PUBLISHED: 07 JUN 2014 04:42:57 | UPDATED: 09 JUN 2014 18:02:14

FINANCIAL REVIEW KAREN MALEY

Travellers may be groaning but investors are hopeful the end of the domestic air wars could brighten the future of the country’s beleaguered airline industry. So is it time to buy Qantas or Virgin?

This week Qantas Airways boss Alan Joyce signalled that he expects average airfares will begin to rise now the airline’s long battle against Virgin Australia Holdings over domestic capacity appears to have ended.

Joyce pointed out that airline profits have come under pressure as capacity increases have outstripped demand. Underlying demand in the local market has been growing by around 4-to-5 per cent a year, but in the past few years capacity has been increasing by around 8 per cent.