Airline turbulence

A war of words has broken out between the two airlines which will be servicing the Limestone Coast region’s main airport. Regional Express (REX) has fired the opening salvo as QantasLink prepares to land at the Mount Gambier Regional Airport.

REX last week announced it would embark on a major revamp of its regional route network in response to what it called “aggressive predatory moves by Qantas into thin regional routes serviced by REX”.

Rex’s Deputy Chairman John Sharp said Qantas “had 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”.

“Qantas is making record losses during COVID and has received an estimated $1.2b in Commonwealth assistance to stay solvent but, despite this, feels it is appropriate to use tax-payers’ funds to finance the losses on new services whose sole objective is to weaken the competitor.”

Mr Sharp said the announced Qantas routes, including Mount Gambier, “have only supported one regional carrier in the past and the current monthly passenger numbers are laughable”. “Even when passenger numbers return to pre-COVID levels, these routes would still be unable to viably support two carriers,” he said.

Mr Sharp said the Mount Gambier routes had an annual passenger load of 36,000 (Melbourne), with 134 passengers in the last month and 49,000 (Adelaide) with 1286 in the same time. “The REX board has decided to stand its ground in these routes even if inevitably both carriers will be making significant losses,” he said.

“Unfortunately, the expected drag on REX’s financial position from the losses on the above eight routes will mean REX will be unable to continue subsidising marginal routes that we have serviced for the past 20 years.”

Mr Sharp said REX would cease five routes at the end of March, however at this stage the Mount Gambier services would not be affected. In response, QantasLink CEO John Gissing said it was “a classic REX tantrum”.

“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,” he said. “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.

“We do not start routes if we do not think they will be commercially viable. “We know extra capacity and lower fares increases overall travel demand, which is good news for the regional communities.”

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