Regional Express Holdings Ltd (REX) (ASX: REX) announced on Thursday that it is set to reduce its seat capacity by 18 percent for the Port Lincoln-Adelaide service route in South Australia, blaming stiffer competition from QantasLink which earlier resumed its flight services on the region.

REX company representative Warwick Lodge said that the airline is now forced to offer 38,000 less seats and the reduced flight capacity will take effect starting on August 23 as he admitted that the latest developments were "quite a disappointing turn of events."

Mr Lodge said that the company had worked "extremely hard over the last seven years to gradually build up the air service that we provide between Port Lincoln and Adelaide," adding that it was disheartening for him to see that the situation is reverting back to less choice.

He said that competition is generally healthy for any business but in REX's case, it had a head-on collision with the disadvantageous part of the business competition though on QantasLink's part, the company said that it was quite satisfied with the current demand and has no reason to make changes on its present schedule.