Regional Express (Rex), the Australian regional carrier, will be exiting routes from Sydney to Ballina, and Adelaide to Kangaroo Island, suggesting the routes are money-losing, and is raising an official complaint to the Australian Competition and Consumer Commission (ACCC) regarding Qantas “dumping excessive capacity on routes that are already extremely marginal.”
The regional airline argued in a statement: “The direct impact of this conduct is to force out the smaller competitor and substantially lessen competition in the long term.”
Highlighting three regional routes in particular between: Adelaide to Whyalla, Adelaide to Kangaroo Island and Sydney to Ballina, Rex will argue Qantas’ behaviour on the routes goes beyond “competition on the merits” and “kills the ability for Rex to offer a sustainable alternative to the Qantas model for regional communities and increases Qantas’ market power.”
As a regional carrier, the airline said it is the sole operator across 80% of its regional network, but its average fares have only risen 1.2% annually since it was formed in 2002.
In the statement, Rex stated it is “not able to match Qantas’ financial firepower” and “is not able to continue servicing a money-losing route indefinitely.”
“The Rex Board has decided that in light of the sharp downturn experienced in the last six months and the poor economic outlook for the next 12 months, Rex will be exiting the Sydney to Ballina, and Adelaide to Kangaroo Island routes in the coming weeks,” the airline said. “This is not a decision that Rex has taken lightly having serviced Kangaroo Island continuously for 30 years and Ballina for 24 years, first as Kendell Airlines and then as Rex since 2002.”
“Qantas has won this round,” the regional carrier stated, “but in the longer term the communities are the real losers.”
However, Qantas have hit back regarding the complaints, according to statements in ABC News, suggesting it was adding services and giving regional consumers choice, arguing that Rex was “blaming” Qantas’ capacity commitments, adding: “Not long ago, they blamed us for the fact their pilots were applying for jobs with Qantas.”
