Qantas (ASX:QAN) share price falls amid ACCC report into COVID-19 impacts

The Qantas Airways Limited (ASX: QAN) share price is in the red today despite no news being released by the airline.

Meanwhile, the Australian Competition and Consumer Commission (ACCC) has found current outbreaks of the COVID-19 Delta variant halted Australian airlines’ recoveries.

The watchdog found one-third of all domestic flights were cancelled in July. That’s the highest cancellation rate on record.

At the time of writing, the Qantas share price is $5.57, 2.96% lower than its previous close.

Qantas stock isn’t alone in its struggles today. The share prices of Flight Centre Travel Group Ltd (ASX: FLT), Webjet Limited (ASX: WEB), and Regional Express Holdings Ltd (ASX: REX) are down 1.77%, 2.02%, and 1.34%, respectively.

The broader market is also in the red. Right now, the S&P/ASX 200 Index (ASX: XJO) and All Ordinaries Index (ASX: XAO) are both down 1.1%.

Let’s take a closer look at the ACCC’s findings.

ACCC report into the airline industry

The Qantas share price is among the many ASX-listed travel companies struggling today.

At the same time, the ACCC has released its latest Airline Competition in Australia report.

The watchdog found Australian domestic capacity, which peaked at 68% of pre-pandemic levels in April, fell to just 23% of normal levels in July. The body expects that figure will have fallen even further over August and September.

The ACCC is also concerned airports might soon increase the fees charged to airlines to make up for some of their losses.

The body commented airports are “effectively unregulated regional monopolies with significant market power.”

ACCC chair Rod Sims commented on the watchdog’s worries:

We would be very concerned if the major Australian airports sought to use their monopoly position to charge airlines excessive prices in order to recover any lost profits from the pandemic. This could limit an already vulnerable sector’s ability to recover, and impact on both consumers and the economy.

But it’s not all bad for Qantas. The ACCC found Qantas used its COVID-induced downtime to expand its regional operations while Rex and Virgin reduced theirs. Though, as Sims said, “passengers on regional routes are less likely to experience the benefits of competition between multiple airlines.”

Finally, the ACCC found the price gap between Virgin and Qantas corporate airfares has doubled since the first half of 2019.

Virgin’s average corporate airfare has decreased to $193 while Qantas’ has increased to $323.    

The body warned the gap could see Qantas cornering more of the premium market. Additionally, that market may continue to see prices increase.

Qantas share price snapshot

While the ACCC has been worrying about how the last few months have affected competition in the airline sector, the Qantas share price has been soaring.

It has gained 21.5% since the start of July, bringing its year-to-date gains to 15.4%.

The post Qantas (ASX:QAN) share price falls amid ACCC report into COVID-19 impacts appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper 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 owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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