Rex has announced a major revamp of its regional route network in response to what it calls "aggressive predatory moves" by rival airline Qantas.
In a notice to shareholders this morning, Rex's Deputy Chairman John Sharp heavily criticised Qantas, accusing the business of attempting to intimidate smaller players.
"Qantas has clearly embarked on a deliberate strategy of moving into Rex's routes that can only support one regional carrier in an attempt to intimidate and damage Rex in its traditional regional market, hoping that Rex would be a less formidable competitor in the domestic market," Mr Sharp said.
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"Qantas is making record losses during COVID and had received an estimated $1.2 billion in Commonwealth assistance to stay solvent but, despite this, feels it is appropriate to use taxpayer's funds to finance the losses on new services whose sole objective is to weaken the competitor."
Rex argued that Qantas' entry into routes such as Sydney to Orange and Sydney to Merimbula would force it out as the low-passenger routes would be unable to support two airlines.
The airline said once government support through the RANS program (Regional Airline Network Support) ends in March, it will be forced to cancel five routes including: Sydney to Bathurst, Sydney to Cooma, Sydney to Lismore, Sydney to Grafton and Adelaide to Kangaroo Island.
In order to "recover from the losses", Rex will start new services in April including Sydney to Coffs Harbour and Sydney to Port Macquarie.
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Rex also called on Australia's competition watchdog to intervene in what it believes is Qantas attempting to squeeze out smaller players.
"Rex also calls on the ACCC to take enforcement actions against Qantas for its predatory behaviour," the statement to shareholders reads.
"All carriers are facing existential challenges and the ACCC must do its part to ensure that the dominant carrier does not take advantage of the current situation to deliver pre-emptive strikes against its much smaller competitors, especially at a time when it is receiving massive handouts to stay solvent."
In a response, QantasLink CEO John Gissing said Qantas only starts new routes if they will be commercially viable for the airline.
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"This is a classic Rex tantrum," Mr Gissing said in a statement.
"Rex's idea of competition is that it's something that happens to other people, because they believe they have an enshrined right to be the only carrier on some regional routes.
"The fact is Rex is receiving millions of dollars in bespoke government assistance for its regional operations at the same time as it's acquiring new aircraft to fly between capital cities."
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Mr Gissing said Qantas will look at the routes Rex is pulling out of for opportunities.
"It feels like Rex is trying to blame Qantas for other challenges they may be having. We don't start routes if we don't think they will be commercially viable for us," Mr Gissing said.
"We know that extra capacity and lower fares increases overall travel demand, which is good news for the regional communities we will be operating to.
"We'll be reviewing our network and consider whether we can offer services on any of the routes that Rex is threatening to pull out of."
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