Rex vs Qantas saga continues, will Netflix seek rights to produce?

Who doesn’t love a story about an underdog? Seeing the little guy triumph over the bully is the plotline of many a bildungsroman, and Netflix’s latest hit drama series ‘Rex vs Qantas’.

Ok, just kidding, but we’re convinced it’s only a matter of time before someone produces the show seeing as there’s more than enough drama in this story for a good ten part series… 

Regional Express Airlines (ASX: REX) has made it very clear that they believe they’re being bullied by Qantas (ASX: QAN), a back and forth saga that has been going on for years now where Rex alleges that Qantas has been encroaching on their routes and being anticompetitive. 

Just this month, Rex came out saying that the pilot’s union, the Australian Federation of Air Pilots (AFAP) was aligned with Qantas’ agenda to target them following correspondence circulated to pilots. The reason for surmising that the AFAP and Qantas are aligned come from the fact that the union’s president is a pilot with Qantas’ regional service arm, QantasLink. 

Earlier this year Rex withdrew services from multiple routes, some of which they had services exclusively for years, citing Qantas’ entry to approximately ten Rex routes as “predatory”. 

Rex even went so far as to file a complaint with the ACCC in 2021 when Qantas began services between Melbourne and Albury, a route previously monopolised by Rex for more than 40 years. 

Following investigation, the ACCC found no evidence of Qantas’ business plans being anticompetitive, yet Rex maintains that they are the target of serious malice from the red kangaroo. 

The most recent episode, I mean development, in the story came yesterday when Rex announced a “massive expansion” of regional services to major regional centres along their network. The Company has increased services by up 67% to eleven cities across the country.

The announcement wasn’t all peachy though, with the airline removing yet another route from their list, again citing Qantas as the reason. 

“It pains us to have to abandon half a dozen marginal regional routes after decades of faithful service,” said Rex’s General Manager of Network Strategy, Warrick Lodge. “Today, we will need to add another one to the list of small regional cities suffering from the collateral damage of Qantas’ predatory actions. From June 27, Rex will be withdrawing from the Sydney to Cooma route which Qantas sees fit to want to enter even though this route had only 2,000 passengers in the last 12 months.”

Despite attributing the route cancellations to the fact that “Rex could no longer afford to subsidise these marginal routes during these challenging times,” this move raises a new question. If Rex can afford to ramp up services on existing routes, why couldn’t they maintain routes already being flown instead of conceding defeat the second that Qantas entered the game?

Is it a “classic Rex tantrum” (as labelled by Qantas), or a genuine cash saving strategy? Either way, I think Rex owes shareholders a financial breakdown of the running costs of each route they stopped servicing to help us understand why they see fit to pull out of some, yet increase services in others. 

Interestingly, one of the services Rex has vowed to increase by 50% is Sydney to Broken Hill. Qantas announced on the 7th of June that they were increasing their capacity on the same route, adding an extra weekly return service from 21 June. Is this Rex fighting back and having some staying power this time? Or will they let Qantas oust them simply by being present?

Stay tuned for next week’s ep…