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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.
In a bid to counteract the skyrocketing expenses of jet fuel, Australia’s leading airline has decided to increase fares on its international routes. Meanwhile, another airline has opted to cancel flights in the Middle East, adding to the turbulence in the aviation industry.
The Qantas Group has reported a staggering 150% surge in jet fuel costs over the past two weeks, a substantial rise that has significantly impacted its financial outlay despite existing hedging strategies. Consequently, Qantas International has announced fare hikes, with the extent of these increases varying across different routes.
In a statement released on Tuesday, the airline noted the current intense demand for international flights, especially those heading to Europe. “Lower fare options are selling out more quickly than usual,” Qantas remarked, advising customers to book early to take advantage of the best deals available.
Although Qantas does not operate flights to the Middle East, it is providing assistance to customers booked on its partner airlines, such as Emirates, ensuring travelers are accommodated amid the evolving circumstances.
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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