REX Airlines and Qantas subsidiary QantasLink have entered a public spat over a new flight route between Sydney and Broken Hill.
But it seems the dispute hasn't dampened investor sentiment for the companies' shares. Both airlines are having a good week on the ASX so far.
The Regional Express Holdings Ltd (ASX: REX) share price has surged 23% in just the last 3 trading days. Meanwhile, the Qantas Airways Ltd (ASX: QAN) share price has gained more than 6%.
Let's take a look at what's behind the squabble.
Broken Hill competition
REX Airlines is not happy about Qantas operating in what it sees as its own regional market. QantasLink will be flying between Broken Hill and Sydney for the first time from 8 April.
The airline will schedule return flights between the two destinations in its 50-seat Q300 aircraft twice a week.
In comments on ABC radio, REX deputy chair John Sharp described Qantas's decision to fly into the regional town as "retaliation".
Qantas obviously isn't happy with Rex going into the domestic airline business, flying in competition with them in Sydney, Melbourne, Brisbane, and Adelaide.
So in retaliation they've been moving into our regional market, our traditional market.
However, QantasLink CEO John Gissing had his own words for REX, stating:
We hear a lot about that airline. Some people in aviation call them the cockatoo airline, lots of squawking. But sometimes you can't work out what they're actually on about.
Despite the public spat, both Qantas and the Regional Express share price are well in the green this week. The Qantas share price has been buoyed by news Australia's international borders will open. As Motley Fool Australia reported yesterday, Qantas is looking to restart flights to more overseas destinations on the back of the announcement.
Meanwhile, Regional Express has received $250 million from the NSW government to secure its base in Sydney.
In an announcement shared with the market on Monday, REX said the package would create 2,500 jobs in NSW. REX deputy chair Sharp commented:
Without the state's substantial assistance, Rex's expansion plans in the State would never have materialised under this climate of pandemic and many new jobs would not be created.
NSW premier Dominic Perrottet added:
By supporting Rex Airlines to expand its Sydney headquarters we are not only creating thousands of new jobs, but signalling to the world that NSW is open and ready to welcome travellers.
