The Australian Competition and Consumer Commission (ACCC) has released its latest report on the domestic airline competition, revealing that both Qantas Group and Virgin Australia have reported substantial earnings despite facing significantly higher jet fuel prices.

Qantas Group's underlying earnings before interest and tax stood at approximately $2.35 billion, reflecting an 11% decrease from the previous year, while Virgin Australia reported a 13.4% increase in underlying earnings, totaling $753 million. These results highlight the financial resilience of the two largest operators in Australia's concentrated domestic aviation market.

Despite jet fuel prices being nearly 50% higher in late August 2026 compared to February 2026, both airlines managed to maintain strong financial performance due to resilient passenger demand, higher fares, and strategic capacity adjustments. The ACCC Chair, Gina Cass-Gottlieb, noted that the airlines' arrangements to lock in some fuel costs in advance helped mitigate the short-term impact of rising costs.

Average domestic airfares have increased, with a 3.5% rise in May and a 4% rise in June compared to the same months last year. The airlines anticipate that elevated fuel costs will persist, leading to further capacity reductions and increased revenue per seat. The ongoing stable passenger demand and high load factors may exert upward pressure on airfares.

Domestic passenger volumes remained stable in the quarter leading to July 2026, although slightly lower than the previous year. Leisure travel, particularly during the winter school holidays, has been a significant source of demand. Airlines have been adjusting their capacity in response to higher operating costs and market volatility, resulting in a 2.3% decrease in seat capacity in May and June compared to the previous year.

On-time performance across the industry has declined, with Qantas being the only airline to maintain an on-time arrival rate above the long-term average. However, overall cancellation rates have improved, remaining below the long-term average for the longest consecutive period since 2018.

The opening of the Western Sydney International Airport for freight operations in July 2026, with passenger services set to begin in October, is expected to enhance competition in the Australian aviation market by providing new services and greater choice for consumers.