The Regional Express brand slammed domestic carrier Qantas, announcing it had “raised an official complaint to the Australian Competition and Consumer Commission (ACCC) about Qantas’ behaviour of dumping excessive capacity on routes that are already extremely marginal”.
However, Qantas hit back, accusing the regional carrier of “throwing tantrums”.
Rex said it would cite Qantas’ behaviour “in three regional routes that go beyond competition on the merits’.
These routes included Adelaide to KI and Adelaide to Whyalla, a route Qantas opted to add in 2015.
“This route was serviced by Rex with annual passenger numbers of 60,000 and annual seats of 100,000, giving a Rex load factor of 60 per cent,” Rex said in a statement.
“In April 2015, Qantas commenced services on the route by bringing in an additional 66,000 seats, thus bringing the total market load factor to 43 per cent, which makes the service uneconomical for both carriers.”
Rex said Qantas entered the KI service in December 2017, also commencing direct services to Melbourne, “further diluting the passengers travelling on Rex since they no longer need to travel to Adelaide to fly to Melbourne”.
“It is obvious that the excessive additional capacity introduced by Qantas on these routes kills the ability for Rex to offer a sustainable alternative to the Qantas model for regional communities and increases Qantas’ market power,” Rex said.
“Rex has been a steadfast partner to Kangaroo Island… and other regional and remote communities for decades, faithfully providing reliable, safe and frequent air services with affordable fares…
“However, Rex has to face up to the reality that it is not able to match Qantas’ financial firepower and unlike Qantas, Rex is not able to continue servicing a money-losing route indefinitely.”
It said its board has “decided that in light of the sharp downturn experienced in the last six months and the poor economic outlook for the next 12 months, Rex will be exiting the Sydney to Ballina and Adelaide to Kangaroo Island routes in the coming weeks”.
It comes as Kangaroo Island begins to rebuild its infrastructure and tourism capacity after fatal bushfires engulfed large sections of the island last month.
“This is not a decision that Rex has taken lightly having serviced Kangaroo Island continuously for 30 years and Ballina for 24 years, first as Kendell Airlines and then as Rex since 2002,” it said.
“Rex’s only recourse is to appeal to the ACCC to stop this anti-competitive conduct… Qantas has won this round, but in the longer term the communities are the real losers.”
KI mayor Michael Pengilly told InDaily he was “very, very disappointed” by the move.
“The timing couldn’t be worse,” he said.
“I understand it’s an economic decision from them, and I don’t want to make any comment on their dispute with Qantas – that’s not my business… my business is ensuring a twice-daily service to the island, and if we lose Rex, we lose that.”
He said Rex’s morning and afternoon flights were crucial to tourism, while Qantas’s year-round but less-regular service was largely geared towards servicing the Southern Ocean Lodge, which was gutted by the fire.
He called on newly-self-appointed Tourism Minister Steven Marshall to intervene, saying “the alternative would be for Qantas to lift their game substantially and put on a twice-daily service, seven days a week”.
“That’s the only thing that will stop us falling off the radar with the international tourism sector,” he said.
Rex Airlines courted controversy in SA in 2018 after scaling back flights between Adelaide and Mount Gambier citing “unfair” complaints about the service.
A Qantas spokesperson said: “Rex has a track record for throwing tantrums when things aren’t going according to their plan.”
“Not long ago, they blamed us for the fact their pilots were applying for jobs with Qantas. Now it’s because we’ve added services and given regional consumers more choice,” they said in a statement.
“We’re focused on adding new routes to regions that we think have genuine growth potential. That includes stimulating those towns with more capacity, which helps build momentum and can grow the size of the pie over time.
“Rex blaming our capacity commitments as a reason for exiting Kangaroo Island after the devastating bushfires is a sad state of affairs.
“We have a long history of serving regional Australia and we’ll continue to invest in communities where there’s sustainable demand for our services.”
Last month, Qantas committed to maintain flights between Adelaide and Kangaroo Island until at least the end of March next year. It operates five times a week at peak times of year and three times per week in off-peak.
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