Australia's competition watchdog has warned capital city airfares could take off after the departure of broke challenger Rex. The regional carrier's entry into the major-cities market in 2021 knocked a quarter off the average price, the Australian Competition and Consumer Commission said on Thursday. But its absence and the earlier demise of budget carrier Bonza would mean no route would have more than two competing airlines.
The regional airline appointed administrators on July 30 and grounded its Boeing 737 fleet flying between major metropolitan centres as it buckled under $500 million in debt. Rex's interim overseers from EY Australia have been looking for a buyer and on Friday it will go to court in an attempt to get more time to secure the airline's future. The federal government has guaranteed all regional flight bookings with Rex and a further bailout has been flagged as long as the carrier prioritises servicing areas outside capital cities.
The ACCC warned the "concentrated" sector was lacking competition with Bonza's collapse and Rex teetering on the brink. "Airfares are generally lower where there is more competition on a route ..
. when Rex entered several intercity routes in 2021, the average airfare paid per passenger across those routes fell by around 25 per cent," the watchdog said in its latest airline competition report. "Should Rex's intercity services not re-commence, consumers would miss out on the competition that Rex provided with Qantas, (subsidiary) Je.