The twice-daily service will start on June 10. On that day, the lowest direct-flight fares from other airlines were listed on cheap ticket websites as $174 from Virgin and $197 from Qantas.

Rex said it would offer in-flight food and free checked-in baggage.

The Canberra-to-Melbourne Greyhound bus costs $99.

Apart from the price war, Rex intensified its war of words, accusing Qantas of "perfecting the art of price gouging".

"What Qantas has been doing is ripping off the people of Canberra," Rex deputy chairman John Sharp said.

Rex has already taken aim at Qantas by selling Canberra to Sydney tickets for $99. It's also muscling into Qantas territory by offering Sydney to Melbourne at $49.

Regional Express is shaking up Australian aviation, attacking the dominance of not only Qantas but Virgin Australia.

In the industry, the "golden triangle" between Sydney, Melbourne and Brisbane is seen as one of the most profitable routes in aviation anywhere. It now has three airlines jostling for customers.

Mr Sharp said that people stuck with a particular airline like they stuck loyally with an Aussie rules football team.

"The prices are designed to break that habit," he said.

Sceptics wondered if Rex's bargain-basement prices would only apply to a handful of seats which would sell out quickly, but at the time of writing Rex remained the cheapest Canberra-Sydney ticket on low-fare websites for June 10, a date chosen at random.

On that date, Canberra to Sydney cost $109 on Rex compared with Qantas at $177 rising to $182 in the late afternoon and evening.

The Boeing 737 on the Canberra-Melbourne route has 170 seats. Eight would be business class at a higher price. All the other 162 seats, Rex said, would be at the $69 price apart from 12 extra leg-room seats which would be $15 more.

The airline accused Qantas of "fare gouging".

"Qantas has perfected the art of price gouging, ripping off passengers with sky-high fares on a route with only a weak competitor to keep it honest,"Mr Sharp said.

"This will now change with Rex's entry. We are sure that both Qantas and Virgin Australia will immediately match our fares as they have done every time. We estimate that Rex's entry will save Canberrans over $150 million a year in lower fares once travel returns to pre-COVID levels," he said.

He noted that the public service has an obligation to choose the cheapest fare. "Rex is going to be the best fare of the day so we expect to get a lot of government business."

Rex reckons that a million passengers would travel between Canberra and Melbourne before Covid.

Rex has been in secret talks with the ACT government.

"The ACT government warmly welcomes Rex Airlines investment in the Canberra-Melbourne route," the ACT Chief Minister Andrew Barr said.

"This is a major boost to competition on one of the city's busiest aviation routes. It will make it easier, and significantly cheaper, for people to visit Canberra.

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"It is a further vote of confidence in Canberra's tourism and hospitality industry."

When Rex announced the $99 Canberra-to-Sydney ticket it claimed that Qantas had been known to charge $1000, though it wasn't clear if this was one-way or return.

Either way, Qantas was irritated by the claim. It would be competitive with Rex, it said when Rex announced its Sydney service.

Rex is the latest smaller airline to expand to Canberra. Three others - Pelican, Alliance and Link - fly to Hobart, Cairns, Port Macquarie, the Sunshine and Gold coasts and Newcastle.

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