Regional Express airlines to end Kangaroo Island service, after Qantas steps up flights

The Wednesday Qantas Q300 flight from Adelaide landing at Kingscote today, February 5.
The Wednesday Qantas Q300 flight from Adelaide landing at Kingscote today, February 5.

UPDATE WEDNESDAY, FEB. 5: Regional Express airlines today issued a statement saying it won't withdraw from Kangaroo Island until Qantas steps up flights.

Regarding the announcement to withdraw from Kangaroo Island, Rex says it will allow for a reasonable period for Qantas to match Rex's 2-3 daily services before withdrawing so there will be no disruption to local residents and tourists.

The Islander will endeavor to find out from Qantas if it can or will expend its Kangaroo Island services.

Rex did today announce that services to Ballina will cease from Sunday, March 29, 2020.

The last service, ZL211 will depart Ballina at 6:30am on Saturday March 28. All passengers with bookings after this date will be offered alternative flights between Lismore and Sydney or a full refund.

Federal Member for Mayo Rebekha Sharkie says she is disappointed by the Rex decision and will seek a meeting with the airline.

"Given everything the Island is going through right now with the fire recovery, the news that Rex airlines is pulling up stumps is a blow for the Kangaroo Island community.

"There is already virtually a monopoly for ferry services. The last thing the Island needs is an airline monopoly.

"My Centre Alliance colleague Senator Rex Patrick and I will be seeking an urgent meeting with Rex.

"We want to know more about Rex's complaint to the Australian Competition and Consumer Commission (ACCC) regarding Qantas."

ISLANDER DELIVERY: The Islander newspapers arrive at the Kangaroo Island airport on the Rex flight from Adelaide. File photo

ISLANDER DELIVERY: The Islander newspapers arrive at the Kangaroo Island airport on the Rex flight from Adelaide. File photo

Regional Express airlines has announced it will end services to Kangaroo Island blaming what it says in unfair competition.

Rex currently operates a daily service to Kangaroo Island and has served the Island for 30 years. It will also cease service to Ballina, NSW.

A spokesperson for the airline said it was a difficult decision and date for the last KI service had not yet been set but would be announced soon.

The ground crew on Kangaroo Island had been informed of the decision and any arrangements regarding their employment would be finalised once the final date had been set.

Mayor Michael Pengilly said he was not happy and the announcement was very disappointing. "This is another kick in the guts that quite frankly we don't need," he said.

If the Rex serviced ended, he called on Qantas to expand its service to a twice-daily service, that locals in particular relied on to get to and from Adelaide for meetings and appointments.

Rex announced on Monday, February 3 that it has raised an official complaint to the Australian Competition and Consumer Commission (ACCC).

Rex in the complaint alleges Qantas has dumped excessive capacity on three routes that were already extremely marginal, Kangaroo Island, Ballina and also Whyalla.

"The direct impact of this conduct is to force out the smaller competitor and substantially lessen competition in the long term," the statement reads. "Rex will be citing Qantas' behaviour in three regional routes that go beyond "competition on the merits."

The Adelaide to Kangaroo Island route was serviced by Rex with annual passenger numbers of 37,000 and annual seats of 66,000, giving an annual Rex load factor of 57 per cent.

The statement by Rex reads: "In December 2017 - the peak period for traffic on the Kangaroo Island route - Qantas commenced services by bringing in 6200 seats in the period of December 2017 to February 2018, bringing the total capacity during that period to 24,700 seats to service only 13,000 passengers. In addition, Qantas commenced direct services to Melbourne, further diluting the passengers travelling on Rex since they no longer need to travel to Adelaide to fly to Melbourne."

Qantas currently flies the Adelaide to Kangaroo Island route using a Q300 aircraft with single daily service between three and five times a week depending on the season.

Rex meanwhile offered a twice-daily service to Adelaide, an early morning and then afternoon or evening flight.

