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UPDATE 1-Australia watchdog chief Sims says reviewing complaint about Qantas by carrier Rex

(Adds Qantas comment in paragraphs 5-6)

SYDNEY, Dec 21 (Reuters) - Australian Competition and Consumer Commission Chairman (ACCC) Rod Sims said the regulator is looking into a complaint from Rex Airlines that Qantas Airways Ltd is trying to stymie its attempts to become a third player on the country’s major inter-city routes.

Regional carrier Rex plans to begin flying on Melbourne-Sydney-Canberra routes from March, directly competing with Qantas, its low-cost arm Jetstar and rival Virgin Australia.

Rex last week lodged a complaint with the ACCC, alleging Qantas had started flying some regional routes, a strategy it said was aimed at flooding that market with excess capacity.

"We have to see if these are loss-making flights, or not, and of course at the moment ... loss-making is tricky. If they can cover their cash costs, it's pretty hard to say you can't fly there," Sims said in an interview on Monday for Reuters Next reutersevents.com/events/next.

The Chief Executive of Qantaslink, Qantas’ regional brand, said Rex did not have the right to “maintain a monopoly indefinitely” on regional routes.

“We’re focused on adding new routes to regions that we think have genuine growth potential,” said CEO John Gissing in a statement. “We expect these additional flights to stimulate demand to these towns. This is vital at a time when regional tourism needs a boost.”

In the interview, the ACCC’s Sims said he was more focused on ensuring Rex continues to have access to landing slots on the major inter-city routes, a development that has been enabled by reduced flights during the coronavirus pandemic.

“We’ve got to make sure those slots are available in the longer term, because having three players would provide more competition,” Sims said.

Qantas carried 75% of all domestic passengers in September, compared with 60% a year ago, according to a recent ACCC report, albeit with reduced overall numbers because of the pandemic.

Sims noted the recent COVID-19 outbreak in Sydney has delivered a blow to the domestic aviation industry, with several states closing borders at what is usually peak travel time for Christmas and New Year.

“It reminds us how complicated it is to get rid of this virus, and how quickly it can grow,” Sims said, adding he believed there would be no return to usual international travel to and from Australia throughout 2021.

(The full interview with ACCC Chairman Rod Sims will be broadcast during the Reuters Next event in January: reutersevents.com/events/next/)

Reporting by Jane Wardell; Editing by Kenneth Maxwell

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