Qantas raises fares, cuts flights due to Middle East fuel crisis and war
Consensus Summary
Qantas has raised fares and cut domestic flights by about 5% due to soaring fuel costs linked to the Middle East conflict, with its fuel bill for the second half of 2026 now estimated at $3.1 billion to $3.3 billion, up from $2.2 billion to $2.5 billion. The airline is redeploying capacity from the US and domestic routes to increase flights to Europe, where demand is strong as travelers avoid Middle East transit hubs. Jet fuel refinery margins have surged from $20 to $120 per barrel, contributing to the cost spike. Qantas also canceled all services to Mount Gambier and suspended a $150 million share buyback, though it paid its interim dividend as planned. Jetstar, a Qantas subsidiary, reduced flights between Australia and New Zealand by 12% on some routes, offering impacted passengers alternative travel or refunds. The airline remains cautious, retaining the option to take further action if fuel costs rise further.
✓ Verified by 2+ sources
Key details reported by multiple sources:
- Qantas increased its fuel cost estimate for the second half of the 2026 financial year to between $3.1 billion and $3.3 billion, up from a previous estimate of $2.5 billion (ABC) or $2.2 billion (Guardian).
- Qantas reduced domestic flight capacity by about 5% in the current quarter due to fuel market volatility and economic conditions.
- Qantas raised fares and redeployed capacity from its US and domestic network to increase flights to Paris and Rome, citing strong demand for Europe-bound travel as passengers avoid Middle East routes.
- Jet fuel refinery margins increased from $US20 per barrel in February to a peak of around $US120 per barrel, contributing to Qantas's higher fuel costs.
- Qantas will cancel all services in and out of Mount Gambier from next month due to fuel costs and declining demand.
- Qantas paid its interim dividend of $300 million (19.8 cents per share) on April 15, 2026, but suspended its planned $150 million share buyback due to uncertainty.
- Qantas shares were down 0.8% at midday AEST on April 14, 2026, while the broader share market rose.
Points of Difference
Details reported by only one source:
- Qantas says demand for services to Europe is growing as travelers avoid Middle East routes.
- Qantas estimates its fuel bill could reach up to $3.3 billion due to the ongoing war in the Middle East, more than $800 million above its previous estimate of $2.5 billion.
- Qantas had hedged approximately 90% of its 2H26 exposure in crude oil but remains exposed to jet refining margin movements.
- Jetstar reduced flights between Australia and New Zealand by 12% on some routes, with Auckland-Sydney and Auckland-Brisbane services impacted from May.
- Jetstar reduced services within New Zealand (Auckland-Christchurch and Auckland-Wellington) and offered impacted passengers same-day travel or refunds.
- Qantas forecasts its international revenue per available seat kilometer to be double its previous guidance.
- Persian Gulf carriers, including Emirates, Etihad, and Qatar Airways, have reduced services due to the Iran conflict, prompting passengers to seek alternatives.
- Oil prices rose from roughly $US56 ($A80) a barrel before the conflict to around $US100 ($A143) a barrel, with Qantas assuming market jet fuel will be between $A185 to $A200 a barrel excluding hedging over the June quarter.
- Qantas FY26 capital expenditure will now be at or below $4.1 billion, the bottom end of the previously guided range.
Contradictions
Conflicting information between sources:
- The ABC and Guardian report Qantas's previous fuel cost estimate as $2.5 billion and $2.2 billion respectively, while the ABC states the increase is more than $800 million above the previous estimate, but the Guardian says it is up $600 million to $800 million from $2.2 billion.
- The ABC mentions Qantas shares were down 0.8% at midday AEST on April 14, 2026, but no other source confirms this specific share movement.
Source Articles
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