Qantas has announced a significant increase in international airfares, attributing the move to volatile oil prices stemming from the ongoing war in the Middle East. Simultaneously, the airline reported a spike in ticket sales for flights to Europe, driven by passengers rebooking from carriers impacted by global flight disruptions.
Fuel Costs and Pricing Adjustments
A spokesperson for Qantas confirmed on Tuesday that while the company hedges against changes in jet fuel prices, it was not fully protected from the recent surge. The spokesperson noted that the extent of price hikes will vary across different international routes, though specific details were not disclosed.
Impact of Middle East Conflict
The conflict, which escalated after a US-Israel strike on Iran in late February, has caused widespread flight chaos, affecting major airports and airspaces across the Middle East, including Dubai—one of the world's busiest international hubs. Qantas, which does not operate flights to the region, has continued its services and seen a rapid increase in bookings as passengers from affected airlines seek alternatives.
Surge in European Travel Demand
According to the spokesperson, trips to and from Europe between April and June have experienced a notable uptick in recent weeks. Key routes, such as Perth to London and Perth to Paris, as well as services via Singapore, are now more than 90% full for March, compared to a typical occupancy rate of around 75%. Additionally, the seasonal Perth-Rome service, set to resume in May, is already in high demand.
Capacity Expansion Considerations
In response to the heightened demand, Qantas is evaluating the possibility of adding capacity to its Europe routes, which currently connect through the United States, Asia, and South Africa. However, the airline has not indicated whether domestic flights under Qantas or its subsidiary Jetstar will see similar fare increases.
Competitive Landscape and Industry Response
Virgin Australia, Qantas's primary domestic competitor, had not announced any price hikes as of Tuesday evening. Virgin reported in February that it has hedged 85% of its fuel costs for the first half of 2026 to mitigate price fluctuations. The company is closely monitoring developments in the Middle East and assessing potential long-term impacts from rising fuel prices.
Broader Industry Implications
Air New Zealand informed investors on Tuesday that profits would no longer align with expectations due to the spike in jet fuel costs. Brent crude, the international oil benchmark, surged to as high as US$119.50 per barrel on Monday amid fears of a deepening energy supply crisis from the conflict. It later fell to $91.58 per barrel after the US president described the war on Iran as "very complete, pretty much" in a CBS News interview.
The Strait of Hormuz, adjacent to Iran and a critical passage for about a fifth of global oil and seaborne gas tankers, has effectively been closed for a week, exacerbating supply concerns and contributing to the volatility in fuel markets.
