Qantas shares have plunged after the airline and its low-cost spin-off, Jetstar, said it was cutting back planned flights on domestic routes in response to reduced demand from Australians worried about the economy and the upcoming election.

Qantas shares tumbled 14 per cent to be at $3.49 at midday, AEST, before recovering slightly to $3.58 at 12.30pm - down 11.8 per cent.

The airline said it had revised plans to increase seat capacity in April, May and June because customers were flying less.

"Some softness in demand, related to the upcoming federal election and a recent drop in consumer confidence in Australia, began to emerge over the peak Easter and school holiday period in late March and continued to be seen in forward bookings," Qantas said in an update to stock exchange.