Why this smaller ASX travel share is locking horns with Qantas over regulation

Here’s the latest on Regional Express’ battle with Qantas over regional flight routes.

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Key points

  • Qantas shares are in the red on Tuesday, while Regional Express shares are in the green
  • Regional Express and Qantas have recently exchanged words regarding regional flight routes 
  • News has emerged Regional Express sought to regulate NSW flight paths to require a tender process 

News has emerged ASX travel share Regional Express Holdings Ltd (ASX: REX) sought government support to regulate regional routes.

Regional Express shares are currently trading at $1.07, a 2.88% gain. Meanwhile, the company’s larger rival Qantas Airways Limited (ASX: QAN) has seen a 1.4% drop in its share price so far today.

Let’s take a look at what is going on in the travel world.

Regulation battle

Regional Express requested help from the New South Wales Government to regulate regional flight routes but was reportedly knocked back, The Australian reported.

Had Regional Express been successful, airlines, including Qantas, would have had to bid via a tender process for these country flight routes.

Commenting on the news, a spokesperson for Regional Express told the publication:

The only airline that enjoys the benefit of regulated routes in NSW is Qantas.

In late May, Regional Express withdrew regional flights routes to Bathurst, Grafton, Lismore, Kangaroo Island, and Ballina.

At the time, Regional Express chair John Sharp blamed the decision on Qantas’ “predatory actions“. However, Qantas hit back, claiming:

This is just the latest example of Rex blaming Qantas and others for decisions that by its own admission it has made “to look after itself”.

In mid-June, Regional Express announced it would increase weekday services to major regional centres including Albury, Broken Hill, Coffs Harbour, Dubbo, Orange, and Port Macquarie, among others.

Qantas has launched more than 40 new regional flight routes since April 2020. Meanwhile, Regional Express has commenced multiple new interstate flights.

ASX travel share price recap

The Qantas share price has gained nearly 1% in the past year, while the Regional Express share price has lost around 11%.

In comparison, the S&P/ASX 200 Index (ASX: XJO) has shed around 8% in the past year.

Qantas has a market capitalisation of $8.6 billion while Regional Express has a market cap of around $116 million.

Motley Fool contributor Monica O'Shea has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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