Qantas cuts flights, raises fares due to Middle East conflict-driven fuel costs
Consensus Summary
Qantas is cutting domestic flights by 5% and raising fares due to soaring jet fuel costs driven by the Middle East conflict, with its fuel bill for the second half of 2026 rising to $3.1bn–$3.3bn from earlier estimates of $2.2bn–$2.7bn. Jet fuel prices have surged 125% since February 2026, reaching $US210 per barrel, while refining margins exploded from $US20 to $US120 per barrel. The airline is redeploying capacity to European routes like Paris and Rome, where demand is strong, and has canceled services to Mount Gambier. Jetstar, Qantas’s low-cost arm, is also reducing trans-Tasman and domestic New Zealand flights. Analysts warn fare increases of 20% or more are likely, with long-term elevated prices expected as oil markets remain volatile. Qantas has hedged most of its crude exposure but remains vulnerable to refining margin swings, and it has paused a $150m share buyback while maintaining its dividend. Industry experts note airlines have limited tools to offset fuel costs beyond price hikes, and sustainable alternatives remain niche and expensive.
✓ Verified by 2+ sources
Key details reported by multiple sources:
- Qantas expects its fuel bill for the second half of the 2026 financial year to be between $3.1bn and $3.3bn, up from previous estimates of $2.5bn–$2.7bn (or $2.2bn in one source).
- Qantas has reduced domestic flight capacity by about 5% due to fuel cost volatility and the Middle East conflict.
- Jet fuel prices have surged from ~$US56 ($A80) per barrel pre-conflict to ~$US100–$US210 ($A143–$A294) per barrel, with refining margins rising from $US20 to $US120 per barrel.
- Qantas has redeployed capacity from its US and domestic networks to increase flights to Paris and Rome due to strong demand for European routes.
- Qantas will cancel all services in and out of Mount Gambier from next month (May 2026) due to fuel costs and declining demand.
- Qantas paid an interim dividend of $300m (19.8 cents per share) on 15 April 2026 but canceled a planned $150m share buyback due to uncertainty.
- Jetstar (Qantas-owned) will reduce 12% of services on flights between Auckland and Sydney/Brisbane, and Auckland-Christchurch/Wellington, starting May 2026.
- Qantas has hedged approximately 90% of its 2H26 crude oil exposure but remains exposed to jet refining margin volatility.
- Qantas forecasts its international revenue per available seat kilometre (RASK) will double due to fare increases and strong demand.
Points of Difference
Details reported by only one source:
- Qantas assumes market jet fuel will be between $A185–$A200 per barrel (excluding hedging) over the June quarter.
- Qantas FY26 capital expenditure will be at or below $4.1bn, the bottom end of its previously guided range.
- Qantas cited oil prices trading around $US100 ($A143) per barrel as of the update.
- Qantas shares were down 0.8% at midday AEST on 15 April 2026, while the broader share market rose.
- Jetstar confirmed impacted passengers were contacted directly and most offered same-day travel alternatives.
- ABC News requested a list of all route changes from Qantas but did not receive it.
- Jet fuel prices have climbed 125% since the start of the Middle East conflict, peaking at ~$US210 per barrel.
- Petrol prices are up ~40% and diesel ~80% since February 2026 due to the conflict.
- Analysts at UBS estimate Qantas’s earnings per share will be 19% lower in FY26 and 13% lower in FY27.
- Ellis Taylor (Cirium) noted Qantas is cutting flights from five per day to three on some routes, not full route cancellations.
- Graham Doig (UNSW) stated airlines operate on thin margins and have limited options beyond fare hikes to offset fuel costs.
- Sustainable jet fuels are viable but currently only supply a few percent of global demand and are not cost-competitive.
- Qantas is benefiting from demand for flights transiting through Asia as Middle East carriers reduce services.
Where the reporting differs
Details that conflict, or appear in only some outlets:
- Newscomau and ABC state Qantas’s previous fuel cost estimate was $2.5bn–$2.7bn, but Guardian states it was $2.2bn.
- Newscomau says Qantas’s fuel bill is up $600m–$800m from previous estimates, while ABC and Guardian specify an $800m increase.
- Guardian reports jet fuel peaked at $US155/barrel in June 2022 post-Ukraine war, but does not provide a direct comparison to current $US210/barrel figure in other sources.
- ABC mentions Qantas’s domestic capacity cut is in the 'current quarter,' while Newscomau specifies it is a 5% drop in the fourth quarter.
Source Articles
Aussies face fewer flights and higher fares
Travellers will be slugged with higher costs and fewer options as the fallout from the Middle East conflict continues to drive oil prices higher.
Qantas cuts domestic flights and raises fares as fuel costs blow out
Qantas will cut domestic flights due to higher fuel costs and the uncertainty of the Middle East war, as it flags as much as $800 million in extra fuel costs.
This chart on oil prices shows why Qantas and Virgin are cutting flights and raising fares
Price of jet fuel has climbed by 125% since start of Iran war – giving Qantas and Virgin a big challenge as fuel accounts for a fifth of expenses Get our breaking news email , free app or daily news podcast Thanks to the US-Israel war on Iran , filling up your car with petrol costs about 40% more than it did in February, and for diesel vehicles it’s closer to 80%. But even those painful increases pale in comparison to the extraordinary rise in the price of jet fuel, which has climbed by a 125% s
Qantas hikes fares, cuts domestic services as fuel uncertainty starts to bite
The airline also says that demand for services to Europe is growing, as travellers avoid Middle East routes.
Qantas raises fares and cuts domestic flights as travel patterns shift due to Middle East turmoil
As Persian Gulf carriers reduce routes, the Australian airline is also feeling the impact of rising fuel costs Follow our Australia news live blog for latest updates Get our breaking news email , free app or daily news podcast Qantas has lifted fares and cut domestic flights amid a surge in travel demand away from airlines that transit through the troubled Middle East. The Australian airline says it has redeployed capacity from its US and domestic network to take advantage of the strong interest
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