Rex slams Qantas competition tactics

Facing more competition on the lucrative Golden Triangle route this year, Qantas is accused of trying to steal bookings from rivals with an underhanded tactic.

Rex Deputy Chairman John Sharp is unimpressed with Qantas boss Alan Joyce’s suggestion Australia only has room for two airline groups. Picture: Mick Tsikas/AAP

Qantas has been accused of trying to steal bookings from its competitors by casting doubt over the survival prospects of Rex and Virgin Australia.

Rex is set to take on Qantas and Virgin on the lucrative Golden Triangle route this year, at a time when airline revenues are at historic lows.

In a business interview on Wednesday, Qantas boss Alan Joyce suggested there was not room for all three, saying Australia had never sustained more than two airline groups and probably wouldn’t in the future.

“You can be guaranteed that Qantas will (survive) – it’s who else is going to be in the marketplace post this and into the future is going to be interesting,” said Mr Joyce.

The comments angered Rex deputy chairman John Sharp, ahead of the regional airline’s foray into the capital city aviation market with Sydney-Melbourne flights from March 1.

He questioned why Mr Joyce would make such a remark, suggesting it was an attempt to deter travellers from booking with Qantas’s rivals.

“By saying one of these two is going to die, people will think ‘we better not book with them because they might not be there when we want to cash in on our ticket and so we better book with Qantas because Alan Joyce says this is the only airline that’s definitely going to survive’,” Mr Sharp said.

“What you learn from Rex’s history is this is an airline that knows how to survive, and it does it without a huge balance sheet.”

He pointed out that since Mr Joyce was appointed CEO of Qantas in late 2008, the airline had made a loss of $284m.

In the same period Rex had made $185.5m in profits, he said.

“Sure circumstances are very different now to what we’ve had in the past, but Rex has a much lower cost base than Qantas’s,” said Mr Sharp.

“The highest wages we pay at Rex are in the $200,000 bracket and we keep our costs very low. Of course in tough times people who are more likely to survive are those who have their costs as low as possible.”

Rex currently plans to operate nine flights a day between Melbourne and Sydney on Boeing 737s in a two-class cabin configuration.

Prior to the COVID crisis, the route was the second busiest in the world, carrying more than 9 million passengers a year.

Mr Sharp said forward bookings had been “encouraging” with more than 100 received while the website was still being tested.

“We were literally launching the website so it would be ready the next day and to our great surprise we had bookings coming in,” he said.

“We’re constantly surprised by what happens in this industry, it’s very aggressive and competitive and we wouldn’t expect anything less from Qantas and Virgin than what we’re getting.”

A Virgin Australia spokesman indicated they were also confident of taking the fight up to Qantas and being around for the long term, after emerging from administration last year with new owners and a “renewed sense of purpose”.

“The changes we’ve made to reduce our cost base will put us in good stead to respond to the increasingly competitive market conditions,” he said.

“Leisure travellers, small and medium sized business, and many corporates will emerge from COVID-19 wanting better value for money. They will be hungry for flexibility and choice, a trusted brand, premium features and great prices which we stand ready to deliver on.”