Rex Airlines has closed down a bunch of its services. Or "entered voluntary administration", but I don't proper know what that is, because I don't work in business. To tell the truth, I've never worked with planes, on planes, near planes, or in any relation to planes. In fact, I've never been on a plane. Never even seen one. Couldn't pick one out of a line-up.
As of today, I'm reliably informed that planes "fly", which leads me to assume they're some kind of winged insect. The name "Rex Airlines" indicates that these insects are, roughly, from the Jurassic era, which is quite cool. Unfortunately, as mentioned, they're closing down because they can't pay their debts, which is less cool.
As I have never interacted with a plane in my life, I'm very well placed to offer serious and substantive analysis of this unfortunate situation (mostly by looking to see what the relevant industry-governing body was saying this time last year, which is what I usually do in these situations).
Here's the situation:
Rex is a relatively young and small Australian domestic airline, and one that has semi-regularly, apparently, been considered the "most reliable" airline in the country, going by pure statistics.
Its platoon of odd, winged, passenger-carrying insects are the only ones that service a large number of regional (non-urban) airports, particularly in Queensland, where the state government actively subsidies some of its routes. These regional flight routes are pretty secure: it has no competition on most of them. This all appears to be good news for their viability!
However, this lack of competition is not surprising, overall, because the country's big two airlines (Qantas and Virgin, and the other brand names they directly and wholly own) don't actually care about these small regional routes.
They run the big routes, and have as a result, for the last two decades, flown 90% of all domestic air travel. In some months of recent years, this combined share has almost reached 95%.
Now, I may not know anything about planes (I do not) or air travel (I do not), but I know a thing or two about duopolies, an-
Oh, yes, thank you, Ms Cass-Gottlieb, that's basically what I was about to say, but said way better.
Many people who have gotten on planes (which seems like a bad idea, I wouldn't trust a big insect like that) have told me three things suck about flying: the prices seem unfair and arbitrary, the customer service is bad, and if the airline makes a mistake there's basically no way to make them fix it or compensate you for it. There are rules about these things, though, which is good.
Oh, hey, that's weird. Someone left all these "airline consumer guidelines" scattered around, but there's a bunch of sticky notes on them... and they all just say "lmao these are unenforced, get wrecked consumers". That's weird.
Oh, those sticky notes aren't weird at all. Totally understandable, in fact, because these guidelines are not functionally enforcable, so the airlines can do whatever they want and we do not, in actuality, have a reliable mechanism for making them comply with Australian Consumer Law. Therefore, they regularly and wantonly fail to meet consumer guarantees, and then fail to remedy those failures. Neat!
Wait, no, not neat. The other thing. Bad. That's bad.
But hey, the existence of Rex Airlines and its little fleet of insects is good news, because it's competition! The Australian domestic aviation situation is... a bit fucked. In the face of this, Rex has made moves into the big routes, so- Hmm. Hang on. The established two airlines have literally no incentive to let Rex or any other airline participate in the domestic market, of which they control 90+%. I feel like that could be a problem. Rex is actually in financial distress now, isn't it? I wonder how that happened?
Well, if I were a big airline (bearing in mind that I am not an airline, I don't know what planes are, I am just speculating), I'd probably lower my prices in order to cut any new competitors on popular routes totally out of the market. It'd be easy enough, because I'd be able to take losses that they couldn't.
Then, once they dropped out of a route, I'd just raise my prices again and recoup the losses I voluntarily ate in order to crush them. I'd probably also pull shenanigans to make it really hard for them to even get space at big airports. It's probably a fiddly process, parking big weird flying bugs.
Oh, that's exactly what Qantas been doing?
Weird.
I don't know what a "demand management scheme" is, but that sounds like it has something to do with, like, airlines getting slots at airports so they can pick up passengers. Which seems important for the "flying insect-based passenger business", or whatever it is that airlines do.
Huh. Have any of those been implemented?
