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”.
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.
“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”.
For just $59.95 a year, you can keep up to date with the very best of Australian Aviation each month, directly via our app! Our app is available on mobile, tablet and PC devices. So what are you waiting for? Go digital with Australian Aviation and read up on all missed special coverage, exclusive photos and editions. Subscribe now at australianaviation.com.au.