Rex accuses Qantas of predatory behaviour, withdraws from routes

[Mattg]

Rex has put out yet another media release today accusing Qantas of predatory behaviour in launching flights on various former Rex monopoly regional routes.

Rex says that it has decided to keep operating on routes with new competition from QantasLink, even though they will be loss-making, and due to the losses it will sustain in doing so Rex will apparently have to cease services on five other marginal routes (4/5 of which currently have no competitor) once government funding runs out in March:

• Sydney-Bathurst
• Sydney-Cooma
• Sydney-Lismore
• Sydney-Grafton
• Adelaide-Kingscote

But at the same time, Rex says it will launch flights on two routes "where Virgin Australia has retreated", being Sydney-Coffs Harbour and Sydney-Port Macquarie. (I'm pretty sure VA still flies to Coffs Harbour?!)

According to Rex, other new routes under consideration, which are currently served by Qantas, are Sydney-Tamworth, Perth-Geraldton, Melbourne-Devonport and Sydney-Canberra.

Rex to cut routes in face of Qantas ‘intimidation’

Qantas has hit back at Rex’s accusation of predatory behavour, saying the country airline is ‘throwing a classic Rex tantrum’.

www.smh.com.au

I agree that SYD-CBR would make sense for Rex, since it's basically been abandoned by Virgin and still has lots of traffic. But I can't see Rex launching flights to Tamworth after saying in a press release last September that
"cities, such as Tamworth, which insist on charging security screening charges on carriers not legally required to be screened, will not be considered.”

Basically, it looks to me like Rex is now trying to hold five regional routes hostage as a political weapon to force the government and/or ACCC to either extend the RANS funding or take action against Qantas. This could get interesting.

 

[Jousams]

Rex has put out yet another media release today accusing Qantas of predatory behaviour in launching flights on various former Rex monopoly regional routes.

Rex says that it has decided to keep operating on routes with new competition from QantasLink, even though they will be loss-making, and due to the losses it will sustain in doing so Rex will apparently have to cease services on five other marginal routes (which currently have no competitor) once government funding runs out in March:

• Sydney-Bathurst
• Sydney-Cooma
• Sydney-Lismore
• Sydney-Grafton
• Adelaide-Kingscote

But at the same time, Rex says it will launch flights on two routes "where Virgin Australia has retreated", being Sydney-Coffs Harbour and Sydney-Port Macquarie. (I'm pretty sure VA still flies to Coffs Harbour?!)

According to Rex, other new routes under consideration, which are currently served by Qantas, are Sydney-Tamworth, Perth-Geraldton, Melbourne-Devonport and Sydney-Canberra.

Rex to cut routes in face of Qantas ‘intimidation’

Qantas has hit back at Rex’s accusation of predatory behavour, saying the country airline is ‘throwing a classic Rex tantrum’.

www.smh.com.au

I agree that SYD-CBR would make sense for Rex, since it's basically been abandoned by Virgin and still has lots of traffic. But I can't see Rex launching flights to Tamworth after saying in a press release last September that
"cities, such as Tamworth, which insist on charging security screening charges on carriers not legally required to be screened, will not be considered.”

Basically, it looks to me like Rex is now trying to hold five regional routes hostage as a political weapon to force the government and/or ACCC to either extend the RANS funding or take action against Qantas. This could get interesting.

rex is the boy who cried wolf. i wish the government would wake up to it....

 

[jakeseven7]

Yawn, rinse and repeat PR dribble

 

[Mattg]

Qantas has responded, calling this a "classic Rex tantrum".

https://www.qantasnewsroom.com.au/qantas-responds/statement-on-rex-network-announcement/

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.

The fact is Rex is receiving millions of dollars in bespoke government assistance for its regional operations at the same time as it’s acquiring new aircraft to fly between capital cities.

It feels like Rex is trying to blame Qantas for other challenges they may be having.

We don’t start routes if we don’t think they will be commercially viable for us.

We know that extra capacity and lower fares increases overall travel demand, which is good news for the regional communities we will be operating to.

We’ll be reviewing our network and consider whether we can offer services on any of the routes that Rex is threatening to pull out of.

 

[flydoc]

https://www.qantasnewsroom.com.au/qantas-responds/statement-on-rex-network-announcement/

“We know that extra capacity and lower fares increases overall travel demand” (John Gissing)

Does it? What happened when QF & VA went head to head and flooded the market a few years back ? What happens to fares when there’s just not enough traffic for 2 operators and 1 pulls out as we’ve seen time and again?
It’s possibly a little more nuanced than A + B = C.

 

[dajop]

“We know that extra capacity and lower fares increases overall travel demand” (John Gissing)

Does it? What happened when QF & VA went head to head and flooded the market a few years back ? What happens to fares when there’s just not enough traffic for 2 operators and 1 pulls out as we’ve seen time and again?
It’s possibly a little more nuanced than A + B = C.

Agree.

