Qantas eyes fare hike, reduced capacity amid fuel crisis

“The group has and will continue to adjust fares and capacity in response to higher fuel costs,” the airline said in a release to the ASX on Friday.

It comes as the ongoing Iran War pushed the price of jet fuel to US$176.40 (AU$253.22) per barrel on Tuesday, 3 November, up 81.8 per cent year-on-year.

In August, Qantas Group anticipated a $3.6 billion fuel bill through to the end of this year, however, the cost of jet fuel has jumped a further 13.2 per cent since then.

However, the airline has long utilised fuel hedging in order to cushion itself against fuel price volatility.

Currently, the airline said that 85 per cent of its fuel reserves through to the end of the financial year are hedged, giving the airline greater certainty in the face of rising costs.

Elsewhere in the release, Qantas said it still sees passenger demand as “resilient”, with both domestic and international leisure traffic dubbed as “strong”.

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However, new capacity forecasts will see Qantas reduce overall capacity by 1 per cent by June 2027, compared with June 2026, with domestic capacity expected to fall by 4 per cent year-on-year.

Despite this, the airline expects total revenue per seat to increase by between 8 and 10 per cent through to December 2026.

Ultimately, the airline said it anticipates its total net capital expenditure to remain “at the lower end” of its previously guided range of $4.3 to $4.6 billion for the full year to 30 June 2027.

In August, Qantas Group revealed it had taken a $420 million hit to its full-year earnings as a result of the Iran war.

The Flying Kangaroo saw a $1.29 billion statutory profit after tax for 2025–26, down $316 million on the previous financial year, with mitigation actions undertaken in response to the conflict reducing the impact of a $610 million increase in Qantas’ fuel costs.

“This has been another year of progress, with customer satisfaction at its highest in a decade and world-leading operational performance, even as the aviation industry faced record high fuel costs and disruption from the conflict in the Middle East,” Qantas Group chief executive Vanessa Hudson said at the time.

“We came through it with a strong result, which is what allows us to continue investing in the largest fleet renewal in our history and deliver more for our customers, people and shareholders.”

Qantas Group Domestic delivered $1.44 billion in underlying EBIT, with Qantas Domestic revenue up 5 per cent and Jetstar Domestic earnings up 15 per cent.

Qantas International revenue grew eight per cent and Jetstar International by 14 per cent, though “significantly higher fuel costs” saw Group International Underlying EBIT decline to $650 million; net freight revenue also increased by nine per cent.