Qantas warns of fare rises and 4% domestic flight cuts as fuel prices stay elevated
Qantas has said it will raise fares and cut domestic capacity as it continues to face higher fuel costs linked to the Middle East war. The airline said domestic flights across Qantas and Jetstar will be reduced by a total of 4% in 2027. It also said it expects fuel prices to remain high through the new financial year.
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In a market update released on Friday morning ahead of its annual general meeting, the carrier said it would continue to adjust fares and capacity in response to higher fuel costs. Qantas said it expects fuel costs of A$3.8 billion for the first half of the new financial year. It added that it has extended hedging for about 85% of its annual fuel bill, mainly in Brent crude oil, to help manage price swings.
The airline said elevated fuel prices have already weighed on profits, with hundreds of millions shaved off its last annual result. It said trading conditions remain in line with the outlook it gave in August, despite strong demand for both domestic and international travel. Qantas also said demand has been supported by customers redirecting travel away from the Middle East, while corporate and government travel remained stable.
The announcement matters because fuel is one of the biggest costs for airlines, and sustained increases can feed through to ticket prices and route planning. Qantas said the current pressure is being driven by the wider conflict in the Middle East, which has pushed Brent crude above US$100 a barrel, compared with about US$60 before the US attack on Iran in February. That shift has left airlines exposed to a more expensive operating environment even where passenger demand remains strong.
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The carrier has already responded once this year, cutting domestic flight capacity and raising fares in April because of fuel costs. In August, it reported a net profit of A$1.3 billion for 2025/26, down nearly 20% from the previous year, while underlying pre-tax profit fell nearly 14% to A$2.1 billion. Revenue rose 7% to A$25.5 billion, showing that demand remained resilient even as costs increased.
What remains unclear is how long fuel prices will stay elevated and whether further changes to fares or capacity will follow. Qantas said it is monitoring corporate and government travel closely, but did not give a detailed breakdown of which routes will be affected by the 2027 cuts. Investors and passengers will be watching for more detail at the annual general meeting and in the airline's next financial updates.
