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Rex Reveals New Network Strategy After 'Predatory Moves' By Qantas

Rex announces that it will embark on a major revamp of its regional route network in response to 'aggressive predatory moves by Qantas'

Rex announces that it will embark on a major revamp of its regional route network in response to ‘aggressive predatory moves by Qantas’

Regional Express has announced it will cut five of its ‘marginal routes’ at the end of March, in a move that allows the airline to stand its ground on routes where it now faces direct competition from Qantas

Rex’s Deputy Chairman, the Hon John Sharp AM, 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 is making record losses during COVID and has received an estimated $1.2 billion in Commonwealth assistance to stay solvent but, despite this, feels it is appropriate to use taxpayers’ funds to finance the losses on new services whose sole objective is to weaken the competitor.”

Changes of service

Sapphire Coast
Merimbula

The routes on which Qantas has announced it will be starting, or has started, services since the outbreak of COVID are listed below.

Rex states that all of these routes have only supported one regional carrier
in the past and the current monthly passenger numbers are ‘laughable’.

  • Sydney – Orange
  • Sydney – Merimbula
  • Sydney – Griffith
  • Melbourne – Merimbula
  • Melbourne – Albury
  • Melbourne – Wagga Wagga
  • Melbourne – Mount Gambier
  • Adelaide – Mount Gambier

Rex’s Deputy Chairman, the Hon John Sharp AM said, “the Rex Board has decided to stand its ground in these routes even if inevitably both carriers will be making significant losses.

“Unfortunately, the expected drag on Rex’s financial position from the losses on the above eight routes will mean that Rex will be unable to continue subsidising marginal routes that we have serviced for the past 20 years.

“It is with a heavy heart that we are announcing the cessation of services to the five routes below once the government support through the RANS program is discontinued at the end of March:

  • Sydney – Bathurst
  • Sydney – Cooma
  • Sydney – Lismore
  • Sydney – Grafton
  • Adelaide – Kangaroo Island

“In order to recover from the losses, Rex will, from April, commence new services to ports where Virgin Australia has retreated, leaving Qantas as the sole or dominant operator.

The new services (on sale from today) are from Sydney to:

  • Coffs Harbour (330,000 passengers pre-COVID)
  • Port Macquarie (190,000 passengers pre-COVID)

“Other routes under active consideration where Qantas is the sole or dominant carrier include:

  • Sydney – Tamworth
  • Perth – Geraldton
  • Melbourne – Devonport
  • Sydney – Canberra

REX has announced it will be launching services to these cities once a partnership agreement is concluded with the local councils or airport owners.

Getting the ACCC involved

The airline has also called on the ACCC to take enforcement actions against Qantas for its ‘predatory behaviour’.

The statement says that all carriers are facing existential challenges and the ACCC must do its part to ensure that the dominant carrier does not take advantage of the current situation to deliver pre-emptive strikes against its much smaller competitors, especially at a time when it is receiving massive
handouts to stay solvent.

In this environment, the introduction of new competing services in fragile regional routes should be set aside by the ACCC until we return to a semblance of normality.

The statement concluded by saying it is noteworthy that Qantas had not accepted numerous offers by Rex to enter into a collaborative partnership that optimises resources, as permitted under the authorisation, to achieve better outcomes for all stakeholders including the travelling public.

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