The Qantas Kingscote Melbourne route only operated in the peak season of December and January with a larger Q400 aircraft.

Kangaroo Island Council just built a new airport for $21 million with State and Federal Grants and was hoping for expanded services.

The council had held regular meetings with both Rex and Qantas in recent months to speak about maintaining and improving services.

The Island was badly impacted on by bushfires since December, having 48 per cent of the Island and more than 210,000 hectares burned, including iconic destinations such as Flinders Chase National Park and Southern Ocean Lodge.

A spokesperson for Qantas said in the wake of the bushfires, the airline had committed to a KI service through March 2021. Qantas will also "vigorously defend the complaint to the ACCC".

On Monday afternoon Qantas released the following statement:

"Rex has a track record for throwing tantrums when things aren't going according to their plan. Not long ago, they blamed us for the fact their pilots were applying for jobs with Qantas. Now it's because we've added services and given regional consumers more choice.

"We're focused on adding new routes to regions that we think have genuine growth potential. That includes stimulating those towns with more capacity, which helps build momentum and can grow the size of the pie over time.

"Rex blaming our capacity commitments as a reason for exiting Kangaroo Island after the devastating bushfires is a sad state of affairs.

"We have a long history of serving regional Australia and we'll continue to invest in communities where there's sustainable demand for our services."

Qantas meantime made the following points in its announcement on January 24:

  • Qantas has committed to maintain flights between Adelaide and Kangaroo Island until at least the end of March 2021, as the island recovers from the devastating bushfires.
  • The national carrier currently operates a year-round service from Adelaide to Kangaroo Island, five times per week in peak times and three times per week in off-peak.
  • Qantas and its partners Emirates and American Airlines market and sell flights to Kangaroo Island to international tourists in dozens of countries.
  • Airlines don't usually provide long-term commitments to routes in this way, however as air services are important to Kangaroo Island, we wanted to provide certainty for the local community.
  • Qantas is working closely with the SA Tourism to support their "#BookThemOut" campaign to boost tourism to the island.
  • Longer term, Qantas is working with Tourism Australia and state-based tourism agencies, including SA Tourism, on marketing activities to increase visitation to all bushfire affected areas.

The Rex statement from Monday continues:

"It is obvious that the excessive additional capacity introduced by Qantas on these routes kills the ability for Rex to offer a sustainable alternative to the Qantas model for regional communities and increases Qantas' market power.

"Rex has been a steadfast partner to Kangaroo Island, Ballina and other regional and remote communities for decades, faithfully providing reliable, safe and frequent air services with affordable fares. In fact, even though Rex is the sole operator across 80 per cent of its vast regional network, Rex's average fare has risen only 1.2 per cent annually since Rex was formed in 2002.

"However, Rex has to face up to the reality that it is not able to match Qantas' financial firepower and unlike Qantas, Rex is not able to continue servicing a money-losing route indefinitely. The Rex Board has decided that in light of the sharp downturn experienced in the last six months and the poor economic outlook for the next 12 months, Rex will be exiting the Sydney to Ballina and Adelaide to Kangaroo Island routes in the coming weeks.

"This is not a decision that Rex has taken lightly having serviced Kangaroo Island continuously for 30 years and Ballina for 24 years, first as Kendell Airlines and then as Rex since 2002.

"Rex's only recourse is to appeal to the ACCC to stop this anti-competitive conduct now that the ACCC has an effects test in section 46 that can be enforced.

"Qantas has won this round, but in the longer term the communities are the real losers."

Regional Express (Rex) is Australia's largest independent regional airline operating a fleet of 60 Saab 340 aircraft on some 1,500 weekly flights to 60 destinations throughout all states in Australia. In addition to the regional airline Rex, the Rex Group comprises wholly owned subsidiaries Pel-Air Aviation (air freight, aeromedical and charter operator) and the two pilot academies Australian Airline Pilot Academy in Wagga Wagga and Ballarat.

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