Rex Airlines has also alleged that Qantas has been poaching its pilots, which is apparently a significant contributor to why they have had to close several of their regional routes over the past two years. I'd imagine that the large international airline could probably afford to offer Rex pilots more money than they were getting. Hell, maybe they'd even offer more money than a non-Rex pilot joining Qantas would get offered.
It's what I would do, if I were a Decision Maker at Qantas (which I am not, because I am not ruthless or ambitious or a bastard, or particularly suited to Making Clever Decisions). Obviously, nothing has been proven regarding this alleged poaching, and I'm not even sure it'd be illegal anyway. If it was, I'm sure exceptions would be made. Airlines are important, after all.
Anyhow, it goes further. Ever since Qantas noticed Rex had ambitions on the major air travel routes, they've apparently been a bit vindictive. In one notable case, when Rex had to pull its Adelaide-to-Whyalla services (in South Australia), Qantas immediately, seemingly out of pure, gleeful spite, added four of its own services to and from the city, expanding from six to ten weekly services total, a move which it had not previously displayed much interest in doing (in fact, Alan Joyce, when he was Qantas' chief executive, repeatedly mocked Rex for having 'empty seats' on many of their routes).
Why did Rex pull these flights? Well, there's this problem with security screening: in addition to being a bit of a silly fuckaround, it's also expensive. The Federal government used to fund it. They stopped doing that, and the Whyalla Council decided to offload the cost onto the airlines instead of handling it themselves.
This put Rex on the hook for security screenings at that airport, meaning its flights would have jumped up in cost by at least $40. When tickets can be as low as $80, that's a pretty serious bump. Qantas could afford to eat some (or all) of that cost increase for their regional flights without raising prices, at least temporarily, but Rex could not. So, Rex pulled out, alleging "underhanded" means were taken to deliberately arrange this situation, at the local level, to push them out.
It is noted that if costs were standardized and spread across the industry evenly, costs per ticket could rise by as little as $7, not $40, so not only is the government shrugging and saying "not paying for that no more, folks", it's *also* refusing to do anything in the way of reasonably mitigating the impact. I think we should just let the bugs eat anyone who acts up, but apparently this is "not a valid security policy" and I'm "not allowed to be in aviation policy meetings of any kind", so, you know, whatever.
As such, though, rather than fixing airline regulations or moving towards the government control and nationalisation of a key consumer service currently controlled by a small number of predatory corporations who have repeatedly flouted not just consumer law but regular corporate law... federal and local governments have instead decided to make it more onerous for new airlines to move in on established duopoly turf.
I may not know why people are so keen on big flying passenger bugs or why they're important, but government facilitation of an under-regulated duopoly in a key industry is a classic Australian story, and I know it well.
Added to all of this, the risks of trying to muscle in on the big inter-city lanes are apparently quite high, because the prices for leasing the large, high-volume planes needed for those routes are... also high.
Lots of other airlines have tried to be the metaphorical Aldi and squeeze into the gaps in the airline duopoly, but Qantas and Virgin have a stranglehold on the market that likely makes Woolworths and Coles weep with envy.
Air Australia, Ansett, Bonza, Compass, OzJet, and Tigerair have all tried to slide in, and all been folded into so much scrap, like the world's most wasteful (and metallic) origami projects. Rex's crash was so predictable, people were warning about it a year out, even as the small airline pushed out aggressively, leasing 737s and adding major routes to their repertoire.
In fact, Alan Jones, the aforementioned ex-Qantas chief executive (and noted parasite) has said outright that “this market has never sustained three airline groups and it probably won’t into the future”, cheerfully omitting that this has, historically, been because the previously-nationalised body that makes up Qantas has never been squeamish about splattering competition with its outsize market power. Which the various governments of recent history have seemed content to just sort of... watch happen, again and again, despite it costing them no small amount of money to intervene in regional areas to prop essential flight services up (which Qantas and Virgin have no interest in providing) when this happens.
