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Rex ups the ante on Qantas in fly-in-fly-out market

By Jessica Yun and Amelia McGuire

Regional Express has finalised its acquisition of fly-in-fly-out operator National Jet Express (NJE), the regional arm of Cobham Aviation, for $48 million while Qantas’ takeover of FIFO rival Alliance Australia awaits watchdog approval.

Rex executive chairman Lim Kim Hai indicated the company intended to overtake Alliance Australia as Australia’s leading FIFO operator through “bold plans to grow and transform” NJE.

Rex Airlines has completed its acquisition of fly-in-fly-out operator National Jet Express.

Rex Airlines has completed its acquisition of fly-in-fly-out operator National Jet Express.Credit: Sam D’Agostino

“Resource companies all over Australia can now count on a modern, comfortable and environmentally friendly fleet for their FIFO needs instead of relying on 30-year-old Fokker 100 aircraft used predominantly by the other operators,” said Lim.

Rex Airlines will lease two new aircraft to add to its fleet and indicated it is looking to expand into Queensland and the Northern Territory in particular.

“We will continue to invest in new aircraft and technology to grow the business, especially in Queensland where resource companies have been facing severe issues with capacity and reliability in recent years,” Lim said.

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Lim told The Sydney Morning Herald and The Age last month the acquisition came about almost by accident.

“We didn’t think about it at all until this year until we gave a half-hearted response to their request for interest, but then they said yes, and we realised it would work,” he said, adding the carrier adopts a flexible investment approach because the industry is so volatile.

Meanwhile, Qantas’ $614 million proposed acquisition of Alliance Australia has been on hold for months after the Australian Competition and Consumer Commission (ACCC) expressed preliminary concerns about decreased competition.

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“We are concerned that this proposed acquisition is likely to substantially lessen competition for air transport services to and from regional and remote areas in Queensland and Western Australia for corporate customers,” said ACCC chair Gina Cass-Gottlieb said in mid-August.

The ACCC gave Rex the green light for its purchase of NJE less than two weeks after the initial announcement.

While the ACCC has raised concerns with Qantas’ acquisition of Alliance, Rex doesn’t have a problem with it.

“Rex does not believe that the Qantas takeover of Alliance will result in a significant lessening of competition as the existing market players ... have the capabilities to be able to compete vigorously for each new tender,” Rex corporate services general manager Irwin Tan wrote in a letter addressed to the ACCC.

However, Rex’s support the acquisition comes with a few conditions, one of which is that Qantas would “not impose any restrictions on access to its simulators by its rivals”.

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Original URL: https://www.watoday.com.au/link/follow-20170101-p5bmby