What happened to the Qantas share price on Tuesday?
Shares of Qantas Airways Ltd [ASX:QAN] took off by more than 1.8% today as the company continued to soar after last week’s better-than-expected results.
Why did the QAN share price rise?
Qantas has faced a lot of pressure with competition, higher fuel prices, and more discounting of airfares.
However, a report in today’s Australian Financial Review suggested that an increase in tourism, particularly from Asia, would help boost Qantas’ domestic air-travel business.
The article notes that Qantas and its Jetstar subsidiary only command around 25% of inbound and outbound traffic in Australia. However, on the domestic front, Qantas maintains a dominant position. In 2016, Qantas and Jetstar accounted for nearly 60% of domestic airline traffic.
As a point of comparison, Virgin Australia accounts for 30% of domestic traffic.
If tourism numbers do increase, that could spell a good opportunity for Qantas, especially when you take into account its key membership of the One World Alliance, which allows for code-sharing deals with a number of international players.
Should You Buy Qantas Shares?
The stock price is up, and has recovered almost all of the ground it lost in early 2016. However, as we say, the airline industry is volatile. Small changes in the market can have a magnified impact on the bottom line. For investors tempted to look at Qantas now, we would suggest extreme caution.
By Kris Sayce