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.
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.
“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.