Australia’s Rex threatens legal action against Qantas

Rex – Regional Express (ZL, Wagga Wagga) has announced it has appointed a high-profile law firm “to pursue all legal remedies” in its continued claims of “predatory and anti-competitive behaviour” by Qantas (QF, Sydney Kingsford Smith) on domestic regional routes.

This follows a long-standing stand-off between the two airlines over network expansion. Rex to date has filed running complaints that Australia’s largest airline is trying to push it out of its previously exclusive regional routes. Chief among Rex’s claims earlier this year was that Qantas and its low-cost subsidiary Jetstar Airways (JQ, Melbourne Tullamarine), as well as Virgin Australia (VA, Brisbane Int’l), were dumping capacity on the Sydney Kingsford Smith-Melbourne Tullamarine route, on which Rex was a new entrant. Rex began jet operations on the highly competitive route in March, which sparked a price war between the three airlines.

Qantas was not immediately available for comment, but the airline has consistently denied any wrongdoing. It even has opened a dedicated section on its website responding to what it calls “false claims from Rex”.

With its international flights remaining grounded due to COVID-19 restrictions, Qantas and Jetstar- which together hold more than 70% of the domestic market share – have added 45 domestic routes during the pandemic. They claim Rex only operates on ten of these where it remains the largest carrier.

In its latest move, Rex said it had engaged class-action specialist firm Clayton Utz and would cooperate with the Australian Competition and Consumer Commission (ACCC) to ensure that Qantas “is held to account”.

To substantiate its claims, Rex pointed to old cases where price-fixing saw Qantas fined USD61 million by a US court in 2007; AUD20 million (USD14.7 million) after having participated in a price-fixing cartel with British Airways (BA, London Heathrow) in 2008; and NZD6.5 million (USD4.5 million) in New Zealand in 2011.

It also referred to the ACCC in March 2021 having told the Australian parliament that it was still investigating potential anti-competitive conduct by Qantas in relation to its acquisition of a 19.9% stake in close competitor, Alliance Airlines (QQ, Brisbane Int’l); and whether its move into regional routes would lead to higher airfares. The commission at the time noted that adding capacity to a route to meet increased demand — and offering discounted fares — was consistent with effective competition and generally good for consumers, but it would consider taking action if free competition was affected.

Rex operates a fleet of 63 aircraft, including twenty-six S340B(Plus)s, thirty S340Bs, one S340A, and six B737-800s, according to the ch-aviation fleets advanced module. It operates to 61 destinations throughout Australia.

The Rex Group also comprises wholly-owned subsidiaries Pel-Air Aviation (PFY, Sydney Kingsford Smith) (air freight, aeromedical, and charter operator) and two pilot academies, Australian Airline Pilot Academy in Wagga Wagga and Ballarat.