An airline war is set to erupt over the skies of regional Australia with Qantas announcing plans to expand its operations and muscle into key new routes.
The national carrier will introduce seven routes across NSW, South Australia and Victoria and offer special fares to lure customers away from its competitors.
The destinations will include Mount Gambier, Wagga Wagga, Merimbula, Newcastle, Griffith, and Albury.
The move has triggered an immediate backlash from Australia’s largest independent regional carrier, Regional Express (Rex), which operates on these routes.
Rex called for the federal government to intervene, describing the announcement as an “attack on its profitable regional operations”.
Qantas will offer $125 one-way fares on the routes for a period to snare new passengers.
‘Pent-up demand’ for regional travel
QantasLink chief executive John Gissing said it was a great opportunity for travellers to explore regional Australia.
“As the national carrier, we have an important role to play in driving tourism and supporting the industry’s recovery,” Mr Gissing said.
“Before COVID, more than 11 million Australians travelled overseas each year, so these flights will help convert some of these international trips into domestic holidays instead.”
Mr Gissing said there was “significant pent-up demand” for travel.
“These new flights will help more Australians explore some of the incredible places in their own backyard and drive tourism, which is so vital to the local economies of regional areas,” he said.
In a statement, Rex said it had “grave concerns” Qantas was embarking on an opportunistic strategy of flooding the regional airline market with additional excess capacity to eliminate weaker regional competitors.
“History has shown that once regional airlines are squeezed out, the loss is permanent and regional and rural communities suffer the consequences,” it said.
“Qantas is choosing to incur huge losses on these routes, using Commonwealth government subsidies to finance a strategy that will destroy incumbent regional operators.
“Rex believes these actions are clearly anti-competitive and particularly unconscionable at a time when Qantas is receiving almost $1 billion of federal assistance, while laying off thousands of workers under the pretext of reducing losses.”
Rex calls for federal assistance
Rex has called on the federal government to cease all grants to Qantas and is asking for new powers to be given to the ACCC to protect the industry from “new entry and expansion”.
“That will bring greater competition to the domestic market at a time when the aviation industry is particularly vulnerable to aggressive behaviour that entrenches the market power of the dominant carrier,” it said.
One of the new routes will serve Mount Gambier, which has been a Rex stronghold for many years.
Qantas will operate five weekly return flights from Mount Gambier to Melbourne and Adelaide.
Richard Sage, the Mayor of the District Council of Grant, welcomed the news and said it was up to the airlines to decide if the route was viable for them.
He said Qantas had approached the council with its intentions a week ago and the sudden news had “come out of left field”.
“It’s going to be great news for the region when you consider that we will have two carriers,” Mr Sage said.
“One will be doing the domestic flight majority and the other will be doing the tourism stuff that we are really hoping to get going in the region — I think it’s really the time.”
“Everybody’s been [in] lockdown for such a long time that they’re looking at growing their business and it’s a way of doing it right around Australia, getting domestic flights going.
“If you consider [our] region, they’ve been looking for an experience where they can fly in and do a tour, hire/drive, those types of things, it’s a new sphere Mount Gambier and the region is going to have.”