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Qantas to hike airfares as fuel bill hits bottom line
Australia's biggest airline group will "adjust airfares and capacity" after its fuel bill came in higher than expected.
- Australia’s biggest airline group will “adjust airfares and capacity” after its fuel bill came in higher than expected.
- Qantas said, at its AGM, that the prolonged war in Iran was weighing heavily on fuel costs.
- Despite this, travel demand remained high, particularly on routes that avoided the Middle East.
Qantas says it will have to adjust its airfares and consider capacity after the war in Iran kept its fuel bill elevated far longer than first forecast.
Providing an update to the market this morning, Qantas said it now predicts its first-half fuel bill to be $3.75 billion.
For the same period a year earlier, before the war began, its bill was around $2.6 billion.
As a result, the airline said it will be reviewing its margins.
“The Group has and will continue to adjust fares and capacity in response to higher fuel costs,” it told shareholders.
“The Group’s FY27 net capital expenditure is now expected to be at the lower end of the previously guided range of $4.3 billion to $4.6 billion.”
Despite the soaring fuel costs, Qantas said demand for flights remained relatively strong, particularly on routes to Europe that avoided the Middle East.
“Demand remains resilient as customers continue to prioritise travel,” the board said.
“International demand across Qantas and Jetstar remains strong, supported by customers redirecting travel away from the Middle East. Domestic leisure demand remains strong.
“Non-resources corporate and government travel remains stable and is being closely monitored.”
In a speech to shareholders at the airline’s AGM today, CEO Vanessa Hudson told investors that “Project Sunrise” — the airline’s first Sydney-to-London flight non-stop — is on track to happen in October.
“Project Sunrise is the next great innovation in our future,” she said.
“But our fleet renewal is far bigger than Project Sunrise, with over 200 new aircraft joining Qantas and Jetstar, including up to 31 this financial year.”
Qantas Chair John Mullen said the group was on track for a “record year” before the war broke out.
“The 2026 financial year was a year that was split into two distinct periods,” he said.
“In the first eight months of the year, Qantas and Jetstar both performed strongly, with demand growing across our domestic and international networks, and profitability benefiting from the arrival of more new aircraft.
“Then, from late February and just days after management posted our half-year financial results, the conflict in the Middle East pushed fuel prices to record highs and global aviation experienced significant disruption.”
Qantas’ note to shareholders comes after its primary rival in Australia, Virgin Australia, also told stakeholders it would have to lift its airfares.
“Virgin Australia regularly reviews its fares in response to external market conditions,” a spokesperson told The Money Edition.
“As we foreshadowed in our FY26 results announcement, costs across the aviation sector continue to rise at a rate well ahead of national inflation.
“We are making fare adjustments to reflect these increased costs.”
Topics: Qantas