Also, just looking at a few random dates. QF seem to charge the QF FF tax a price premium of about $30-$40 on the new routes. Rex have had relatively low “community fares” on many of its routes for some time. Interesting that QF is not matching these yet (perhaps it will during “sales”), so sort of makes a bit of a mockery of the lower fares piece, although admittedly there may be many more seats at the QF price level than before.

 

[jase05]

Rex will apparently have to cease services on five other marginal routes (which currently have no competitor) once government funding runs out in March:

• Sydney-Bathurst
• Sydney-Cooma
• Sydney-Lismore
• Sydney-Grafton
• Adelaide-Kingscote

QF has been running ADL-KGC for awhile

 

[Mattg]

QF has been running ADL-KGC for awhile

You're quite correct. (I should know because I flew QF on that route last year!)

 

[henrus]

But at the same time, Rex says it will launch flights on two routes "where Virgin Australia has retreated", being Sydney-Coffs Harbour and Sydney-Port Macquarie. (I'm pretty sure VA still flies to Coffs Harbour?!)

So they're willing to go "up against" Qantas on some routes where they think they can compete but not ones where they charge an arm and a leg plus a gold bar on top.

I agree that SYD-CBR would make sense for Rex, since it's basically been abandoned by Virgin and still has lots of traffic. But I can't see Rex launching flights to Tamworth after saying in a press release last September that

There is a reason why VA has abandoned it... they don't have a lot of gov/big biz contracts in Canberra and without these, there isn't much traffic between SYD-CBR.

I've never understood SYD-CBR to begin with, but in these times makes zero sense... You've got to spend time at an airport before boarding, on the plane sitting next to others, and then at the airport upon arrival. All of these places require wearing a mask and all of them put yourself at a greater risk of COVID (or being caught up in a COVID hotspot like MEL T4) whereas the drive is a simple 3hrs. Sure back in the day (pre covid), people would say international/domestic connections but with flights in/out of Sydney few and far between, it's quite hard to even connect in SYD right now.

Anyway back to Rex's antics... it's all quite incredible and I just wonder when it will stop...

The 737 launch is turning into an absolute flop (from multiple aircraft to just one at launch) and arguably they could even be accused of predatory pricing on the SYD-MEL route. Regionally, they run a fleet of aging ~20-30 year old props and charge a fortune but then complain when someone comes in and offers something better.

As Rex said themself Qantas is struggling and so the business is looking for new options domestically because that's all they can operate. The management must be stupid to think that Qantas is going to enter any sort of "collaborative partnership" especially since they're actively going after Qantas' bread and butter routes.

Finally, if it's not obvious the annoucment makes me angry, this really comes down to a case of smarter not harder. Take the two lowest routes in their first table, perhaps in these unusual times some out-of-the-box thinking is required...
Melbourne – Wagga Wagga : They already have flights from Wagga Wagga to Sydney and will soon have SYD-MEL so if you've only got ~150 people per month then make them connect if you can't compete.
Melbourne – Mount Gambier : Scrap the route and force people to connect via Adelaide - if they didn't burn bridges with Qantas/Virgin they could have had some codeshare or through ticket agreement.

 

[Carrots]

Their antics however seem to work more often than not (and frankly it's sad that it does).

Unsurprisingly, locally here in SA, the Opposition Party was quick to announce that the State Gov should throw Rex a handout to ensure they keep flying their twice weekly return flights to Kangaroo Island (versus the current QF 4 returns).

For SA, I wonder how long Rex will continue with Mt Gambier given the QF push on this route, and whether we'll see reductions/changes to the Pt Lincoln and Whyalla routes which QF also fly.

 

[themaiz]

OK Rex: how about you start flying SYD/WTB, a route that QF was doing twice a day with suitably full Dash-8 planes, but has now abrogated entirely? Unless of course, you want to fly via CNS, take the whole day, and pay $2k return.

I'm tired of driving from Toowoomba to BNE at 5AM so that I can get back to Sydney for work. Hell, I'd even pay $200 to Rex instead of using a QF points claim.

 

[eastwest101]

OK Rex: how about you start flying SYD/WTB, a route that QF was doing twice a day with suitably full Dash-8 planes, but has now abrogated entirely? Unless of course, you want to fly via CNS, take the whole day, and pay $2k return.

I'm tired of driving from Toowoomba to BNE at 5AM so that I can get back to Sydney for work. Hell, I'd even pay $200 to Rex instead of using a QF points claim.

I think that you have hit upon an interesting point about QF entering regional routes, aside from the several Dash 8-300s taken back from JQ New Zealand and older -200s the majority of the fleet is mostly -400s which have similar operating costs but a noticable increase in seats. I think the issue is that QF have "to many" -400s and not enough smaller -200s and -300s to match capacity to market size. If QF had more smaller -200s and -300s then I think Rex would have been really stuffed if Qantas had the right sized aircraft.

