ACCC To Monitor Qantas, Virgin As Bonza And Rex's Exit Sparks Fears Of Higher Airfares

Bonza and Rex's withdrawal from key city routes has sparked concerns that Australia's aviation market may face a slump in competition, potentially driving airfares higher.

The Australian Competition and Consumer Commission (ACCC) has vowed to keep a vigilant eye on the country's two dominant airlines, Qantas and Virgin, to prevent them from taking advantage of the reduced competition due to Bonza and Rex's withdrawal, The Guardian reported.

The ACCC is concerned that Qantas and Virgin are capitalizing on the decreased competition and raising ticket prices on popular routes.

"The ACCC cautions that consumers may miss out on the benefits of a more competitive domestic airline market if Rex is unable to re-commence its services between metropolitan cities," the agency said.

"While Bonza and Rex provided relatively limited jet capacity on these metropolitan competing routes, the exit of both airlines on these routes may mean that consumers face higher air fares and reduced choice for domestic travel," the watchdog added.

Anna Brakey, ACCC commissioner, said, "With the suspension of Rex's services between metropolitan cities, we are closely monitoring air fares and remain vigilant to any increases in prices on routes that Rex is no longer flying on."

Rex Airlines will withhold its Boeing 737 operations in major cities like Sydney, Melbourne, and Brisbane, but will continue to travel to smaller regional areas.

The airline's problems, nonetheless, extend beyond its route system, as it is grappling with a AU$500 million debt crisis with 4,800 creditors, including 667 former employees who are still awaiting their entitlements. Rex entered voluntary administration on July 30.

Rex's administrators have requested to postpone the meeting date to Nov. 25, aiming to finalize the sale of the debt-laden airline, ABC reported. The administrators say more time is needed to find a suitable buyer, making the extension necessary.

Only two airlines were operating on any domestic route by July due to a decline in the number of competing airlines. The ACCC found that in 2019 airline revenue per passenger on certain contested routes was lower than pre-pandemic levels.

The ACCC said Rex's entry into major city routes in 2021 sparked competition, leading to lower airfares.