Rex takes fight to Virgin, Qantas with launch of Melbourne-Canberra flights

This adds to the escalating tensions between Rex and Qantas, which erupted when Mr Sharp – a former transport minister in the Howard government – accused Qantas and Virgin of dumping capacity on the domestic market in order to spoil the smaller airline’s chances of success.

Mr Sharp wrote to competition regulator chairman Rod Sims stating the company’s concerns that the large capacity increase undertaken by Virgin and Qantas was a co-ordinated effort.

Rex, which was born out of the 2001 Ansett collapse, has until now had a fleet of mostly Saab 340 turboprop aircraft servicing 59 regional and remote destinations. The company viewed the devastating impacts of the COVID-19 crisis and Virgin entering administration last year as the opportunity to expand.

Rex received $62 million in government subsidies last financial year, making it one of the few airlines in the world to grow its revenue despite the impacts of the pandemic. Qantas received a $15 million net benefit to its bottom line last financial year from JobKeeper and aviation support schemes. Qantas is the major beneficiary of another $1.2 billion industry support package, enabling it to continue to pay stood-down international air crew $500 a week while international borders remain closed.

The two airlines have previously accused each other of using government funding to expand their operations.

Loading

Since the start of the pandemic, Qantas has launched, or is planning to launch, on eight routes where Rex previously had a monopoly: Sydney to Orange, Merimbula and Griffith; Melbourne to Merimbula, Albury, Wagga Wagga and Mount Gambier; and Adelaide to Mount Gambier.

Anthony Cicuttini, managing director of Redwater Consulting Group, which focuses on aviation, said Rex’s entrance into the capital city market was good for competition and would lower prices for consumers.

But he said the company would have to work hard to promote its brand in order to secure a competitive edge against the major carriers.

“Rex has long been the regional airline for Australia, that’s been their brand, that’s what people know them for,” he said.

“In the short term they’ll have some challenges getting their brand up there and making people aware that they’re available for booking.”