REX Outlines Its Reshuffled Regional Network Strategy

Australian airline Rex is revamping its parts of its regional network in response to what it calls Qantas’ aggressive predatory moves. Rex says that when government assistance ends, it will exit five regional routes in southeastern Australia. Qantas is having none of it. It calls Rex’s decision and allegations a classic Rex tantrum.

Rex is exiting five routes and criticizing Qantas for predatory behavior. Photo: Andrew Curran / Simple Flying

Rex quits mostly monopoly status routes

In a wide-ranging press statement issued on Monday, Rex said it would exit the following routes; Sydney – Bathurst, Sydney – Cooma, Sydney – Grafton, Sydney – Lismore, and Adelaide – Kangaroo Island. Presently, these routes are temporarily supported by the Australian Government’s Regional Airline Network Support (RANS) program.

There are a few points to note here. Rex had previously announced it was abandoning the Adelaide – Kangaroo Island route when QantasLink said it would begin operating that route. That’s not new news. Lismore Airport has been in decline for years, with passengers lured to the nearby booming Ballina Byron Airport, which offers better frequencies and bigger aircraft. Cooma is largely a seasonal route. It’s the closest airport to the New South Wales snowfields. Off-season, Sydney – Cooma has always been a marginal proposition since Airlines of New South Wales days. Finally, this is the second time in about six months Rex has walked from Grafton. Last year, they abandoned the Sydney – Grafton route after a local political allegedly told Rex to “pull their finger out” and buckle down.

QantasLink operates Dash 8 turboprops, competing against Rex’s Saab 340s. Photo: Getty Images

Rex and Qantas trade verbal barbs

Against this backdrop, Rex’s Deputy Chairman John Sharp said on Monday;

“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.”

Except for the Adelaide – Kangaroo Island route, Qantas does not and never has operated on any of these routes Rex is exiting.

This is a classic Rex tantrum,” says QantasLink’s CEO John Gissing.

“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.”

Qantas has launched flights recently on several regional routes Rex previously enjoyed a monopoly on. That includes services to Kangaroo Island, Orange, Merimbula, Mt Gambier, and Griffith. Rex calls this predatory behavior and wants the Australian competition watchdog, the ACCC, to take enforcement action against Qantas.

“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,” says Rex.

Rex now competes with QantasLink on the Sydney – Orange route. Photo: Orange City Council Newsroom

Qantas denies Rex allegations, suggests Rex is blameshifting

Qantas told Simple Flying today that they’ve launched 26 new routes in Australia in the past year. But Rex only operates on eight of those new routes. Qantas says they don’t start new routes unless they think they can make a dollar on them.

“It feels like Rex is trying to blame Qantas for other challenges they may be having,” says Mr Gissing.

Of those eight routes Qantas and Rex compete on, Rex currently plans to stick with it. Despite this, Rex says current passenger numbers on these eight routes are “laughable.” Rex also argues that two airlines on these eight routes won’t be viable when demand returns to normal. But Qantas disagrees.

“We know that extra capacity and lower fares increases overall travel demand,” said the QantasLink CEO.

Rex’s John Sharp calls Qantas’ behavior predatory and aggressive. Photo: Getty Images

Rex moves onto routes Qantas dominate

Meanwhile, despite the howls of outrage, Rex isn’t shy about moving onto Qantas’ turf. Jet services on the key Sydney – Melbourne route are on track to start next week. In addition, Rex says it plans to launch services on the Sydney – Coffs Harbour and Sydney – Port Macquarie routes. They are busy regional routes Qantas has long enjoyed the lion’s share of. Also on Rex’s radar are flights to Tamworth, Canberra, Devonport, and Geraldton – all airports heavy with Qantas or QantasLink services.

Given Rex isn’t shy about moving onto routes to compete against Qantas, you can’t help thinking Qantas has a point when they dismiss Rex’s protests about competition on routes once belonging to Rex.

What do you think? Does Rex have a point, or should they simply learn to live with the competition? Post a comment and let us know.