With international flights almost completely stopped, domestic aviation in Australia is heating up with regional carrier Rex calling Thursday for the Australian government to stop all federal subsidies to flag carrier Qantas.
Rex accused Qantas of “flooding the regional airline market with additional excess capacity to eliminate weaker regional competitors, which will have devastating long term impacts on regional aviation”.
Rex has stepped up its game in the Australian market. Where once it was a regional turboprop carrier that worked for mining companies and others on so-called “fly in-fly out” missions, Rex has used the COVID-19 pandemic as a way to take advantage of the opportunities that present themselves during times of chaos. It has ordered 737 narrowbodies and planned additional routes to compete against Qantas as well as Virgin Australia, which has just emerged from administration under new ownership.
Rex said Thursday that “history has shown that once regional airlines are squeezed out, the loss is permanent and regional and rural communities suffer the consequences. Qantas is choosing to incur huge losses on these routes, using…government subsidies to finance a strategy that will destroy incumbent regional operators”.
Rex gave an example of the Sydney – Orange market, which it said was “barely big enough for one operator, with a pre-COVID patronage of 65,000 annual passengers. Since its start of operations on 20 July 2020, at the height of the pandemic in Australia, it managed an average of only 10 passengers per flight, even for only two return services a week”.
“It is clear that Qantas is very worried about Rex’s entry into the domestic market as it is well aware of Rex’s superior efficiencies and on-time performance. Qantas is trying to weaken Rex by attacking its profitable regional operations even at the cost of heavy losses for itself,” Rex said in a statement, calling the actions “clearly anti-competitive and particularly unconscionable” when Qantas is receiving almost A$1 billion of federal assistance, while laying off thousands of workers under the pretext of reducing losses.
Rex called on the Australian government to cease all grants to Qantas “if it persists with this opportunistic behaviour”, adding the federal government should be aware that Qantas’s actions will have a long-term negative impact on regional aviation and that “Qantas is well known for quickly dropping a route once it no longer serves its strategic objectives. If Qantas succeeds in driving Rex away from these routes, there is every possibility they will never have a regional service again when they are no longer relevant to Qantas,” Rex said.