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ACCC backs Qantas in Rex network row

written by Adam Thorn | March 5, 2021
VH-REX 7378FE at YMML VICTORPODY
Rex’s latest leased 737, VH-REX, departs from Melbourne YMML (Victor Pody)

The ACCC has backed Qantas’ decision to launch new flights on what were previously exclusive Rex routes, despite the regional airline calling the move “predatory”.

Speaking at a Senate committee yesterday, Australian Consumer and Competition Commission (ACCC) chairman Rod Sims said, “If Qantas has the aircraft, it’s incurring the fixed costs, it realises it can make a cash contribution by flying somewhere – it’s a bit hard to call that predatory.”

The vote of confidence comes a week after the two airlines became involved in an extraordinary public slanging match over networks, resulting in the flag carrier suggesting Rex was having a “tantrum”.

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Thursday marked the fifth hearing of the Senate committee examining “the future of Australia’s aviation sector, in the context of COVID-19 and conditions post-pandemic”.

It’s designed as a forum for top industry figures to discuss how the pandemic has affected the industry and to examine how it can best recover.

Sims used the appearance to back Qantas’ stance.

“Once we start getting back to normal, you might have a different definition of what constitutes predatory. [But] our sense is that … they are cash positive on those routes by and large at the moment,” he said.

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“If at the end of this we have Qantas and Jetstar flying in where previously Rex did, but otherwise Rex is going well … you might say: well who cares?”

The row between the two airlines began 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, “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 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.”

Despite the argument, Qantas ploughed on this week and formally launched flights on the disputed routes between Sydney and Griffith, and Melbourne and Merimbula.

In an apparent dig at its rival, QantasLink CEO John Gissing marked the launch by arguing the move would offer locals “more choice and competitive fares” on what was “previously a monopoly route”.

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3 Comments

  • Warwick

    says:

    Wonderful not having to hear the multiple, loud rantings of Sharp for over a week now!
    At this stage, it seems he maybe a very worried person, as all’s not well in his world of flying.
    He’s got leased B737’s stuck in WGA, & JKT, for varying reasons’. When they’ll be available is questionable.
    Rex flying SYDBNESYD, to complete’ the ‘golden triangle’ routings, has been pushed back at least another month.
    His ‘entry’ into this previous lucrative market, has been a flop, with his having to reduce the number of flights SYDMELSYD, from nine daily, to only TWO!
    That doesn’t augur well $ wise for him at all, & certainly not what he expected.
    BUT he wanted to ‘push in’ to the area, so now he has to do whatever he can, or have ‘egg on his face’.

    It reminds me of a pair of stupid businessmen, back in the day, when they saw on board an aircraft that Business Class was full up, so they decided to start up an airline with only that class. All they could see were $ signs, but not realising that most of those pax had redeemed FF points! It lasted 2-3 weeks.
    How long will Rex last on the main trunk routes?

  • Vicky

    says:

    How much is Joyce paying the Accc, to override this….when is Joyce going to be sacked.

  • Kathleen Healy

    says:

    Perhaps ALAN JOYCE NEEDS A PAY RISE SO.HES COPETING WITH Recs ROUTES

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