ACCC lets Rex team up with Qantas and Virgin on key country routes

ACCC lets Rex, Qantas and Virgin work together to keep country routes flying

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Regional Express will combine services with Virgin Australia and Qantas on 10 regional routes during the coronavirus pandemic

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UPDATED 8.30am

The national competition regulator will allow country air service specialist Regional Express to share flights with rivals Virgin Australia and Qantas on 10 important regional routes during the coronavirus pandemic.

The Australian Competition and Consumer Commission's decision also lets Rex, QantasLink and Virgin temporarily share revenue from providing services on the routes.

However, Rex said it would only start talks with QantasLink on how best to service regional communities if there were meaningful assistance packages offered by federal, state and local governments to keep essential regional air services going.

The ACCC's passenger sharing offer would not alone enable the airlines to survive the next three months.

Eight other regional airlines have told the federal government they only have days before they collapse.

Routes approved for combined services include Sydney-Albury and Melbourne-Mildura, which are currently operated by all three airlines, and Cairns-Townsville and Adelaide-Port Lincoln, on which both Rex and QantasLink fly at present.

The offer is conditional on Rex, Virgin and QantasLink charging fares no higher than those which existed on February 1, 2020, which means they will not be able to collude to raise prices.

Routes approved for combined services include Sydney-Albury and Melbourne-Mildura, which are currently operated by all three airlines, and Cairns-Townsville and Adelaide-Port Lincoln, on which both Rex and QantasLink fly at present.

The ACCC's green light to flight services being co-ordinated by the three rivals may result in arrangements such as each carrier operating just one daily service on a regional route.

Other options could see revenue being shared between carriers, or an operator suspending its flights on a route to allow another airline to maintain a viable service.

This authorisation will help provide certainty for regional flight operators to support services on these routes for those who need to use them - Rod Sims, Australian Competion and Consumer Commission

The regional air service decision comes just days after the ACCC gave major supermarkets permission to work together with fresh food and other grocery suppliers so they could guarantee the continuity of supply for products in their retail stores, particularly in rural and remote locations.

Rex deputy chairman John Sharp said while extremely grateful to the ACCC for promptly granting the interim authorisation, federal, state and local governments all needed to act urgently to determine specific assistance packages so regional airlines could provide the bare minimum of essential air services to keep the communities running.

"For example, Rex carries critical blood supplies daily to regional and remote communities on its network, as well as transporting COVID-19 testing samples from regional centres to capital cities for analysis," he said.

"This may no longer be possible in the foreseeable future."

Chairman Rod Sims said the ACCC had recognised the urgency of the request from the airlines to be allowed to share services they previously flew in competition with each other.

The competition watchdog has the power to grant an authorisation when it is satisfied the public benefit from the conduct outweighs any public detriment.

Normally such co-ordinated action between the three national airlines would set competition alarm bells ringing.

However, airlines were facing significant challenges due to the COVID-19 pandemic, including rapidly escalating travel restrictions on people moving around Australia.

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"This authorisation will help provide certainty for regional flight operators to support services on these routes for those who need to use them," Mr Sims said.

"We hope this temporary measure will also support airlines' ability to again compete with each other on these routes once the pandemic crisis has passed."

He said the ACCC was ready to urgently assist airlines with any co-ordination arrangements which were "necessary and appropriate during this crisis".

It would be able to review the interim authorisation at any time and would seek feedback from the public or others in the industry on Rex's application for authorisation.

The routes concerned are:

NSW

  • Sydney - Wagga Wagga (Rex and QantasLink)
  • Sydney - Dubbo (Rex and QantasLink)
  • Sydney - Albury (Rex, QantasLink and Virgin Australia, noting Virgin Australia has announced it is suspending services on this route until 14 June 2020)
  • Sydney - Armidale (Rex and QantasLink, noting Rex has announced it is suspending services from 6 April 2020)

Victoria

  • Melbourne - Mildura (Rex, QantasLink and Virgin Australia, noting Virgin Australia has announced it is suspending services on this route until 14 June 2020)

South Australia

  • Adelaide - Port Lincoln (Rex and QantasLink)
  • Adelaide - Whyalla (Rex and QantasLink)
  • Adelaide - Kangaroo Island (Rex and QantasLink, Rex has announced an exit in July 2020)

Queensland

  • Cairns -Townsville (Rex and QantasLink)
  • Townsville - Mount Isa (Rex and QantasLink)
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The story ACCC lets Rex team up with Qantas and Virgin on key country routes first appeared on Farm Online.

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