I don't know anything about planes. But I know that we have a government, which is (I think we can all agree) a government. This means that, nominally, the government (which is a government) has the ability to make rules that airlines have to follow, because it is a government and airlines are just companies. I'm not sure why the government doesn't want to do that.
It's been well over a year since the ACCC handed down their findings about "airlines are fucked, hey, here's how to fix it". People would like it a lot if any of those fixes happened, and it would probably be very good for the economy. I think. Not really sure how those work, to be honest.
It is interesting, though, that 92% of Australian federal politicians are members of Qantas' "Chairman's Lounge" (their most exclusive membership tier, only available via personal invite), at least five hold shares in Qantas, and in total "Only 21 federal politicians out of 277 have not declared any gifts from Qantas". That's probably normal, right? It's fine.
I'm not alleging anything. I don't even understand why people insist on using big weird Jurassic-era bugs for personal transportation. Maybe flying by big bug is less likely to get you eaten than using interstate train services? Or maybe you're more likely to get bug-eaten, but it's cheaper? IDK.
Anyway, me pointing at things and saying "fucked up or what?" isn't the point, or even particularly good analysis. The point is, you gotta send calls and letters to your local representatives: tell them you want to see Qantas kicked in the metaphorical dick (or, rather, that you want the ACCC's recommended measures on airline regulation implemented to help break up the decades-old duopoly that's exacerbating the cost of living crisis and keeps, with gusto, breaking the fucking law - like it did during the Covid lockdowns).
Stay mad, pet some bugs, harass your representatives.
As of today, I'm reliably informed that planes "fly", which leads me to assume they're some kind of winged insect. The name "Rex Airlines" indicates that these insects are, roughly, from the Jurassic era, which is quite cool. Unfortunately, as mentioned, they're closing down because they can't pay their debts, which is less cool.
As I have never interacted with a plane in my life, I'm very well placed to offer serious and substantive analysis of this unfortunate situation (mostly by looking to see what the relevant industry-governing body was saying this time last year, which is what I usually do in these situations).
“Domestic aviation is one of the most concentrated industries in Australia, barring only natural monopolies such as electricity grids and rail networks."
—Gina Cass-Gottlieb, Chair of the Australian Consumer & Competition Commission, in the ACCC's June 2023 Report.
Here's the situation:
Rex is a relatively young and small Australian domestic airline, and one that has semi-regularly, apparently, been considered the "most reliable" airline in the country, going by pure statistics.
Its platoon of odd, winged, passenger-carrying insects are the only ones that service a large number of regional (non-urban) airports, particularly in Queensland, where the state government actively subsidies some of its routes. These regional flight routes are pretty secure: it has no competition on most of them. This all appears to be good news for their viability!
However, this lack of competition is not surprising, overall, because the country's big two airlines (Qantas and Virgin, and the other brand names they directly and wholly own) don't actually care about these small regional routes.
They run the big routes, and have as a result, for the last two decades, flown 90% of all domestic air travel. In some months of recent years, this combined share has almost reached 95%.
Now, I may not know anything about planes (I do not) or air travel (I do not), but I know a thing or two about duopolies, an-
“Without a real threat of losing passengers to other airlines, the Qantas and Virgin Australia airline groups have had less incentive to offer attractive airfares, develop more direct routes, operate more reliable services, and invest in systems to provide high levels of customer service.”
—Gina Cass-Gottlieb, Chair of the ACCC, in their June 2023 Report.
Oh, yes, thank you, Ms Cass-Gottlieb, that's basically what I was about to say, but said way better.
Many people who have gotten on planes (which seems like a bad idea, I wouldn't trust a big insect like that) have told me three things suck about flying: the prices seem unfair and arbitrary, the customer service is bad, and if the airline makes a mistake there's basically no way to make them fix it or compensate you for it. There are rules about these things, though, which is good.
Oh, hey, that's weird. Someone left all these "airline consumer guidelines" scattered around, but there's a bunch of sticky notes on them... and they all just say "lmao these are unenforced, get wrecked consumers". That's weird.
