Qantas threatened with lawsuit by Rex

Qantas is facing possible legal action by Rex as airlines struggle with border restrictions but has called the threat ‘nonsensical’.

Rex has temporarily grounded its 737 fleet in response to Sydney’s extended Covid lockdown and related border closures. Picture: Joe Corrigan

Qantas has been warned it could face legal action by smaller rival Rex, which has accused the flying kangaroo of capacity dumping and predatory practices in domestic travel.

After complaining to the Australian Competition and Consumer Commission, Rex is now seeking advice on other legal remedies for what it calls “Qantas’s anti-competitive behaviour”.

Rex deputy chairman John Sharp said since it announced its expansion into domestic routes, Qantas had tried to intimidate Rex by launching flights on nine regional routes in competition with the smaller airline.

In addition, he said Qantas had dumped 80 per cent of extra capacity on the Sydney-Melbourne routes in March, at the same time as Rex began services.

“Now Qantas has publicly begged for another bailout from the federal government in the form of JobKeeper-style support, even though it has already received about $2 billion worth of commitments in federal and state assistance,” said Mr Sharp.

“It would be an irresponsible use of public funds to provide Qantas with even more government money when they have demonstrated no hesitation in using taxpayer funds to finance loss making predatory activities that are designed to destroy competition.”

To date the ACCC has not found any evidence of anti-competitive behaviour by Qantas but the watchdog continues to closely monitor all airlines in the domestic market.

A Qantas spokeswoman said it was “beyond them why Rex felt the need to constantly make nonsensical attacks on Qantas instead of focusing on their own business”.

“We don’t intend to take that same approach but we will continue to correct the record,” she said.

In regards to the capacity dumping claim, the spokeswoman said flights increased on the Sydney-Melbourne route in March in response to demand when borders reopened.

“Rex’s argument is the equivalent of going to a major intersection when it’s quiet and then complaining when it starts to get busy,” she said.

Since the pandemic struck and international borders closed, Qantas and Jetstar had announced 46 new routes, of which only 11 were in direct competition with Rex, the spokeswoman said.

She also rejected Rex’s claim that Qantas had pocketed $2bn from the federal government, saying the airline received the same support as other businesses or airlines.

“The majority of that support was JobKeeper and other payments which went to our people while they were stood down,” she said.

“The rest was fee-for-service including repatriation flights to bring Australians home and vital freight services to keep goods coming in and out of the country.”

All airlines were facing an uphill battle at the moment, due to Sydney’s extended lockdown and related border closures.

In June, more than 9000 flights were cancelled, prompting Qantas chief Alan Joyce to warn employees they may again be stood down without pay, if very low levels of flying persisted.

Rex has temporarily grounded its Boeing 737 fleet in response to the severe restrictions on interstate air travel, and Virgin Australia has also raised concerns about the potential impact on workers if current conditions continued.

Originally published as Qantas threatened with lawsuit by Rex