The Australian Competition & Consumer Commission (ACCC) has responded to allegations made by Rex that Qantas is engaging in anti-competitive behaviour against the regional airline.
Over the past year, Qantas has launched flights on eight regional routes already served by Rex including Sydney-Orange, Sydney-Griffith, Melbourne-Merimbula and Adelaide-Mt Gambier. Rex alleges that this constitutes “predatory behaviour” on the part of Qantas, and has urged the ACCC to take action against its larger rival.
“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,” Rex Deputy Chairman John Sharp said.
“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,” Mr Sharp said.
Rex responded to Qantas’ actions by withdrawing flights to five regional destinations – four which Qantas doesn’t fly to and will now be left without any air service – while at the same time launching new services in direct competition with Qantas, including Sydney-Port Macquarie and Sydney-Coffs Harbour.
But in its third quarterly report into Airline Competition in Australia, released today, the ACCC observed that “Rex’s recent expansion into the domestic network, and its announced plans to enter additional routes in competition with Qantas, does not suggest that the entry of Qantas on particular routes is impeding Rex from competing across the broader network.”
“To the contrary, competition appears to be increasing not decreasing,” the ACCC report says.
“The ACCC has carefully considered these issues. When assessing allegations of anti-competitive conduct the ACCC must consider whether the entry of Qantas would be likely to breach the Act by having the purpose, effect, or likely effect of substantially lessening competition. It is important to note that the Act’s focus is on protecting the process of competition, not individual competitors.”
The report also notes:
In this context we note that, since the start of the pandemic, Qantas has announced 26 new routes to reflect new travel demand patterns. Rex is the sole operator on only 8 of those routes. It remains the largest carrier on all 8 routes and has publicly stated that it intends to stay on these routes. On 22 February 2021, Rex announced that it will exit 5 other routes when RANS funding ceases. Of these 5 routes, Qantas operates on only one (Adelaide-Kangaroo Island), which it has serviced since December 2017. As noted above, at the time of Rex’s announcement, RANS funding was due to cease at the end of March, however, it has since been extended to 30 September 2021; it is not yet known whether Rex will continue on those routes through to the end of September.
– Page 8 of the ACCC report on Airline Competition in Australia, March 2020
Of the five routes Rex announced last month it would exit if Regional Airline Network Support (RANS) funding is not extended, Qantas has already announced it will take over one route; Sydney-Cooma which will be served on a seasonal basis over winter.
Rex launched Boeing 737 flights between Sydney and Melbourne earlier this month, and will soon expand its domestic network to include the Melbourne-Adelaide, Melbourne-Gold Coast and Sydney-Gold Coast routes. The ACCC said it was following this closely and was concerned about Rex’s ability to access slots at Sydney Airport beyond October 2021.
Join the discussion on the Australian Frequent Flyer forum: Rex accuses Qantas of predatory behaviour, withdraws from routes
