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

written by Adam Thorn | February 27, 2022

Victor Pody shot this Rex Saab 340B, VH-ZLA.

Rex has doubled down on its plans to pursue “all legal avenues” against Qantas over the flag carrier moving into its previously exclusive routes.

The airline suggested in its half-year financial report, released on Friday, that it’s still working with litigation firm Clayton Utz, which it first appointed in August last year.

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.

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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.”

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.”

Comments (7)

  • Nicholas

    says:

    This is embarrassing, for Rex.

    They are hopelessly out of their depth now and I’d hate to be a staffer with all the ridiculous cant coming out from Sharp on a daily basis.

    They are a lesson on how hubris and over reach can bring a well respected regional airline slowly to its knee’s. Very sad.

  • Nick

    says:

    John Sharp does seem pretty hostile to improvements in rural aviation for someone who says they advocate for improved rural aviation.

  • Vannus

    says:

    Funny how Sharp neglects to mention his airline’s inroads of the ‘golden triangle’ main trunk-routes, since March 2020.
    Now THAT was predatory!

    Rex’s financials’ haven’t been good for years’, so don’t know where it’s getting $ to fund a wasteful legal action.

    In the end, Sharp will rue the day he took on QANTAS.

  • Al Harps

    says:

    Would love Qantus to compete with Rex on the Albany to Perth route, Rex needs to fly bigger planes and reduce airfares. Competition needed, as Qantus flies from Geraldton to Perth for about half the cost of Albany to Perth by Rex

    • Nerdy Nev

      says:

      If you’re going to comment on QANTAS, at least have the decency to spell its’ acronym correctly…QANTAS…

  • Rod Pickin

    says:

    Mr. REX, I was under the impression that Monopolies were not acceptable in business today so the QF move into Broken Hill whilst unpalatable to yourselves is quite acceptable and legal and the customers will decide. On the other hand, REX’s move into mainline domestic ops again whilst unpalatable to the existing operators is also legal. I omitted acceptable because in absolute reality from a business sense having a planned five airline operation concentrating on non regional services in this country with our population base is nonsense in the extreme. There could be a case to question whether two or three of the foreign owned carriers motives are to cripple the Oz owned and operated concerns. Whilst the ACCC may have different views, sometimes regulation has to be seen to protect those misguided sunbeam chasing dreamers and protect them from themselves. Forget the ego, use common sense.

  • Bazz

    says:

    It’s time for Joyce and Sharp to set their egos and handbags aside. The industry needs focus and competition not conflict. All this carry on is a distraction from rebuilding and return to Post Covid normality.
    If you want to give competition be prepared to accept competition. Shake hands, fight fair, stop wasting shareholder money on lawyers and stop whinging.

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