Close sidebar

Qantas attacks Rex ‘tantrum’ as it axes routes

written by Adam Thorn | February 22, 2021
Rex new livery Boeing 737-8FE, VH-RQC msn 33797 v1
Regional Express revealed its new 737-800NG livery. (@rexairlines)

Qantas and Rex became involved in an extraordinary public slanging match on Monday after the regional airline axed five routes.

Rex said Qantas’ decision to compete with it on eight routes was “predatory” and had caused a “drag” on its financial position. Qantas responded by saying Rex was having a “tantrum” and argued it only operated on one of the discontinued routes.

“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,” Qantas said.

Advertisement
Advertisement

The row began on Monday morning when Rex said it was to axe five regional routes when the government-supplemented financial help expires at the end of March: Sydney–Bathurst, Sydney–Cooma, Sydney–Lismore, Sydney–Grafton and Adelaide–Kangaroo Island.

However, it blamed the decision to axe these routes on Qantas, choosing to compete with it on eight separate routes (Sydney—Orange, Sydney–Merimbula, Sydney–Griffith, Melbourne–Merimbula, Melbourne–Albury, Melbourne–Wagga Wagga, Melbourne–Mount Gambier, Adelaide–Mount Gambier).

Rex’s deputy chairman, John Sharp, said, “All of these routes have only supported one regional carrier in the past, and the current monthly passenger numbers are laughable. Even when passenger numbers return to pre-COVID levels, these routes would still be unable to viably support two carriers.

“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.

PROMOTED CONTENT

“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 on the above eight routes will mean that Rex will be unable to continue subsidising marginal routes that we have serviced for the past 20 years.”

Rex said it would launch new routes “to ports where Virgin Australia has retreated, leaving Qantas as the sole or dominant operator”. This included Coffs Harbour and Port Macquarie initially, with the potential to add Sydney–Tamworth, Perth–Geraldton, Melbourne–Devonport and Sydney–Canberra.

Qantas responded by branding the announcement “a classic Rex tantrum”.

“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,” said the business in a statement.

“It feels like Rex is trying to blame Qantas for other challenges they may be having. We don’t start routes if we don’t think they will be commercially viable for us.

“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. We’ll be reviewing our network and consider whether we can offer services on any of the routes that Rex is threatening to pull out of.

“Since the start of the pandemic, the Qantas Group has announced 26 new routes to reflect new travel demand patterns. Only eight are on routes that REX currently operate and they remain the largest carrier on all of these routes.

“Qantas only operates on one of the five routes REX says it is exiting (Adelaide-Kangaroo Island).

“As distinct from REX, Qantas has not been acquiring new aircraft types and setting up entirely new operations in the middle of a pandemic, while at the same time receiving (relatively to their pre-COVID revenue and earnings) large amounts of government support.”

The tit-for-tat argument between the carriers comes a little over a week before Rex becomes the first new challenger in two decades to fly between Sydney and Melbourne on 1 March, before adding Brisbane shortly after.

The so-called ‘golden triangle’ between the NSW, Victoria and Queensland capitals is known as one of the most lucrative domestic routes in the world.

Rex first announced firm details of its golden triangle ticket strategy back in December.

“Rex will begin with nine Sydney-Melbourne return services a day,” announced Sharp. “By Easter, two additional 737s will be added to expand our domestic network to Brisbane and other capital cities. If all things go as planned, we hope to grow our fleet to eight to 10 by the end of 2021.

“Rex will offer all the usual perks of a full-service carrier, including eight Business Class seats. All fares include checked baggage allowance, food, pre-assigned seating and online check-in. Lounge access and on-board Wi-Fi will be free for Business Class, while Economy passengers can access these options for a small fee.”

Its shareholder then voted “overwhelmingly” to approve the business’ $150 million investment to launch the route on 29 January.

Steer your own in-flight experience – available on print and digital Whether our classic glossy magazine in your letterbox, daily news updates in your inbox, peeling back a few layers in the podcast or our monthly current affair reports, you can count on us to keep you up to date. Sign up today for just $99.95 for more exclusive offers here. Subscribe now at australianaviation.com.au.

19 Comments

  • GeoffR

    says:

    I hope Rex remembers it’s history and actually ‘lives’ it’s moto, ‘Our heart is in the country’. It’s the regional routes that have made it the airline it is today. It owns its SAAB’s, it has lower costs, so give it a shot and compete, don’t run. Stay where you are now and compete on others where you aren’t. There are other routes and pairs around Tamworth, Armidale, Port Macca, Newcastle, Coffs etc., that need flights south and north. It’s not all about Sydney. Refresh the inside and match the Dash8 service. Those local governments and councils should reward loyalty. If Qantas pulls out for a more profitable route you won’t have an air service.

  • Warwick

    says:

    Sharp whinging again about competition, but he’s no qualms about flying on main trunk routes’.
    This guy doesn’t know when to keep quiet.
    Let’s see if he’s still operating on the ‘golden triangle’ come 2022.

  • John Phillips

    says:

    REX strategy hard to understand here, taking on SYD_MEL with new aircraft.

    Hopefully QF will not be called on to fill the routes flown by REX if REX have overextended themselves, and go belly up.

  • Ronald Fletcher

    says:

    Either virgin or Rex will Collapse on the Golden triangle. Strange Rex can expand at this time

  • Peter K

    says:

    Welcome to the competitive aviation world Rex.

    I predict that Rex is going to regret that it decided to move onto the mainline capital city routes.

