Traveler amnesia and expensive fares give Qantas its best-ever profit

But behind these figures lies an even more extraordinary financial performance. Had Qantas not decided to use another $900 million in cash to pay down debt, its half-year profit could have been significantly higher.

Unsurprisingly, Qantas’ share price has followed a similar trajectory – it’s up 45 percent since July, when an unlucky mob of customers chased Joyce with pitchforks.

As pricey as interstate travel has become, international travel is off the charts for both economy and business class.

Ultimately, consumer desire for air travel trumped any Qantas boycott, as did their lack of choice. A market with only two and a half operators ensures patronage for all in a period of thirsty travel demand. Strong advance bookings also suggest airfares will remain elevated in the first six months of calendar 2023.

But in the medium term, these rates are unsustainable as the higher cost of living and rise in interest rates put a ceiling on the public’s ability to pay high prices for tickets.

Meanwhile, Qantas has yet to clear the 40 percent of COVID-related travel credits that have not been redeemed.

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Many customers who tried to rebook the same flights with credits found that prices had doubled or worsened and were unable or unwilling to pay the difference.

Such an experience (although not limited to Qantas) leaves a bad taste in the mouth.

But as pricey as interstate travel has become, international travel is all the rage, for both economy and business class.

Qantas is running at just 70 percent of capacity in its international division and will continue to increase this next year.

But it also benefits from the cost-induced shift from international travel to domestic flying.

Melbourne Airport CEO Lorie Argus told the UK this week Australian Financial Review Infrastructure Summit that skyrocketing airfares are unsustainable if the industry truly recovered from COVID-19, but acknowledged that it will take time for airfares to fall from current levels, not seen in more than a decade.

Qantas shareholders will be delighted by the rising share price, the $400 million buyback announced in August and the tantalizing suggestion that more buybacks may be forthcoming.

But dividends may be a bit scarcer. The company accumulated $7 billion in losses during the pandemic period, so it may take some time to chew through this. Only after this has been achieved can it offer shareholders (tax effective) prepaid dividends.

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