Rex revisits threat to pursue ‘all legal avenues’ against Qantas

The move follows a long-running war of words between Rex and Qantas over network expansion, which has seen Qantas’ 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.

In a new document issued to the ASX, Rex said, “Clayton Utz are exploring all legal avenues to stop Qantas from abusing its market position in order to hurt its competitors through anti-competitive behaviour in the form of capacity dumping and predatory practices.

“Since Rex’s announcement in June 2020 to launch domestic routes, Qantas has tried to intimidate Rex by commencing services on nine regional routes in competition against Rex. The routes are marginal for one carrier and certainly too small for two airline operators.”

While outgoing ACCC chair Rod Sims has warned his organisation would be keeping a close eye on different airlines’ expansions post-COVID, he has previously backed Qantas’ new routes. Sims even argued in a 2021 Senate committee that it would be wrong for Rex to brand its rival 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.

Qantas has previously said in response to the claims that “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.”

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Rex’s new mention of legal action comes shortly after Qantas announced it would soon begin operating two weekly return flights between Sydney and Broken Hill – a route that Rex has operated solely for 18 years.

Rex Airlines has held a monopoly on Sydney-Broken Hill flights since 2004, and currently conducts daily return flights plus one return service on weekends on its 36-seat Saab 340 aircraft.

However, come Friday, 8 April, QantasLink will break Rex’s exclusive streak on the route, with twice-weekly return flights, taking place on Mondays and Fridays, on its fleet of 50-seat Dash 8 Q300 aircraft.

Speaking with ABC Radio in February, Sharp accused Qantas of unnecessarily “swamping” the market but insisted Rex would adjust its operations as needed to compete.

“We are constantly looking at the schedule and trying to adjust to suit the market conditions and we will obviously keep doing that,” Sharp said.

“I mean [Qantas’ entrance] will impact on what we do in some form or another; We’ll probably shift schedules around a little bit to try and be even more competitive with Qantas and try and match whatever they’re doing and do it better and cheaper for the passengers.”

Sharp suggested that Qantas was only moving into the Broken Hill route in order to “retaliate” at Rex’s decision in late 2020 to expand into the domestic capital city market, placing it in competition with Qantas.

“They don’t like that, and they’ve made lots of complaints to people about our behaviour in moving into that market. So, in retaliation, they’ve been moving into our regional market,” Sharp said.

Sharp said that pre-COVID, around 28,000 passengers flew between Sydney and Broken Hill each year, a number which has fallen to under 9,000 since the beginning of the pandemic.

“Qantas’ announcement yesterday means that they’re putting 10,000 seats into the market, where there’s currently only 8,000 or 9,000 passengers,” Sharp explained.

“They are swamping the market and the question is whether they’ll hang in there and keep offering the service, or whether after a short period of time, when they’re satisfied that they’ve given Rex a good punch in the nose, then they’ll walk away from it.”

Rex, however, is itself planning more capital cities flights and said it could even expand its fleet to fly up to 30 Boeing 737s over the coming five to seven years.

The news was revealed by Rex chairman Lim Kim Hai at the iconic Singapore Airshow, and nearly doubles Rex’s previous public fleet expansion goals.

“That’s a very good medium-term objective,” Lim said. “There’s a lot to be said for economies of scale.”