    It will be starved of oxygen by both Virgin Australia and Jetstar.

    It was opportunistic of Rex to consider these routes, enticed primarily by cheap leasing rates for ex Virgin B737s. But leasing costs are but one element in the complex matrix that make up a successful airline.

    Anyway, we are merely observers. It is a serious matter for the actual players.

    The Qantas group is a formidable competitor and it punches above its weight on a global comparative scale.

  • Denis Gregory

    says:

    Rex has since reduced its proposed Sydney-Melbourne flights to two a day even before it starts the new service. You have to wonder what the heck it’s doing.

    • Tim

      says:

      Reason is their aircraft are elsewhere being repaired, or painted.
      When these jobs will be completed, no one knows.
      So ZL aren’t able to fulfill a promised scheduling on the SYDMELSYD Routes.
      So they’re off to a ‘good start’……NOT!

  • AgentGerko

    says:

    I have no -problem with competition but its clear in this case that QF is trying to use its financial muscle, supporterd by our taxpayer money, to hurt its smaller rival. It’s laughable for QF to think that a route that barely supported a 35 seat Rex aircraft will support a second carrier using larger Dask-8 aircraft. And it’s to Rex’s disadvantage that wherever QF moves in, their larger and faster aircraft will give them a competative advantage. Take Sydney – Ballina for example. Who would bounce there way up for 105mins in a small Saab when you can take 75mins in a much larger Dash-8 (or a Virgin B737 for that matter)? QF must be made to at least prove to authorities that they can operate these regional routes profitably and without subsidy or be told to leave it to Rex who have done a capable job for many years. otherwise we are likely to see another raft of regional centres without an air service all thanks for QF arrogance.

    • Simon

      says:

      Agreed. It’s predatory behaviour

  • Nicholas Paul

    says:

    In one short sentence, What did Rex expect?

  • Scott

    says:

    Does Rex forget what they did to the smaller operators when they first started in Australia?
    They ruined small family operated businesses like O’Connor Air in Adelaide by doing exactly the same thing!

  • Warwick

    says:

    Does Sharp ever stop whinging? Grow some, & STOP blaming QANTAS for your own inadequacies’.
    YOU chose to stop various regional flight routes’, therefore leaving them open to another airline.
    Funny how it’s their fault for ‘encroaching’ on ‘your’ area, but you’ve no qualms about pushing your way into the ‘golden triangle’ routings’.

    Where are all your second-hand jets you bought with Fed Govt handouts from your mate, McCormack?
    YOU chose to infiltrate the ‘golden triangle’, so welcome to its’ world.
    Give it six months’, & you’ll pull out of those inter-city flights, & blame QANTAS, yet again, for YOUR gross miscalculations’.

  • Rocket

    says:

    The arrogance of Rex is beyond belief……. accuses Qantas of getting government subsidies which have been paid to all major carriers who operate services during COVID-19, including Virgin.
    IT on the other hand (Rex), gets a handout from the government after bleating endlessly about how hard done by it is and then immediately spends it on B737-800 ex VA….
    Rex “called down the thunder” by intruding on Qantas and Virgin mainline trunk routes, which it is entirely entitled to do, but it is NOT entitled to now start complaining and throwing a wobbly because Qantas decides to start operating on some of its routes.
    What is it Rex???? One rule for Qantas and Virgin and another for you…. GIVE ME A BREAK……

  • Craigy

    says:

    I agree with Qantas. This is another REx tantrum. Somebody please give Sharp his dummy back so we don’t have to hear from this tedious individual.

    As I have said in the past, competition is when REx decides to enter a market. It predatory practice when someone else enters a market. Grow up Sharp!!!

  • Line Noise

    says:

    I wish Qantas would start flying into Burnie/Wynyard again. Rex has been price gouging that route for over 10 years!

  • Ben

    says:

    Rex doing its usual dummy spit about competition… but then tries to muscle in to the triangle.

    Do they honestly think we are that stupid we wouldn’t notice that the routes they are yanking are NOT the routes QFLink has recently started?? Surely if the competition is that bad and these routes aren’t viable then these are the ones to dump, not the ones you are the sole operator on. Unless… they weren’t making money anyway [gasp] and you are using QF as the fall guy for these towns you are now leaving high and dry with no service [double gasp].

    As for trying out the ‘lucrative’ triangle. Good luck, many have tried and failed. The incumbents WILL work hard to protect their market share in that market.

    Anyone remember when Air Australia pivoted from holiday charter carrier to RPT on the triangle?? Not many do… that’s how well that went!

    • Craigy

      says:

      And who can forget Compass, Compass Mk 2 and Southern Cross.

  • JOHN LEITCH

    says:

    I observe with interest & find it unbelievable that people are of the opinion that the ‘ Red Kangaroo Without Paws’ airline is not predatory. Another example : Last October Link Airways announced they would be flying the ‘thin passenger’ route Canberra – Hobart – Canberra using Saab 340B aircraft -Ideal for the route. Last November QantasLink announced they would also be flying the same route using Boeing 717 equipment !!!!! HHHmmmmm ????

    • Vannus

      says:

      Better take another look at the empanage of a QANTAS aircraft!
      The painted-stylised ‘kangaroo’ is WHITE, not red, never has been, & never will be!
      Always a good idea to get your facts correct if you wish to denigrate the Company.

Leave a Comment

Your email address will not be published. Required fields are marked *

Each day, our subscribers are more informed with the right information.

SIGN UP to the Australian Aviation magazine for high-quality news and features for just $99.95 per year