Another Qantas rival fails, spurring calls to curb airline’s market grip


Rex fell into administration on Tuesday. — Bloomberg

SYDNEY: The collapse of another Australian airline – at least the fourth in as many years – highlights again the overwhelming local dominance of Qantas Airways Ltd and increases pressure on the government to rein in the century-old giant.

Rex, an established regional airline that recently tried to take on Qantas on busy and lucrative capital city routes, fell into administration on Tuesday.

Regional Express Holdings Ltd, as the listed entity is known, cancelled all flights between major airports and grounded its fleet of Boeing 737 jets.

Rex’s existential struggles, after two decades of regional operations, stem from its ill-fated expansion into major intercity services such as Sydney-Melbourne – one of the world’s busiest domestic routes – in 2021.

Stymied by a crippling fare war with Qantas and Virgin Australia Airlines Pty, and insufficient slots at Sydney Airport, Rex bled cash and its market share wallowed at just 5%.

Qantas and its budget brand Jetstar control 62% of the market, while Virgin has a 31% share, according to the latest data from Australia’s competition regulator.

Rex appointed Ernst & Young as administrators, and its shares, which had fallen 35% this year, were indefinitely suspended from trading.

The process of voluntary administration is designed to resolve a company’s future, either by securing a deal to save or sell the business or by achieving the best outcome for creditors.

Rex’s fate reinforces the findings of a government review last year, which concluded Australian fliers were being short-changed by out-of-date and inadequate regulation.

There was concern, the government said at the time, that major airlines were manipulating rules to hoard more airport slots than they needed in order to keep out smaller competitors.

The government has promised to shake up the way slots are granted in Sydney to airlines including Qantas.

A more recent parliamentary committee even recommended potential reforms including the power to break up airlines to address market abuse.

Attention is now turning to an overdue government white paper, originally due mid-2024, that will direct aviation policy for the coming decades.

Opposition transport spokeswoman Bridget McKenzie yesterday accused the government of “running a protection racket” for Qantas.

“There is a problem with competition in this country,” she said on national radio.

“It affects ticket pricing, it affects the choice of routes and it allows the behemoth Qantas to monster competition. That’s exactly what has happened here with Rex. “Every time an airline tries to take it up to Qantas, they get smashed,” McKenzie said.

Qantas said in a statement that it “is a challenging day for our industry and we are sad to see Rex enter voluntary administration”.

It offered to fly affected Rex passengers and “connect Rex employees with potential opportunities within the Qantas Group”.

Qantas didn’t immediately reply to an email seeking a response to McKenzie’s comments.

Rex’s failure follows that of startup airline Bonza this year and the collapse of Virgin Australia and Tigerair Australia during the pandemic.

Private equity firm Bain Capital now owns Virgin Australia.

Rex’s regional services using smaller propeller-driven aircraft are still operating, according to Ernst & Young.

Transport Minister Catherine King said yesterday that it was “in everyone’s interest” that Rex continues to exist.

She said Rex was the only transport option in some parts of the country and the government would consider financial aid.

“We’d be reluctant to just throw money at the problem,” she said. “We’d want to ensure there’s a long-term solution to the security of regional aviation.”

King said she is “just about” to release the government’s aviation white paper. — Bloomberg

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