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Rex welcomes ACCC’s ‘scrutiny’ of rivals as network row continues

written by Adam Thorn | June 24, 2021
A Rex Saab 340b, VH-RXX, alongside a Qantas A330-202, VH-EBN, as shot by Victor Pody
A Rex Saab 340b, VH-RXX, alongside a Qantas A330-202, VH-EBN, as shot by Victor Pody

Rex has said it welcomes the “increased scrutiny” the ACCC is “bringing to bear” on Qantas and Virgin over capacity increases, in the latest exchange in the bitter relationship between the airlines.

The regional airline is referring to a line in last week’s ACCC report into market share, in which the competition commission confirmed it was assessing the impact of Virgin and Qantas increasing capacity on routes.

The comments follow a long-running war of words between Rex and Qantas, which has previously seen the flag carrier’s chief executive, Alan Joyce, mock Rex’s “empty aircraft” and Rex deputy chairman John Sharp argue that he doesn’t know how Joyce can “look at himself in the mirror some mornings”. Qantas has consistently denied any wrongdoing.

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The report last week revealed the reborn Virgin Australia has knocked Qantas’ post-COVID domestic market share down from 74 per cent in December to 69 per cent in March.

The decrease came alongside Virgin increasing its share from 24 per cent to 28 per cent, with Rex holding steady at 2 per cent.

However, ACCC chair Rod Sims also warned the organisation would be keeping a close eye on different airlines’ expansions.

“Increasing capacity to meet demand and offering discounted fares is generally a sign of competition and is good for consumers,” said Sims. “However, the ACCC will consider taking enforcement action if capacity and pricing decisions materially damage competition, including by preventing rivals from competing effectively, or driving a competitor off a route or out of business.”

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The ACCC added it also has the option of recommending policy action by the government to address competition concerns.

Rex said it had earlier flagged to the ACCC “the concerted efforts of Qantas, Virgin Australia and Jetstar to raise their capacity on the Sydney-Melbourne route by an identical 80 per cent at the very time that Rex is entering the domestic market in March 2021”.

“Qantas’ situation is so dire that it needed one of the largest bail-outs in Australian corporate history from the Commonwealth amounting to $1.5 billion to date and possibly reaching $2 billion by year end,” said Sharp. “In these circumstances, it is unconscionable to be using taxpayer’s money to fund heavily loss-making and anti-competitive actions that harm consumers by damaging and weakening competition.

“Rex, on the other hand, is one of the most efficient and best performing airlines in the world over the last 12 years, on par with Southwest Airlines and twice as profitable as Singapore Airlines, while Qantas has lost an accumulated $1.9 billion before tax, even after the bailout grants, over the same period.

“Understandably, Qantas is desperate to kill off Rex as it knows that it will have no chance against Rex once the latter is fully established in the domestic market.”

The ACCC has previously backed Qantas’ expansion, with Sims arguing in a Senate committee that it was wrong for Rex to brand Qantas predatory.

“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,” said Sims.

The row between the two airlines began in February when Rex accused Qantas of uncompetitive behaviour by launching rival services on its previously exclusive routes such Melbourne–Merimbula and Melbourne to Wagga Wagga.

Despite the argument, the flag carrier ploughed on, 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 capital city expansion has included flights to CanberraGold Coast and Adelaide, as well as Sydney and Melbourne.

In April, Joyce and Sharp exchanged withering newspaper columns about each other in the AFR.

“It’s a well-known fact in the industry that Rex has now chalked up another dubious honour,” wrote Joyce. “It has presided over the worst launch of a new jet airline in Australia’s aviation history, with empty aircraft and announced routes that have never been flown.”

It came after Sharp wrote that Joyce was a hypocrite for going “cap in hand” to the federal government for help.

Finally, on the Australian Aviation podcast, Sharp claimed Joyce sees himself as a “wizard” but is actually failing his staff, customers and shareholders.

“Qantas has got this arrogant approach that we’re too big to fail and that we’re an icon,” said Sharp. “We play We Still Call Australia Home in the cabin to remind people that we’re the Australian airline. They call themselves a national carrier, but they’ve been privatised. They’re this big bully.”

Rex welcomes ACCC’s ‘scrutiny’ of rivals as network row continues Comment

  • Martyn

    says:

    It’s about time Sharp’s Singaporean bosses’ told him to pull his head in.

    He’s doing Rex no favours, & is possibly responsible for loss of income, by his constant snipes at competitors’.
    People are sick & tired of his illogical rants.
    If he thinks Rex is one of the ‘best performing airlines in the world’, tell him he’s dreamin’.

    IF, & that’s a big IF, Rex were having top load factors’ with their ancient Saab’s, & old 2nd hand ex-Virgin 737’s, he wouldn’t be castigating QANTAS to the extent that he has, since March 2020.

    He’s an ex, not the best pollie, so that speaks volumes.
    He’s treating his current job in the same manner he did in Parliament, where he isn’t any longer, thank goodness.

    Let’s just see how much ‘egg on face’ happens to him once Fed funds dry up this October.

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