The Qantas Airways Ltd (ASX: QAN) share price is joining the broader market rally today, up 0.5% during the lunch hour.
Shares in the S&P/ASX 200 Index (ASX: XJO) airline stock closed Friday trading for $6.43. Shares are currently changing hands for $6.47 apiece.
Today's gains see the Qantas share price up a tidy 9% in 2023, more than double the year to date gains posted by the ASX 200.
But a slide in this "critical asset" could throw up some headwinds for the airline in the months ahead.
Image source: Getty Images
Why could the ASX 200 airline stock hit some turbulence?
In an update released last Tuesday, which failed to lift the Qantas share price on the day, the airline reported that it expects to rake in a record-high underlying profit before tax of between $2.4 billion and $2.5 billion for the 2023 financial year (FY 2023).
Qantas profits are flying high as travel demand rebounds, jet fuel costs come down, and its ticket prices remain decidedly high.
But it's those high ticket prices alongside flight delays and missing baggage (particularly in the early months of reopening) and negative media coverage of the airline's customer service that could hit the Qantas share price.
In the latest Brand Finance report, Qantas dropped from the list of top five airlines for the first time since 2018. All Nippon Airways took the top spot this year, with Qantas dropping to seventh place.
According to Brand Finance Australia managing director Mark Crowe (quoted by The Australian):
Under that investment pillar, Qantas has seen a drop in ratings for value for money and innovation, and then under brand equity they've had falls in recommendation and reputation…
Finally, under performance they've also experienced a drop in loyalty which is perhaps not surprising given there's been a lot of negative publicity around Qantas and customer service.
In an indication of just how this could take down the Qantas share price, Crowe said brand accounts for "anything from 18% to 25% of overall enterprise value".
Crowe continued:
Brand is a critical asset in the airline industry and is really a key determinant in terms of those businesses being able to extract a price premium. Certainly, customers' perceptions and their willingness to pay a premium are very much shaped by a brand that they are very favourable towards.
A Qantas spokeswoman dismissed concerns over the ASX 200 airline's brand.
"The latest government data showed that we were a full 10 percentage points ahead of Virgin for flights leaving on time in April," she said.
"Our call wait times are better than they were before Covid, and our mishandled bag rate has also improved."
Qantas share price snapshot
The Qantas share price has gained 15% over the past 12 months.
For some context, the ASX 200 is down 1% over that same period.
