Regional airline Regional Express
(ASX:REX) has announced that it will exit the Mackay to Townsville route from January 1, 2010.
The company launched the service between Mackay and Townsville on October 1, 2009 in competition with QantasLink.
However Rex made a formal complaint to the Australian Competition and Consumer Commission about QantasLink’s practices on the route after QantasLink slashed their entry level fare by around 35% and reduced their services to Torres Strait and Weipa so as to be able to add around 40,000 additional seats on the Mackay to Townsville route after Rex entered the North Queensland market.
General Manager of Network Strategy and Sales Warrick Lodge says the company is extremely disappointed that it has had to take this action, however with the fares and capacity now on the route it is simply not sustainable.
Mr Lodge says Rex worked extremely hard to reach out to the local community for their support, however says that after almost three months of determined effort the airline has been forced to acknowledge that its competitors predatory practices have been effective.
Rex however says this does not represent a disengagement from Northern Queensland and says it recently commenced a non-stop express service between Townsville and Mount Isa.
Regional Express reported net profit after tax of $22.98 million.