Obviously state border closures hurt the WTB-SYD market. I am guessing that SYD-WTB was pretty full of business/military/fly-in fly-out and connecting passengers?

 

[themaiz]

I am guessing that SYD-WTB was pretty full of business/military/fly-in fly-out and connecting passengers?

Whenever I flew, the planes were surprisingly full and carrying of all kinds of people - wide age and gender range, not dissimilar to any other domestic flight. There definitely was a smattering of FIFO types, and a lot of business people, but clearly lots of families and itinerant travelers also.

Personally, it's exceptionally annoying. I have a home base in Toowoomba and a work base in Sydney. WTB is a pleasant, efficient, and well placed airport with friendly staff and a can-do attitude. And a carpark that's free for four hours! That's enough time to have a meal, a sendoff or do a bit of chatting before a flight.

It is a complete mystery to me that QF does not appear to have any interest in the location. Their ongoing "hey look, we're opening up routes" maps are suspiciously devoid of any dotted lines that extend from anywhere to WTB. I know the Wagners are pushing hard.

Yesterday I (finally) asked QF to refund three revenue flights that were on hold. Their loss. I'm definitely flying less because I can't get in and out quickly enough. I won't be the only one.

 

[PineappleSkip]

WTB is an alternative airport for me to fly from to SYD, as well as MCY and BNE. However I've only done the WTB thing once, because the QF prices ex WTB are consistently much higher than the other two. No competition. Interesting that Rex has not launched services, but it would be thinner on the ground with two operators.

Cheers skip

 

[themaiz]

Skip, do you mean the SYD/WTB fare? Well, they have a bit of a captive market so not surprising that they'd charge whatever the market will stand. One thing that's good about QF's pricing model though: even while revenue fares SYD/WTB are consistently higher than SYD/BNE, the points fare is the same: 8000 plus $40 or so in taxes. That's a good deal.

 

[PineappleSkip]

Yes, I meant WTB-SYD. Bit academic at the moment since the route appears still not to be happening.

Cheers skip

 

[dajop]

Wonder if there are any other untapped routes that might suit a 34-seat operation? WTB-SYD as strong potential. Maybe BXG-ADL is one (albeit marginal) possibility.

 

[1022]

Lismore is my home port and a tough one seeing as Ballina is just half an hour down the road and now served by QF (mainline and QLink), VA, JQ, FP and a token, half hearted service by Rex after they spat the dummy when QF started flying there last year.

Having said that, LSY shouldn’t be impossible, if only they were a bit smarter about it. There’s a decent market in Lismore, pop around 40k, it’s the main health and education hub for the Northern Rivers and is surrounded by towns and villages of residents for whom BNK would be just that little bit too far to drive to be convenient, if only Rex had decent fares and schedules from LSY. (Eg Casino, Kyogle and many smaller hamlets). It’s a lowish SES area, but increasingly popular with tree changers who need to get to Sydney fairly regularly and the gateway to many Byron Hinterland tourist spots. Rex fares are rarely below $200 one way to Sydney and the route is served on a triangle pattern with a stop in Grafton making it a dreary 2.5 hour trip.

There is zero local advertising or goodwill generation (e.g sporting club sponsorship) by Rex and flight schedules chop and change regularly.

If Rex does depart the market (as in they’re not just having a tanty so that the local National MP can look like a hero for throwing them a lifeline) I hope Fly Pelican swoops in and fills the void. They’ve made some shrewd moves in BNK lately with flights to Dubbo and Canberra added in addition to long standing NTL-BNK and there were whispers they would do the same last year at GFN when the councillor (rightly) told Rex to pull their finger out.

 

[themaiz]

There has to be decent revenue on shorter links, and I'm all for Rex giving QF a bit of a squeeze. I'm flying to Hervey Bay in a few weeks. QF quotes $247 to go SYD/BNE/HVB. The SYD/BNE sector is selling at $140 right now, so... another $150 to go BNE/HVB? Sure. And then it's $247 to return HVB/SYD a few days later, when the stand-alone BNE/SYD sector is selling for $200, so incremental HVB/BNE is $47 that day. And I checked a non-QF booking site, and was offered $207 for the full one-way on the same planes.

I'm sort of surprised at the pricing. QFLink seems to be the only carrier doing BNE/HVB/BNE, so they could conceivably charge a motza. In fact I think the incremental fare is pretty reasonable considering the alternative is a 3.5 hour drive in a rental car. So what's the special sauce? Does Fraser Coast have a seriously active polly at work?

 

[henrus]

It is a complete mystery to me that QF does not appear to have any interest in the location. Their ongoing "hey look, we're opening up routes" maps are suspiciously devoid of any dotted lines that extend from anywhere to WTB. I know the Wagners are pushing hard.

I'm surprised Air North doesn't give it a go! I guess the biggest problem pre covid is slots and pricing, regional NSW was classed differently to WTB which made it harder given it's really a regional route.