The national competition regulator will allow country air service specialist Regional Express to share services with rivals Virgin Australia and Qantas on 10 important regional routes during the coronavirus pandemic.
The Australian Competition and Consumer Commission's decision also lets Rex, QantasLink and Virgin temporarily share revenue from providing services on the routes.
The offer is conditional on airlines charging fares no higher than those which existed on February 1, 2020, which means they will not be able to collude to raise prices.
Routes approved for combined services include Sydney-Albury and Melbourne-Mildura, which are currently operated by all three airlines, and Cairns-Townsville and Adelaide-Port Lincoln, on which both Rex and QantasLink fly at present.
The ACCC's green light to flight services being co-ordinated by the three rivals may result in arrangements such as each carrier operating just one daily service on a regional route.
Other options could see revenue being shared between carriers, or an operator suspending its flights on a route to allow another airline to maintain a viable service.
This authorisation will help provide certainty for regional flight operators to support services on these routes for those who need to use themRod Sims, Australian Competion and Consumer Commission
The regional air service decision comes just days after the ACCC gave major supermarkets permission to work together with fresh food and other grocery suppliers so they could guarantee the continuity of supply for products in their retail stores, particularly in rural and remote locations.
Chairman Rod Sims said the ACCC had recognised the urgency of the request from the airlines to be allowed to share services they previously flew in competition with each other.
The competition watchdog has the power to grant an authorisation when it is satisfied the public benefit from the conduct outweighs any public detriment.
Normally such co-ordinated action between the three national airlines would set competition alarm bells ringing.
"This authorisation will help provide certainty for regional flight operators to support services on these routes for those who need to use them," Mr Sims said.
"We hope this temporary measure will also support airlines' ability to again compete with each other on these routes once the pandemic crisis has passed."
He said the ACCC was ready to urgently assist airlines with any co-ordination arrangements which were "necessary and appropriate during this crisis".
It would be able to review the interim authorisation at any time and would seek feedback from the public or others in the industry on Rex's application for authorisation.
The routes concerned are:
- Sydney - Wagga Wagga (Rex and QantasLink)
- Sydney - Dubbo (Rex and QantasLink)
- Sydney - Albury (Rex, QantasLink and Virgin Australia, noting Virgin Australia has announced it is suspending services on this route until 14 June 2020)
- Sydney - Armidale (Rex and QantasLink, noting Rex has announced it is suspending services from 6 April 2020)
- Melbourne - Mildura (Rex, QantasLink and Virgin Australia, noting Virgin Australia has announced it is suspending services on this route until 14 June 2020)
- Adelaide - Port Lincoln (Rex and QantasLink)
- Adelaide - Whyalla (Rex and QantasLink)
- Adelaide - Kangaroo Island (Rex and QantasLink, Rex has announced an exit in July 2020)
- Cairns -Townsville (Rex and QantasLink)
- Townsville - Mount Isa (Rex and QantasLink)