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Virgin Australia is now mirroring Qantas in reducing the number of flights and increasing ticket prices as local airlines grapple with soaring fuel expenses.
The company has announced that its fuel costs are projected to exceed expectations by $30 million to $40 million in the latter half of the 2025-2026 fiscal year.
In response, Virgin plans to decrease its domestic flight operations by 1 percent over the three months leading up to June 30. Additionally, the airline aims to boost its revenue per seat to 5 percent, a rise from the previous target of 3 to 4 percent.
“Jet fuel prices have been extremely volatile, more than doubling since the end of February 2026, which affects our fuel expenses for the June 2026 quarter,” the airline informed its investors.
“Virgin Australia’s strategy involves maintaining higher volumes of hedging in the short term to cushion the impact of price fluctuations, while also adjusting fares and capacity as needed,” the airline added.
Yesterday Qantas has slashed its domestic flying capacity by 5 per cent, flagging that it is set to pay $3.1 billion to $3.3 billion for jet fuel over the second half of the financial year after refinery costs skyrocketed from $US20 a barrel to $US120 a barrel.
The hike in jet fuel is expected to deliver between a $500 million and $800 million hit to the airline’s bottom line.
Qantas Group says it is working closely with the government and jet fuel suppliers who remain confident about supply for the remainder of April and well into May.
“We are closely monitoring the situation given the ongoing uncertainty in global fuel supply chains,” the update said.
“The group has taken action to mitigate the impact of the conflict in the Middle East, including international network changes, capacity adjustments and fare increases.”
Australian airlines ‘most at risk’
Morningstar DBRS released its report just before the US and Iran reached a two-week ceasefire agreement, which included a pledge by Iran to reopen the Strait of Hormuz during the halt in fighting.
Since the war began on February 28, jet fuel prices have nearly doubled, with airlines passing the cost on through ticket increases.
Analysts say carriers with aggressive fuel hedging — a risk management strategy to lock in prices — should be better protected in the near term.But if global supplies of aviation fuel run low, other airlines will be exposed. 
“Beyond price pressures, a prolonged supply chain disruption in the Middle East —combined with export restrictions by key jet fuel suppliers such as China — raises the risk of physical jet fuel shortages in certain regions,” the report says.
“In such a scenario, airlines with greater reliance on imports from affected regions are likely to be most exposed, including carriers in Australia, Asia, and some European markets.”
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