Regional Express axes five routes, blames ‘predatory’ behaviour by Qantas

Regional Express will axe five routes and is pointing the finger at Qantas’ aggressive assertion to win regional flight paths while international travel remains off the table.

In a statement lodged to the Australian Stock Exchange on Monday, the regional focused aviation group said it would “revamp” its flight network following “predatory” moves by the country’s largest airline to cost out Rex on routes that can only sustain one carrier.

Flights from Sydney to Bathurst, Cooma, Orange and Grafton, and Adelaide to Kangaroo Island will be cancelled by the end of March.

REX deputy chairman John Sharp AM said Qantas was deliberately attempting to damage the airline’s traditional regional market.

“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,” he said.

“Qantas is making record losses during COVID and has received an estimated $1.2bn 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.”

The country’s largest airline has moved into regional routes following the onset of the coronavirus pandemic.

Qantas has added new services to destinations such as Byron Bay, Cairns and Merimbula from capital cities.

The new services are primarily due to the expected surge in domestic travel following COVID-19 border restrictions preventing overseas and interstate travel.

Mr Sharp said Rex would stand its ground on routes such as Sydney to Merimbula, Melbourne to Wagga Wagga and Adelaide to Mt Gambier, where Qantas has announced new flights.

The airline noted retaining these routes would come at the expense of keeping certain routes in operation.

“The Rex board has decided to stand its ground in these routes even if inevitably both carriers will be making significant losses,” Mr Sharp said.

“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.”

Rex has called on the Australian Competition and Consumer Commission (ACCC) to enforce action against Qantas for actively trying to swallow up the majority of the Australian aviation market share.

Mr Sharp flagged Rex would begin new routes in April from Sydney to Coffs Harbour and Port Macquarie, which pre COVID-19 had respective passenger volumes of 330,000 and 190,000.

The airline said it would look at setting up operations on routes where Virgin Australia had pulled out or Qantas was the only carrier offering flights.

These services include Sydney to Tamworth, Sydney to Canberra, Melbourne to Devonport and Perth to Geraldton.

“We will be launching services to these cities once a partnership agreement is concluded with the local councils or airport owners,” Mr Sharp said.

“Our plans to commence domestic jet services on the Sydney-Melbourne route on March 1 are still firm barring further border closures.”

According to Rex, Qantas has rejected any agreement to set up partnerships on certain routes where shared resources could help drive down costs.

Qantas has been contacted for comment.

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