ACCC: Demand, fares and capacity adjustments drive Qantas and Virgin performance in FY2026

Australian Competition and Consumer Commission (ACCC) reported (15-Sep-2026) the following highlights from its latest Domestic Airline Competition report:

• Qantas Group and Virgin Australia recorded "substantial earnings" in FY2026 despite increased fuel costs, with Qantas' underlying earnings before interest and tax declining 11% year-on-year to AUD2.4 billion (USD1.7 billion) and Virgin's underlying earnings increasing 13.4% to AUD753 million (USD536.7 million). Jet fuel prices were nearly 50% higher in late Aug-2026 than in Feb-2026;
• Both airline groups' strong financial performance was supported by resilient passenger demand, higher fares, capacity adjustments and arrangements which locked in some fuel costs in advance to reduce the short-term impact of higher costs;
• Average airfares were 3.5% higher in May-2026 and 4% higher in Jun-2026, before moderating in Jul-2026. Airfares may increase further as passenger demand remains stable;
• Both groups expect fuel costs to remain elevated and have forecast further capacity reductions, as well as higher revenue per seat;
• Domestic passenger volumes remained stable in Q4FY2026, although slightly lower than Q4FY2025. Leisure travel, supported by the winter school holidays, remained an important source of demand;
• Following increases in capacity prior to the Middle East conflict, seat capacity fell by 2.3% in both May-2026 and Jun-2026, with Jun-2026 recording the lowest capacity level for June since 2022. As passenger demand remained relatively stable and fewer flights were offered, airlines were able to fill more than 80% of seats;
• Industry-wide on time performance declined from 82.1% in May-2026 to 78.4% in Jul-2026, falling below the long-term average of 80.5%. Qantas (81.4%) was the only airline with an on time arrival rate above the long-term industry average and has been the strongest performer for on time arrivals for six consecutive months. Rex Airlines (76.9%), Virgin Australia (76.3%) and Jetstar Airways (72.5%) all recorded on time arrival rates below the long-term industry average. However, Rex's on-time arrivals were its highest since Jan-2026;
• Overall, there was a sustained improvement in airline cancellations, with 1.5% of flights cancelled in each of May/Jun/Jul-2026. This is the longest consecutive period that cancellation rates have been below the long-term industry average of 2.2% since 2018.

ACCC chair Gina Cass-Gottlieb stated: "These results highlight the financial resilience of the two largest operators in Australia's highly concentrated domestic aviation market", adding: "With resilient demand and high load factors, the announced capacity reductions may place upward pressure on airfares, depending on airlines' commercial decisions and fuel prices". She also commented on the impact of Western Sydney International (Nancy-Bird Walton) Airport, continuing: "The new airport is an exciting development for Australian aviation and in particular for people in the wider Sydney catchment, who will benefit from new services and greater choice. Over time, the airport's 24-hour operations and greater access to take-off and landing slots may make it easier for new airlines to enter the market and offer more competition". [more - original PR]