Key regional flights could be revived after ACCC call on Rex

Key regional flights could be revived after ACCC call on Rex

After ceasing all its flights except in Queensland earlier this week, Regional Express (ASX: REX) may have a shot at reviving 10 key regional routes due to a regulator decision on coordinating with competitors.

The Australian Competition and Consumer Commission (ACCC) has granted Rex interim authorisation to coordinate flight schedules for the routes with Virgin Australia (ASX: VAH) and Qantas Airways (ASX:QAN) during the Covid-19 pandemic.

The interim authorisation will also enable Rex, QantasLink and Virgin to share revenue from providing services on the routes.

The decision is onditional on airlines charging fares no higher than those in place on February 1, 2020, which means they will not be able to coordinate to raise prices.

"We recognise this is an urgent request. This authorisation will help provide certainty for regional flight operators to support services on these routes for those who need to use them," says ACCC chair Rod Sims.

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

"Airlines are facing significant challenges due to the COVID-19 pandemic, including rapidly escalating travel restrictions. The ACCC stands ready to urgently assist airlines with any coordination arrangements that are necessary and appropriate during this crisis."

The routes concerned are:

New South Wales

  • 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)
  • Townville Mount Isa (Rex and QantasLink)

The ACCC has been busy finding ways to allow competitors to coordinate with one another in the best interests of the nation, but without compromising consumer rights and any potential for collusion. Other decisions like this include for supermarkets to ensure supply and medical technology companies to to coordinate supplies and manufacturing.

Updated at 6:22pm AEDT on 26 March 2020.

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