Rex gets reporting role as co-ordination with Qantas, Virgin authorised

Regional Express will submit monthly reports to the consumer watchdog over the conduct of its competitors – Virgin Australia and Qantas Airways – on several regional routes that the regulator has rubber-stamped for revenue sharing and schedule coordination until the end of next June.

The Australian Competition and Consumer Commission said the reports, which it will release publicly, would help protect against anti-competitive information sharing and minimise the potential risk to consumers stemming from the authorisation. It has also barred the airlines from hiking airfares on the routes higher than where they sat on February 1.

"Rex [will] provide monthly updates to the ACCC, to notify the ACCC of developments in relation to the proposed conduct, and to provide information relating to the proposed conduct to the ACCC upon request," the regulator said in its final determination.

Rex's new role comes as it plots entering the lucrative "golden triangle" routes connecting the east coast capitals early next year and tensions with the other airlines heat up.

Qantas chief executive Alan Joyce, who will be in direct competition with the traditionally rural-focused airline if it follows through on its capital city plan, has recently accused Rex of using government subsidies to fund growth.

While the three airlines have all received help to maintain their operations during the COVID-19 pandemic, Rex also received a $53.9 million bailout to ensure its survival.

Rex called the allegations wrong and "mischievous" earlier this month.

Nevertheless, the regional airline has received the role from the ACCC after it spearheaded the application for revenue sharing and schedule co-ordination with others in March. The regulator had previously given interim permissions, yet only delivered a final determination on Friday.

The routes affected are Sydney-Wagga, Sydney-Dubbo, Sydney-Albury, Sydney-Armidale, Adelaide-Port Lincoln, Adelaide-Whyalla, Adelaide-Kangaroo Island, Cairns-Townsville, Townsville-Mount Isa and Melbourne-Mildura.

In addition to the monthly reports, Rex will have to notify the watchdog of any new measures formulated as part of the proposed conduct five business days before implemented and any arrangements to share revenue or co-ordinate schedules within three business days.

"[Rex must] state how the notified measure, decision or arrangement is directed to maintaining the quality or viability of regional services that are or are likely to be impacted by the COVID-19 pandemic," the ACCC said.

The outbreak has crushed travel demand and activity since early February, throwing the aviation sector into turmoil.

Virgin fell into voluntary administration, with creditors blessing its sale to private equity firm Bain Capital last month. Qantas, meanwhile, is looking to sack nearly a third of its workforce, slumping to a $2 billion loss for the 2020 financial year. Rex posted a $19.4 million loss during the period.

The ACCC decided to extend the authorisation to June 30, 2021, despite submissions from the Australian Airports Association, Armidale Regional Council and Dubbo Regional Council that the time should be shorter.

Greater choice

"The ACCC considers that the ability for the airlines to co-ordinate and share revenue is likely to result in public benefits by supporting the continuity of air services to certain regions during the COVID-19 pandemic," the regulator said.

"And [by] enabling better schedule spread, which provides greater choice for passengers flying to and from those regional destinations."

The watchdog noted the trio were receiving government funding to prop up a minimum domestic network until the end of the year and had enabled them to manage the impact of the pandemic so far without co-operation.

"The ACCC considers that the airlines are unlikely to co-ordinate or share revenue while these funding arrangements are in place."

Rex welcomed the determination on Monday morning but said it had been unable to establish any collaboration with Qantas's regional arm QantasLink as of yet.