Qantas share price takes off despite ACCC warning

The Qantas Airways Limited (ASX: QAN) share price is in the green this afternoon amid the competition watchdog’s warning to Aussie airlines.

On announcing that the price of discounted economy airfares hit a 15-year high in September, the Australian Competition & Consumer Commission (ACCC) warned airlines it will be watching to ensure they don’t withhold capacity in a bid to keep revenues high.

The news might have turned the market’s attention to the Qantas share price today. Right now, the airline’s stock is swapping hands for $6.21, 0.32% higher than its previous close.

For comparison, the S&P/ASX 200 Index (ASX: XJO) is down 0.15% at the time of writing.

Let’s take a closer look at the news that might have put the national airline in the spotlight on Tuesday.

ACCC vows to keep an eye on Aussie airlines

The Qantas share price is lifting off amid news demand for air travel soared last quarter.

The latest ACCC Airline Competition in Australia report found domestic airfares surged beyond pre-pandemic levels in that period. The average revenue per passenger came in 27% higher in October 2022 than in October 2019.

Airfares were buoyed by strong demand amid constrained supply brought about by high jet fuel costs and operational challenges, ACCC commissioner Anna Brakey said.

The segment impacted the greatest was discounted economy fares. The watchdog noted that strong demand meant airlines didn’t need to offer discounts to fill planes.

Indeed, an index of discounted economy fares across Australia’s top 70 domestic routes in November 2022 came in at more than double April’s 11-year low. The same index hit a 15-year high in September.

The findings lead Brakey to warn airlines that the watchdog will be keeping an eye on them:

Historic lows and highs for discount airfares in the same year illustrate how changeable this market has been as the industry recovers from the pandemic.

We accept that the airlines are still experiencing some pandemic-related resource challenges, but the ACCC will be monitoring them closely to ensure they return capacity to the market in a timely manner to start easing pressure on airfares.

We would be concerned if airlines withheld capacity to keep airfares high.

Qantas tied with Regional Express Holdings Ltd (ASX: REX) in cancelling the fewest flights in October, just 2.2%. The flying kangaroo also boasted the best on-time performance, with 25.8% of its flights landing late – compared to the industry total of 30.7%.

Its budget leg, Jetstar, however, posted the worst performance in both measures. It cancelled 8.8% of flights while 35.6% arrived late.

Qantas share price snapshot

Recent news Qantas expects to post an underlying pre-tax profit of $1.35 billion to $1.45 billion for the current half bolstered its share price late last month.

The stock is now trading for 20% more than it was at the start of 2022. It has also gained 24% since this time last year.

Comparatively, the ASX 200 is down 4% year to date but up 1% over the last 12 months.

The post Qantas share price takes off despite ACCC warning 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 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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