flights on both routes from 28 March 2021 and tickets are already on sale from $118 one-way.
Rex says it is also actively considering going head-to-head with Qantas on the Sydney-Tamworth, Perth-Geraldton, Melbourne-Devonport and Sydney-Canberra routes.
“We will be launching services to these cities once a partnership agreement is concluded with the local councils or airport owners,” Sharp said.
This is despite Rex General Manager for Network Strategy, Warwick Lodge, declaring in September 2020 that “cities, such as Tamworth, which insist on charging security screening charges on carriers not legally required to be screened, will not be considered” for new Rex services.
QantasLink CEO John Gissing has responded by saying that “it feels like Rex is trying to blame Qantas for other challenges they may be having”.
“Rex’s idea of competition is that it’s something that happens to other people, because they believe they have an enshrined right to be the only carrier on some regional routes,” Mr Gissing said.
“The fact is Rex is receiving millions of dollars in bespoke government assistance for its regional operations at the same time as it’s acquiring new aircraft to fly between capital cities.
Qantas points out that it has announced 26 new domestic routes since the start of the COVID-19 pandemic to reflect new patterns in travel demand while international borders remain closed. Of those routes, only 8 are served by Rex and Qantas says that Rex remains the largest operator on all of those routes.
“We don’t start routes if we don’t think they will be commercially viable for us,” Mr Gissing said.
“We know that extra capacity and lower fares increases overall travel demand, which is good news for the regional communities we will be operating to.”
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