The Qantas Airways Ltd (ASX: QAN) share price is wobbling today.
Shares in the S&P/ASX 200 Index (ASX: XJO) airline stock were up a narrow 0.1% in morning trade. At the time of writing, shares are down 0.4%, trading for $6.56 apiece.
This comes as the airline responds to criticism lobbed by Sydney Airport’s management over aircraft docking slots.
What’s happening at Sydney Airport?
The Qantas share price has been a strong performer during the post-pandemic travel rebound, in part because of its market-dominating size.
But, according to Sydney Airport CEO Geoff Culbert, the domestic rebound in travel numbers has stalled. And Culbert appears to point the finger at Qantas’ dominant market position for the slowdown.
Why?
According to Culbert (quoted by The Australian Financial Review), “Steep airfares and high cancellation rates on popular domestic routes are suppressing demand.”
Earlier this month, Culbert urged the federal government to amend how landing rights are awarded. He said “slot hoarding” by major airlines is stifling competition and keeping ticket prices elevated. This is because they’re allegedly taking up more terminal parking spaces than they need, locking other airlines out.
While high ticket prices have been a boon for Qantas profits and the Qantas share price, any negative impact on rebounding travel demand will hit airport revenues.
And this, according to Qantas’ domestic chief executive Andrew David, is the primary concern for Sydney Airport.
David said the assertion that Qantas is “hoarding slots at Sydney Airport is simply wrong”.
According to David (quoted by the AFR):
It’s a use it or lose it system with a buffer for operational issues that you’d expect when you’re getting planes in the sky with all sorts of weather and runway restrictions, and that’s no different from many airports around the world.
David said Qantas is in favour of reforming the slot system, primarily to deal with weather delays, the biggest factor in cancellations.
“No one controls the weather and the current constraints on Sydney means it’s hard to catch up,” he said.
Sydney Airport currently has a limit of 80 flights per hour in place.
“That drives delays and cancellations and means it’s less efficient for all carriers than it could be,” David said.
Qantas reported that it uses more than 90% of its allocated slots at Sydney Airport. That’s more than the 80% level required to maintain those slots.
Rather than increasing competition, Qantas suggested Sydney Airport’s management would like to see more international planes docked at its slots. These carry more passengers, who are likely to spend more time in the terminal and spend more money.
According to David:
There does seem to be some misdirected frustration from Sydney Airport because they wish the system was different, and they could unlock more revenue. We understand that, but we’re not sure demonising your biggest customer is the way to go about it.
Qantas share price snapshot
The Qantas share price has been a strong performer over the past 12 months, up 41%. Shares in the ASX 200 airline are up 10% in 2023.
