Insights

Is this why the Qantas (ASX:QAN) share price is struggling today?

A competitor is accusing Australia’s largest airline of predatory practice.
The post Is this why the Qantas (ASX:QAN) share price is struggling today? appeared first on The Motley Fool Australia. –

The Qantas Airways Limited (ASX: QAN) share price is struggling to get in the green today.  

There are many factors that could be weighing down shares in the nation’s largest airliner.

However, a recent news article could be another reason the Qantas share price is struggling to take off.

Qantas share price feeling heat of possible legal action

According to a recent article published in The Australian, Qantas could be facing legal action from a rival.

The article reports that airline competitor Regional Express Holdings Ltd (ASX: REX), trading as Rex Airlines, is seeking advice on legal action against Qantas.

The news comes after Rex recently approached the Australian Competition and Consumer Commission (ACCC).

According to the article, the airline operator has accused Qantas of anti-competitive behaviour.

Rex alleges Qantas is engaged in predatory practices and “capacity dumping” in the domestic market.

In airline terms, capacity dumping refers to the practice of larger airlines opening up more capacity on certain routes to try to drive smaller competitors out of business.

Rex claims after its expansion into domestic routes in June last year, Qantas has tried to intimidate its competition by launching services into nine regional routes.

Rex has also accused Qantas of dropping 80% of extra capacity on Sydney-Melbourne routes in March when the smaller airline began its service.

The article noted the ACCC has not found any evidence of anti-competitive behaviour by Qantas to date.

A spokesperson from Qantas also denied the accusation. In responding to claims of capacity dumping, Qantas stated that flights increased in response to increased demand.

More on Qantas

The last 3 months have not been kind to Qantas.

Shares in the airline have struggled following a plethora of COVID-19 induced travel restrictions and lockdowns.

Most recently, the cancellation of the trans-Tasman travel bubble has caused further uncertainty for the company.

Qantas chief executive Alan Joyce also warned the company’s staff of the potential of renewed stand-downs.

The revived warnings follow a drastic reduction in the airline’s domestic capacity, with more than 9000 flights cancelled in June.

Snapshot of the Qantas share price

In addition to lockdowns and reduced capacity, the Qantas share price has also attracted negative feedback from brokers and analysts.

At the time of writing, the Qantas share price is trading slightly lower for the day, down 0.43% to $4.67.

Overall, shares in the national carrier are down around 3.5% since the start of the year.

The post Is this why the Qantas (ASX:QAN) share price is struggling today? appeared first on The Motley Fool Australia.

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Motley Fool contributor Nikhil Gangaram 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 Bruce Jackson.

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