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Rex calls on ACCC again as Qantas slashes regional routes

written by Hannah Dowling | July 26, 2022

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 again called on Australia’s competition watchdog, the ACCC, to investigate Qantas over “predatory” behaviour after Qantas withdrew from two regional routes.

It comes days after Qantas announced it would suspend its Melbourne-Wagga Wagga services from 1 August until at least March 2023 as well as axing its Melbourne-Mount Gambier service entirely from 15 August.

Qantas said the decision to suspend Melbourne-Wagga Wagga was made due to resourcing issues and a “temporary change in aircraft availability at Melbourne”, while the Melbourne-Mount Gambier decision was made in light of low patronage, making the route no longer economically viable.

Rex has lashed out at these decisions, and suggested they show the airline’s “true intentions when it entered into these and other uneconomical regional routes to compete with Rex.”

Notably, Qantas entered both routes within the last two years, and its exit from these services will mean Rex will continue as the sole operator.

“Seeing that its predatory behaviour was not having the desired effect, Qantas now realises that its massive losses compounded by startling operational incompetence make it no longer sustainable to continue bleeding cash on these marginal regional routes,” Rex said on Tuesday.

The carrier predicted that Qantas will continue to exit regional routes that it claims “Qantas entered purely with the intention of destabilising Rex in its traditional regional market as a punishment for entering the domestic market.”

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“The ACCC spent several months investigating Qantas’ predatory behaviour but did not take further action in light of the complication of COVID-related border closures at that time,” it added.

“Now that the complication of border closures no longer provides a convenient excuse for Qantas and that its true intentions have been exposed, Rex calls on the ACCC to reopen its enforcement actions on Qantas.”

Qantas responded in a statement, stating “Rex’s claims are getting increasingly absurd, especially considering they have already been investigated by the ACCC who are taking no further action.”

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“We’ve always said we’d only operate on routes that were commercially viable or that had genuine growth potential, which is exactly what we’re doing,” it added.

“On routes such as Sydney-Orange and Sydney-Broken Hill both Rex and Qantas have added services since we first began flying, which shows that strong competition can increase demand.

“Rex need to stop blaming others and take responsibility for their decisions to exit so many regional routes.”

Melbourne-Wagga Wagga and Melbourne-Mount Gambier were two of the five routes that sparked an ongoing tit-for-tat battle between Qantas and smaller rival Rex over network expansion. Rex argued that Qantas was deliberately entering into previously Rex-exclusive routes in order to drive out the regional carrier. Qantas has consistently denied any wrongdoing.

At the time Qantas announced it intentions to enter these routes, Rex 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”.

Rex later implored the ACCC to investigate Qantas’ network decisions. The ACCC concluded this investigation in March this year, and found no anti-competitive behaviour.

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