QANTAS has denied allegations of predatory pricing after independent regional carrier Rex announced it could no longer compete on the Mackay-Townsville route.
Rex announced on Christmas Eve it would cease its new service between Mackay and Townsville on New Year's Day, exactly three months after it was launched in competition with QantasLink.
On December 10, Rex lodged a formal complaint with the Australian Competition & Consumer Commission over QantasLink behaviour, and the case is now shaping up as a test of new provisions under the Trade Practices Act.
Rex alleges QantasLink slashed its best one-way fare from $130, compared with Rex's $129, to $99 and reduced services to Torres Strait and Weipa so as to be able to dump some 40,000 additional annual seats on the Mackay to Townsville route.
A spokesman for QantasLink, which launched an extra six return Mackay-Townsville services a week on October 19, taking their weekly number to 25, said yesterday decisions on services and fares were made "purely on a commercial basis".
"We are well aware of our legal requirements and reject the suggestion that QantasLink engaged in 'predatory' pricing," the spokesman said.
"QantasLink is committed to providing services that meet the needs of regional Australia. That includes offering competitive fares.
"Regional Express's decision to cease services on the route is their own business."
Rex's Warrick Lodge said the airline was extremely disappointed to abandon the route.
"With the fares and capacity now on the route it is simply not sustainable," he said.
"Rex has worked extremely hard to reach out to the local community for their support, however after almost three months of determined effort we have been forced to acknowledge that our competitor's predatory practices have been effective.
"Rex is nevertheless proud to have been the catalyst for more frequencies, capacity and lower fares and we advise the local community to be vigilant so that these benefits are not reversed the moment Rex leaves."
The Qantas spokesman said the company would co-ooperate fully with the ACCC investigation.
The last similar case in Australia was when Virgin Blue launched services between Brisbane and Mount Isa in 2000. Qantas had been gifted a monopoly on the route when Ansett disappeared. Qantas introduced extra services when Virgin Blue launched its daily flights but Virgin Blue withdrew rather than face years of litigation.
However, in 2007, the ACCC won new provisions of the Trade Practices Act, which made even more explicit the definition of predatory pricing, where an incumbent operator uses its market power to engage in prolonged sub-economic pricing to drive out a rival.
Rex customers with a reservation between Mackay and Townsville after January 1 are advised to contact the Rex Customer Contact Centre on 13 17 13.
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