Rex Airlines has sparked a price war with Qantas after moving in on the Canberra-Sydney route on which the national carrier currently has a monopoly.
The newcomer to the route is to offer one-way tickets at $99 and accused Qantas of "fare gouging". Without giving details, Rex indicated that this would be a consistent fare and not just a very limited offer of low price seats as a sales promotion.
"Qantas has been gouging the market here in Canberra. It's been making monopoly rents," Rex's deputy chairman John Sharp said.
He said Qantas had charged $1000 for a one-way ticket between Canberra and Sydney. "At a time when many small businesses and households are still struggling to make ends meet, our fares will make a world of difference to the community that routinely sees one-way fares close to $1,000 for this short sector," Mr Sharp said.
Adding fuel to a war of words, he said he and his colleagues had driven to Canberra to announce the new service because they couldn't afford the Qantas fare.
Qantas disputed the thousand dollar ticket allegation. "Rex's claims that Qantas' routinely has $1,000 one-way fares' is wrong. Qantas does not have any Economy fares for $1000 one-way on Sydney-Canberra, the highest economy fare is $600 which is fully flexible," a spokesman said.
Until the epidemic, Virgin competed with Qantas on the route but it hasn't returned. Its fleet of jets were uneconomical on the short Sydney to Canberra run. Those economics have not changed.
Rex said it would run seven flights a day between Canberra and Sydney from April 19. Depending on demand, the seven daily flights could expand to 10.
"We believe that on the Sydney-Canberra route alone Rex will be bringing annual savings of between $60 and $100 million to commuters when numbers return to pre-COVID levels," the Rex executive said.
He thinks Rex is nimble and efficient enough to give Qantas a run for its money. The company's business model relies on running frequent services cheaply so business people could get to and from Sydney easily and cheaply within the day.
Rex uses propeller planes with smaller seating capacity (as does Qantas though not Virgin).
He noted that the public service has an obligation to choose the cheapest fare. "Rex is going to be the best fare of the day so we expect to get a lot of government business."
Qantas said it had been and would be competitive. "We've recently had sale fares for as low as $109," the spokesman said. It was selling tickets at $193 on April 19 when Rex starts its flights.
ACT Chief Minister Andrew Barr said: "The investment Rex is making is a vote of confidence in this city."
Rex is the latest smaller airline to expand to Canberra. Three others - Pelican, Alliance and Link - fly to Hobart, Cairns, Port Macquarie, the Sunshine and Gold Coasts and Newcastle.
Canberra Airport's chief executive Stephen Byron, said the airport was now operating at just under half its capacity compared with some days in the depths of the epidemic when there were no passengers.