“Reform to the consumer guarantees to make them enforceable would dramatically improve incentives for all businesses, including airlines, to comply with their obligations and more effectively protect consumer rights.”
—Gina Cass-Gottlieb, Chair of the ACCC, again, in their June 2023 Report.
Oh, those sticky notes aren't weird at all. Totally understandable, in fact, because these guidelines are not functionally enforcable, so the airlines can do whatever they want and we do not, in actuality, have a reliable mechanism for making them comply with Australian Consumer Law. Therefore, they regularly and wantonly fail to meet consumer guarantees, and then fail to remedy those failures. Neat!
Wait, no, not neat. The other thing. Bad. That's bad.
But hey, the existence of Rex Airlines and its little fleet of insects is good news, because it's competition! The Australian domestic aviation situation is... a bit fucked. In the face of this, Rex has made moves into the big routes, so- Hmm. Hang on. The established two airlines have literally no incentive to let Rex or any other airline participate in the domestic market, of which they control 90+%. I feel like that could be a problem. Rex is actually in financial distress now, isn't it? I wonder how that happened?
Well, if I were a big airline (bearing in mind that I am not an airline, I don't know what planes are, I am just speculating), I'd probably lower my prices in order to cut any new competitors on popular routes totally out of the market. It'd be easy enough, because I'd be able to take losses that they couldn't.
Then, once they dropped out of a route, I'd just raise my prices again and recoup the losses I voluntarily ate in order to crush them. I'd probably also pull shenanigans to make it really hard for them to even get space at big airports. It's probably a fiddly process, parking big weird flying bugs.
Oh, that's exactly what Qantas been doing?
Weird.
“Access to peak time slots at Sydney Airport is critical for new and expanding airlines seeking to build an intercity network. Without legislative reform to the airport’s demand management scheme there will not be any material improvement in domestic airline competition in Australia in the foreseeable future.”
—Gina Cass-Gottlieb, Chair of the ACCC, once again, in their June 2023 Report.
I don't know what a "demand management scheme" is, but that sounds like it has something to do with, like, airlines getting slots at airports so they can pick up passengers. Which seems important for the "flying insect-based passenger business", or whatever it is that airlines do.
"Several possible reforms to better manage demand at Sydney Airport, which is Australia’s busiest, have already been identified through a Government-led review and stakeholder working groups."
—The ACCC in their June 2023 Report.
Huh. Have any of those been implemented?
"lmao no, ofc not"
—The ACCC, probably, being quite used to being ignored.
Rex Airlines has also alleged that Qantas has been poaching its pilots, which is apparently a significant contributor to why they have had to close several of their regional routes over the past two years. I'd imagine that the large international airline could probably afford to offer Rex pilots more money than they were getting. Hell, maybe they'd even offer more money than a non-Rex pilot joining Qantas would get offered.
It's what I would do, if I were a Decision Maker at Qantas (which I am not, because I am not ruthless or ambitious or a bastard, or particularly suited to Making Clever Decisions). Obviously, nothing has been proven regarding this alleged poaching, and I'm not even sure it'd be illegal anyway. If it was, I'm sure exceptions would be made. Airlines are important, after all.
Anyhow, it goes further. Ever since Qantas noticed Rex had ambitions on the major air travel routes, they've apparently been a bit vindictive. In one notable case, when Rex had to pull its Adelaide-to-Whyalla services (in South Australia), Qantas immediately, seemingly out of pure, gleeful spite, added four of its own services to and from the city, expanding from six to ten weekly services total, a move which it had not previously displayed much interest in doing (in fact, Alan Joyce, when he was Qantas' chief executive, repeatedly mocked Rex for having 'empty seats' on many of their routes).
Why did Rex pull these flights? Well, there's this problem with security screening: in addition to being a bit of a silly fuckaround, it's also expensive. The Federal government used to fund it. They stopped doing that, and the Whyalla Council decided to offload the cost onto the airlines instead of handling it themselves.
