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Both major domestic airline groups have reported “strong financial results” despite a spike in jet fuel prices, according to the ACCC.
In its latest Domestic Airline Competition in Australia report, the consumer and competition watchdog said jet fuel prices were nearly 50 per cent higher in late August 2026 than in February 2026 due to the Iran conflict, but both Qantas Group and Virgin Australia had solid full-year earnings.
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Qantas Group brought in approximately $2.35 billion before earnings and tax for the 2025-26 financial year, while Virgin saw underlying earnings of $753 million.
“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,” the ACCC said.
“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.”
These capacity adjustments have pushed airfares higher as demand has remained stable – seat capacity dropped by 2.3 per cent year-on-year in both May and June 2026, with June having the lowest available capacity for that month since 2022.
ACCC Chair Gina Cass-Gottlieb pointed to data showing that average airfares “were 3.5 per cent higher in May and 4 per cent in June, before moderating in July”.
“Despite significantly higher fuel costs, both the Qantas Group and Virgin Australia continued to generate substantial earnings in 2025-26,” she said.
“These results highlight the financial resilience of the two largest operators in Australia’s highly concentrated domestic aviation market.
“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.”
The ACCC also noted the upcoming opening of Western Sydney International Airport on 25 October as a positive step for domestic airline competition.
“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,” said Cass-Gottlieb.
“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.”
In its Australian Aviation Network Overview report for July 2026, Airservices Australia said the Australian aviation industry had seen some recovery from the impact of the Iran conflict, though this was before the recent increase in hostilities.
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