Rex Airlines has published new claims regarding flag carrier Qantas, claiming that the airline is “technical insolvent” and “desperate” to kill off the Australian regional carrier.
In a statement dated June 23, Rex said that it welcomed “the increased scrutiny” by the Australian Competition and Consumer Commission (ACCC) in regards to Qantas and Virgin Australia, “over their increases in capacity and price discounting on routes in competition with Rex”.
Rex highlighted what it called “predatory behaviour” by Qantas in entering “nine regional routes that are too small to sustain competition”, stating that the Australian flag carrier was operating the routes at a loss, with load factors below 40 per cent.
Rex deputy chairman, the Hon John Sharp AM, said that “On face value Qantas is technically insolvent with net tangible assets over a hundred times smaller than Rex’s”.
“Its unencumbered cash is insufficient to refund the tickets that are eligible for a refund, which explains why there are over 1,300 postings on its Facebook page demanding a refund,” he added.
“It also explains why Qantas is so anxious to sell tickets for international travel that it has no reasonable prospect of providing – to bring in cash from advanced ticket sales.”
Rex is known for operating regional domestic routes using Saab 340 turboprop aircraft, but has recently been expanding its fleet to include several leased B737-800 jet aircraft, with which it has launched new services from the Australian hub of Melbourne and Sydney.
“Qantas’ situation is so dire that it needed one of the largest bail-outs in Australian corporate history from the Commonwealth amounting to $1.5 billion to date and possibly reaching $2 billion by year end,” said Sharp.
“In these circumstances, it is unconscionable to be using taxpayer’s money to fund heavily loss-making and anti-competitive actions that harm consumers by damaging and weakening competition.”
“Rex, on the other hand, is one of the most efficient and best performing airlines in the world over the last 12 years, on par with Southwest Airlines and twice as profitable as Singapore Airlines, while Qantas, has lost an accumulated $1.9 billion before tax, even after the bailout grants, over the same period.
“Understandably, Qantas is desperate to kill off Rex as it knows that it will have no chance against Rex once the latter is fully established in the domestic market.”
Rex also pointed to the ACCC report highlighting “the new entrant’s [Rex] role in increasing competition and lowering airfares delivering benefits to consumers”.
In response Qantas told Business Traveller that it had “a dedicated page responding to Rex’s litany of false claims”, which can be seen here.
With international borders unlikely to open until 2022, Qantas has been steadily increasing its domestic network, with a recent announcement adding seven new routes, and larger aircraft to existing destinations.
Meanwhile Virgin Australia recently outlined its own domestic growth plans, with the aim of adding over 700 weekly flights across its domestic network by October, including increased frequencies on the Sydney-Brisbane-Melbourne triangle “to support corporate and small to medium sized business travel”.