Travellers are being warned of rising fares and fewer flights within Australia being available as the airlines pass on surging fuel costs to their customers.
In a grim update, Qantas announced a 5 per cent drop in the number of domestic flights, international network changes, and fare increases due to the US/Israel and Iran conflict.
The rising prices follows surging fuel costs, with Qantas saying it will pay between $3.1bn to $3.3bn for jet fuel over the second half of the financial year.
This is up $600m to $800m compared with previous estimates.
“The group continues to closely monitor the dynamic environment and retains optionality to take further actions to mitigate fuel cost increases over time,” Qantas said in a media statement.
Affected Qantas and Jetstar passengers will be contacted directly and offered alternative flights or a refund.
Before the conflict in the Middle East started oil prices were roughly $US56 ($A80) a barrel, before trading around $US100 ($A143) a barrel.
Qantas says jet fuel refinery margins blew out from $US20 ($A28) to $US120 (A169) a barrel.
Qantas now assumes market jet fuel will be between $A185 to $A200 a barrel excluding hedging over the June quarter.
“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,” Qantas said.
“We are closely monitoring the situation given the ongoing uncertainty in global fuel supply chains.”
Despite the escalating conflict in the Middle East, Qantas said demand remained strong for travel and the business said revenue per available seat kilometre would double.
“Qantas continues to see strong demand for international travel to Europe as customers seek alternative routes,” Qantas said.
“In response, the group has redeployed capacity from the US and its domestic network to increase flights to Paris and Rome.”
Qantas says FY26 capital expenditure will now be at or below $4.1bn, the bottom end of the previously guided range.
As announced on 26 February, the $300m interim dividend (19.8 cents per share) will be paid on Wednesday 15 April, but the business will not go ahead with a previously announced $150m share buy back plan.
