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Rex rivals Qantas to fly Sydney-Canberra as row deepens

written by Adam Thorn | March 24, 2021
REX7378FEVHPAGarrivingatYMMLbyVICTORPODY
One of Rex’s new 737s, VH-PAG, shot in Melbourne by Victor Pody

Rex has announced it will challenge Qantas to fly Sydney–Canberra in the latest exchange in the pair’s bitter row over network expansion.

The regional carrier even accused its rival, the only carrier on the route, of “fare gouging” and said it would offer customers annual savings of up to $100 million when capacity returns to pre-COVID levels.

The news comes as the two businesses have been involved in a tit-for-tat argument over launching new services, which started with Rex accusing Qantas of using “predatory” tactics to compete with it on previously exclusive routes. The flag carrier responded by arguing that its smaller rival was throwing a “tantrum”.

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On Wednesday, Rex said it would fly seven return flights a day between Canberra and Sydney from 19 April, but could increase that to 10.

The route is currently operated only by Qantas after Virgin pulled out, though Virgin does intend to restart the route soon in a collaboration with Alliance.

Qantas currently flies its larger 717s and smaller Dash 8s on the route, with fares typically starting from $193. Rex said its tickets will start at $99 one way.

Rex’s deputy chairman, John Sharp, said, “At a time when many small businesses and households are still struggling to make ends meet, our fares will make a world of difference to the community that routinely sees one-way fares close to $1,000 for this short sector.

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“Rex has a war chest of $150 million funded by private equity for domestic services and we will not be deterred in our goal of bringing safe reliable air services at affordable fares to all major cities in Australia.

“We believe that on the Sydney–Canberra route alone Rex will be bringing annual savings of between $60 – $100 million to commuters when numbers return to pre-COVID levels, such is the level of fare gouging being practised.

“Rex’s affordable fares will greatly stimulate more business and leisure traffic between Sydney and the national capital as the industry continues to recover.”

The row between the two airlines began in February when Rex said it was to discontinue 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. These have now been reinstated.

At the time, Rex also 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).

Outlining his case at a Senate committee, Sharp said the routes Qantas is moving to are too small for them to make a profit on.

“They’re doing it because they want to swamp us, to push us out of our traditional marketplace and to hurt us financially so that that in turn hurts us in our expansion into the domestic market,” he said.

However, the day after Sharp first made these comments, ACCC chairman Rod Sims backed Qantas at a separate hearing of the same Senate committee.

Despite the argument, Qantas ploughed on and formally launched flights on some of the disputed routes, and Rex itself continued with its own plan to launch capital city 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.

Rex’s expansion into Canberra follows it launching new routes to the Gold Coast and Adelaide as well as Sydney and Melbourne.

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11 Comments

  • Brenton Clark

    says:

    With no substantive connecting traffic in Sydney, especially to and from international flights at the moment, it is probably not the right time for REX to be introducing services on the Canberra-Sydney route. And the $99 fare will almost certainly be matched by Qantas. And they will also be competing with the frequent Murrays coach services and a significantly improved road system which makes car travel fairly attractive, especially if 2 or more people are travelling together.

  • Mark Dorward

    says:

    I think Rex has misread the market. There is a great sense of loyalty in supporting the existing airlines and staff that have suffered during COVID. New aircraft and competition I believe will not be embraced, that’s what fellow travellers are expressing to me anyway.

    History has shown this is a very difficult thing to do. Impulse had more capital compared to Virgin and still went out of business and got absorbed by Qantas. Consumers did well but Ansett was lost.

    The industry has changed greatly since then and the Jetstar low cost model is in the mix. Having a war chest of $150M is not something to think will win the day, as it will quickly be lost.

    And what about Virgin and the impact of Rex on its recovery? Not much said about that here. I believe loyalty by Virgin customers will not be tested by Rex. As always time will tell.

  • Nicholas

    says:

    Funny how REX seems to forget the cargo hold full of money it got from the Federal Goverment when it talks about its funds avaliable…..

  • Vannus

    says:

    Sharp’s starting with his verbal diarrhoea yet again.
    Said he ‘Rex has a war chest of $150mn funded by private equity’. Big whoop!

    QANTAS has a Cash Reserve of $4.2 BILLION, unencumbered.

    Sharp’s still not said why he’s not flying to BNE. Why not? Is he too embarrassed to do so, as it’d produce ‘egg on his face’?
    About time he did. The truth about THAT situation needs to be told, by him.

  • Steve A

    says:

    Good to see Rex taking on Qantas but the Rex warchest of $150 million may not be enough to hold out against Qantas. Remember that Alan Joyce spent $7-800 million of QF shareholders cash before, giving Virgin a whipping, so QF shareholders can expect another 7-year hiatus on dividend payments like they got last time when he did it.
    Of course, he may be reigned in by the Board, because remember his last attempt to blow a rival out of the water(air) resulted in The 2014 Senate Qantas Inquiry because he nearly sent Qantas down the gurgler at the same time.

    • Aldous

      says:

      Word you need is ‘reined’ in…….

  • Taylor

    says:

    Heard on the ‘plane grapevine’ Rex’s not doing too well on the SYDMELSYD routes’. Had just 30% on one flight, followed next day by only 11 passengers’ on a SYDMEL flight.

    He can crow all he likes, but maybe Sharp’s beginning to realise that it’s hard work that’s required on the main east coast routes’.

    With all his garbage saying going to delete routes, then decides to do a u-turn, once Fed Govt funds ongoing end of this month, until October, he’s leaving ‘future’ passengers’ with uncertainty. Great business model, NOT!

  • Danny

    says:

    Sharp would know all about ‘fare gouging’. Pot, Kettle, Black.
    Country folk, whom he supposedly supports, have paid expensive fares now for nigh on two decades’, on Rex flights.
    He’s full of it, & he’s already got ‘egg on his face’ for u-turn for various routes’ he loudly exclaimed he wouldn’t fly, because they were unprofitable.
    Then he realises he’ll still get taxpayer funded millions $$$$ until October’s end, & voila, he’s flying those routes again.
    What a piece of the proverbial he is.

  • Lindsey

    says:

    The ONLY person having a ‘row’ is Sharp. He’s very insecure in many ways, & hides this by constantly having ‘goes’ at QANTAS.
    It’ll be interesting to see if his airline is still around once Fed Govt ‘handouts’ to it cease 31-10-2021.

  • Warwick

    says:

    Which type of aircraft will be flown by Rex SYDCBRSYD?
    About time Sharp gave that information.

  • Warwick

    says:

    Someone should tell ‘pie in the sky’ Sharp that numbers will never return to pre-covid levels’.
    Teleconferencing alone will limit the need for people to actually be present in another city,& it’s a darn sight cheaper than a Rex airfare.

    ‘Annual savings to ‘commuters’, why not say ‘flyers’,
    of between $60 to $100 million’ said he.
    What a load of crock! He’s just full of it, & folk are mighty tired of listening to his spouting garbage, constantly.

    In time, when all the Fed Govt ‘largesse’ stops being paid to Rex, it’ll be interesting to see how long it lasts, not only on the probable ceasing of east coast routes’, & in that, he’s still not said why he’s NOT flying to/fro BNE, but other non-profitable ‘country’ routes’, which Sharp stops with much regularity, at a whim.

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