The Australian Competition and Consumer Commission (ACCC) said Tuesday it was monitoring Australia's airline industry in response to the ongoing conflict in the Middle East, which caused significant disruption to international air travel to Europe in particular, including airspace closures, flight cancellations and route diversions.

The regulator said in a statement is closely monitoring price movements, market behavior, and the airlines' representations to consumers, ACCC Commissioner Anna Brakey said. The watchdog cautioned airlines against making false or misleading statements about the reasons for any price increases.

ACCC noted that consumer guarantees in the Australian Consumer Law are unlikely to apply if an airline delays or cancels a flight due to the actions of a third party, such as a government closing its airspace or implementing flight restrictions. In such cases, the entitlement of consumers to a refund will depend on the terms and conditions of their booking.

The impact of the conflict on airline operations worldwide had the potential to flow into Australia's domestic market, Brakey said. Any prolonged increase in jet fuel prices as a result of the conflict could lead to higher domestic airfares.

Passenger demand has shifted to hubs in Asia, particularly on routes to Europe, placing upward pressure on airfares where capacity is constrained.

The aviation industry's on‑time arrival rate was over 78% in January, below the long‑term average of about 81%, according to the ACCC's Domestic Airline Competition report. The cancellation rate was 2.1% in January, just under the long-term average of 2.2%.

Virgin Australia (ASX:VGN) reported a cancellation rate of 0.9% in January, while Qantas Airways (ASX:QAN) recorded an elevated cancellation rate of 2.7%.

Airlines increased capacity, offering 2% more seats in January year over year, but with total seat capacity 3.3% below pre-COVID-19 levels. Nearly 99% of all flights were serviced by either Qantas or Virgin Australia.

The real revenue per passenger index fell by about 18% over the quarter to January due to reduced corporate and business travel over the holiday period. However, airfares increased by 4.3% in December 2025 and 0.6% in January year over year.

Shares of Qantas and Virgin Australia each rose nearly 4% in recent trading on Tuesday.