Qantas cuts domestic capacity as fuel crisis continues

It comes after the group has already raised international airfares and redeployed aircraft to bolster its European services amid the ongoing Middle East conflict.

“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,” the airline said.

“While the Group does not operate to the Middle East, Qantas has provided additional support to customers booked to travel on partner airlines, including more flexibility to move flights or receive a refund.

“Qantas continues to see strong demand for international travel to Europe as customers seek alternative routes. In response, the Group has redeployed capacity from the US and its domestic network to increase flights to Paris and Rome.”

According to the market update, jet fuel prices have “more than doubled and remain highly volatile” since Qantas issued its first-half financial results for the year, with its forecast fuel cost rising by around $600 million to $800 million.

“The Group has hedged approximately 90 per cent of its 2H26 exposure in crude oil but is largely exposed to movements in jet refining margins, which have increased from US$20 per barrel in February to a peak of around US$120. As a result, the estimated fuel cost for 2H26 is now $3.1-3.3 billion,” it said.

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“The Group is working closely with the Government and jet fuel suppliers who continue to provide confidence in fuel 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.”

In his latest update on Monday, Minister for Climate Change and Energy, Chris Bowen, said Australia currently has 28 days of jet fuel on hand, as well as 38 days of petrol and 31 days of diesel.

“As you will have noticed, these figures haven’t moved around all that much over the last month or so. That’s a good thing,” Minister Bowen said.

“That shows that while fuel is getting out the door at record rates across Australia, fuel is also coming in the door at Australia’s import terminals. And it’s also going out the door at Australia’s two refineries, so they’re working full pelt to ensure that supply is kept up for Australians.

“In addition, I can confirm we have 57 ships currently on the way to Australia with various types of fuel – crude oil, jet fuel, diesel, and petrol. That’s about standard for this time of year, it’s what we would expect – 57 ships on the way to Australia.

“Also, over the next four weeks, the rolling four-week report, we have 4.1 billion litres of fuel locked in and contracted by Australian companies. That fuel now belongs to them. It is their legal right to have that fuel, and that is locked in to be delivered to Australia over the next four weeks.”

Both Qantas and Virgin Australia have increased airfares due to higher fuel costs after Iran effectively closed the Strait of Hormuz, which sees around 20 per cent of global oil traffic. At the same time, Air New Zealand has been forced to cut flights, and Jetstar has reduced its services in New Zealand.