In brief
- Qantas is raising the prices of international fares, citing the soaring cost of jet fuel.
- The airline said that the cost of jet fuel has risen 150 per cent in the fortnight since the war in the Middle East began.
Australia’s flagship airline, Qantas, is set to increase international fares in response to a dramatic surge in jet fuel prices, while another carrier has opted to cancel flights in the Middle East. The airline has experienced a staggering 150% rise in jet fuel costs over the last two weeks, a burden that persists even amidst their hedging strategies.
In light of this, Qantas International will be adjusting its fare structure, with the extent of increases varying across different routes. The airline has advised travelers to book their tickets early to take advantage of lower fare options, which are selling out faster than usual due to high demand, especially for European destinations.
Although Qantas does not operate flights directly to the Middle East, it is actively supporting customers who have bookings with its partner airlines, including Emirates. This move comes amidst a noticeable spike in demand for travel, particularly on Qantas routes to Europe such as Perth-London, Perth-Paris, and flights that transit through Singapore, which are more heavily booked than in previous times.
“Given the high demand for international flights, particularly to Europe, lower fare options are selling more quickly than usual, and we encourage customers to book early to secure the best available deals,” the airline said in a statement on Tuesday.
Qantas doesn’t fly to the Middle East, but was assisting customers booked to travel on its partner airlines, including Emirates.
There had been strong demand for travel in recent weeks, with Qantas routes to Europe, including Perth-London, Perth-Paris and services via Singapore, significantly more booked than usual.
Virgin Australia said flights operated by its codeshare partner Qatar Airways had been cancelled given the security situation in the Middle East.
Twenty-two flights between Australia and Qatar’s capital of Doha had been cancelled from Tuesday through Friday, Virgin Australia said.
“We expect our schedule to resume in line with the full and safe reopening of Qatari airspace,” the airline said.
Across the ditch, Air New Zealand said it was suspending its full-year earnings guidance given the soaring price of jet fuel, typically an airline’s biggest expense.
Jet fuel has spiked to between $US150 to $US200 per barrel in recent days, up from about $85 to $90 per barrel before the war.
The airline said jet fuel’s pricing was made up of two elements, the cost of Brent crude and the refinery margin.
Air New Zealand is mostly hedged against Brent crude, but like most of its peers is exposed to movement in the refinery margin, known as the “crack spread”.
The crack spread had spiked from about $US22 ($31) per barrel before the conflict to as high as $US115 ($162) per barrel, Air New Zealand said, noting it expected to consume 2.9 million barrels of jet fuel for the rest of the financial year.
“The crisis is expected to meaningfully affect second-half earnings and accordingly, the airline has suspended FY2026 guidance until fuel markets and operating conditions stabilise,” the dual-listed airline said.
Air New Zealand has implemented “initial fare adjustments” and may need to adjust pricing and its schedule further depending on fuel costs.
It was also “progressing ongoing cost reduction initiatives”, the carrier said, without giving details.
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