This isn’t specific to Qantas, just airlines in general. Looking at the state of the lithium market with Chinese producers willing to continue production at a loss, I got thinking about the reason usually given for why airlines underperform - the capital intensive nature of the business. It might of started with Buffett but never totally made sense to me. Plenty of industries with high capital requirements perform just fine.

Maybe we’ve taken the wrong lesson from airlines. The real reason might not be capital intensity at all, but that it’s an industry with endless reasons to operate other than profit.

We see airlines as strategic assets - tied to national pride, tourism, jobs, and trade. There will always be a competitor willing or even subsidised to run at a loss. Governments and shareholders alike romanticise them.

The supply demand dynamic never gets a chance to function properly. Perhaps interruption of the supply demand dynamic, not capital requirements, is the real culprit we need to watch for.