Australia’s two largest airline groups have reported strong financial results despite facing significantly higher jet fuel prices, the ACCC’s latest Domestic Airline Competition in Australia report has found.
The Qantas Group reported underlying earnings before interest and tax of approximately $2.35 billion, down by 11 per cent from 2024-25. Virgin Australia reported underlying earnings of $753 million, up 13.4 per cent from the previous year.
Click to enlargeThese results came despite jet fuel prices remaining significantly higher than before the Middle East conflict. Jet fuel prices were nearly 50 per cent higher in late August 2026 than in February 2026.
“Despite significantly higher fuel costs, both the Qantas Group and Virgin Australia continued to generate substantial earnings in 2025-26,” ACCC Chair Gina Cass-Gottlieb said.
“These results highlight the financial resilience of the two largest operators in Australia’s highly concentrated domestic aviation market.”
Both airline groups’ strong financial performance was supported by resilient passenger demand, higher fares, capacity adjustments and arrangements that locked in some fuel costs in advance to reduce the short-term impact of higher costs.
Airfares are higher and may increase further as passenger demand remains stable
Average domestic airfares were generally higher in recent months than a year earlier. Compared to the same month last year, average airfares were 3.5 per cent higher in May and 4 per cent in June, before moderating in July.
The two major airline groups expect fuel costs to remain elevated and have forecast further capacity reductions, as well as higher revenue from each seat they fly.
“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,” Ms Cass-Gottlieb said.
Domestic passenger volumes remained stable in the quarter to July 2026, although slightly lower than a year earlier. Leisure travel, supported by the winter school holidays, remained an important source of demand.
Airlines continued to adjust capacity in response to higher operating costs, economic uncertainty and market volatility.
Following increases in capacity prior to the Middle East conflict, seat capacity fell by 2.3 per cent in both May and June 2026 compared with a year earlier, with June recording the lowest capacity level for that month since 2022.
As passenger demand remained relatively stable and fewer flights were offered, airlines were able to fill more than 80 per cent of seats.
Fewer flights arrived on time, but cancellation rates remained low
Industry-wide on-time performance declined from 82.1 per cent in May to 78.4 per cent in July, falling below the long-term average of 80.5 per cent.
At 81.4 per cent in July, Qantas was the only airline with an on-time arrival rate above the long-term industry average (80.5 per cent) and has been the strongest performer with respect to on-time arrivals for six consecutive months.
Rex (76.9 per cent), Virgin Australia (76.3 per cent) and Jetstar (72.5 per cent) all recorded on-time arrival rates below the long-term industry average. However, Rex’s on-time arrivals were its highest since January 2026, reflecting a significant improvement for the airline.
Jetstar’s on-time arrivals in July 2026 were notably lower than other airlines on some of its busiest routes.
Overall, there was a sustained improvement in airline cancellations, with 1.5 per cent of flights cancelled in each of May, June and July.
This is the longest consecutive period that cancellation rates have been below the long-term industry average of 2.2 per cent since 2018.
Western Sydney International Airport may create opportunities for more competition
Western Sydney International Airport opened for freight operations in July 2026, with passenger services due to begin in October 2026.
“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,” Ms Cass-Gottlieb said.
“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.”
Background
The ACCC monitors Australia’s domestic airline industry and reports each quarter on airline prices, costs, profits and competition as part of a government direction. The direction applies until December 2026.
As part of the 2026-27 Federal Budget delivered in May 2026, the Government announced its intention to extend the ACCC’s airline monitoring function until December 2029.
The ACCC currently collects data from Jetstar, Qantas, Rex and Virgin Australia for monitoring purposes.