This put Rex on the hook for security screenings at that airport, meaning its flights would have jumped up in cost by at least $40. When tickets can be as low as $80, that's a pretty serious bump. Qantas could afford to eat some (or all) of that cost increase for their regional flights without raising prices, at least temporarily, but Rex could not. So, Rex pulled out, alleging "underhanded" means were taken to deliberately arrange this situation, at the local level, to push them out.
It is noted that if costs were standardized and spread across the industry evenly, costs per ticket could rise by as little as $7, not $40, so not only is the government shrugging and saying "not paying for that no more, folks", it's *also* refusing to do anything in the way of reasonably mitigating the impact. I think we should just let the bugs eat anyone who acts up, but apparently this is "not a valid security policy" and I'm "not allowed to be in aviation policy meetings of any kind", so, you know, whatever.
As such, though, rather than fixing airline regulations or moving towards the government control and nationalisation of a key consumer service currently controlled by a small number of predatory corporations who have repeatedly flouted not just consumer law but regular corporate law... federal and local governments have instead decided to make it more onerous for new airlines to move in on established duopoly turf.
I may not know why people are so keen on big flying passenger bugs or why they're important, but government facilitation of an under-regulated duopoly in a key industry is a classic Australian story, and I know it well.
Added to all of this, the risks of trying to muscle in on the big inter-city lanes are apparently quite high, because the prices for leasing the large, high-volume planes needed for those routes are... also high.
Lots of other airlines have tried to be the metaphorical Aldi and squeeze into the gaps in the airline duopoly, but Qantas and Virgin have a stranglehold on the market that likely makes Woolworths and Coles weep with envy.
Air Australia, Ansett, Bonza, Compass, OzJet, and Tigerair have all tried to slide in, and all been folded into so much scrap, like the world's most wasteful (and metallic) origami projects. Rex's crash was so predictable, people were warning about it a year out, even as the small airline pushed out aggressively, leasing 737s and adding major routes to their repertoire.
In fact, Alan Jones, the aforementioned ex-Qantas chief executive (and noted parasite) has said outright that “this market has never sustained three airline groups and it probably won’t into the future”, cheerfully omitting that this has, historically, been because the previously-nationalised body that makes up Qantas has never been squeamish about splattering competition with its outsize market power. Which the various governments of recent history have seemed content to just sort of... watch happen, again and again, despite it costing them no small amount of money to intervene in regional areas to prop essential flight services up (which Qantas and Virgin have no interest in providing) when this happens.
I don't know anything about planes. But I know that we have a government, which is (I think we can all agree) a government. This means that, nominally, the government (which is a government) has the ability to make rules that airlines have to follow, because it is a government and airlines are just companies. I'm not sure why the government doesn't want to do that.
It's been well over a year since the ACCC handed down their findings about "airlines are fucked, hey, here's how to fix it". People would like it a lot if any of those fixes happened, and it would probably be very good for the economy. I think. Not really sure how those work, to be honest.
It is interesting, though, that 92% of Australian federal politicians are members of Qantas' "Chairman's Lounge" (their most exclusive membership tier, only available via personal invite), at least five hold shares in Qantas, and in total "Only 21 federal politicians out of 277 have not declared any gifts from Qantas". That's probably normal, right? It's fine.
I'm not alleging anything. I don't even understand why people insist on using big weird Jurassic-era bugs for personal transportation. Maybe flying by big bug is less likely to get you eaten than using interstate train services? Or maybe you're more likely to get bug-eaten, but it's cheaper? IDK.
Anyway, me pointing at things and saying "fucked up or what?" isn't the point, or even particularly good analysis. The point is, you gotta send calls and letters to your local representatives: tell them you want to see Qantas kicked in the metaphorical dick (or, rather, that you want the ACCC's recommended measures on airline regulation implemented to help break up the decades-old duopoly that's exacerbating the cost of living crisis and keeps, with gusto, breaking the fucking law - like it did during the Covid lockdowns).
Stay mad, pet some bugs, harass your representatives.