Qantas announced it will increase airfares and reduce flying in Australia by 4 per cent in the first three months of 2027, citing rising fuel costs. The reduction is double the 2 per cent cut the airline forecast in August, and both Qantas and its low-cost unit Jetstar will scale back schedules.
The airline now expects its fuel bill for the final six months of 2026 to reach $3.75 billion, up from an earlier forecast of $3.6 billion, reflecting the prolonged effect of the war in Iran on global energy prices. Higher airfares in Australia, where long distances make flying almost unavoidable, are likely to add to cost-of-living pressures already fuelled by rising interest rates.
“The group has and will continue to adjust fares and capacity in response to higher fuel costs,” Qantas said in a statement. “Demand remains resilient as customers continue to prioritise travel.”
Analysis
Why This Matters
- Australian travellers face higher fares on domestic routes, where flying is often the only practical option given vast distances.
- The 4% flight reduction will mean fewer available seats, potentially leading to less choice and more crowded planes.
- The fare increases come at a time when households are already feeling cost-of-living pressure from rising interest rates.
Background
The war in Iran has driven a stubborn jump in global energy prices, hitting Qantas at a time when it was already forecasting higher fuel costs. The airline first predicted a 2 per cent cut to domestic flying in August, but has now doubled that reduction for early 2027, underscoring the prolonged nature of the cost spike.
What to Watch
- Whether global fuel prices ease in coming months, which could allow Qantas to moderate further fare rises.
- How rival airlines respond to Qantas’s capacity cuts and fare increases.
- Consumer demand: if travel demand softens, Qantas may need to revise its outlook.
Checked
10 claims in this story checked against 1 source: 10 supported.
Show each claim
- SupportedQantas is raising airfares and cutting flights to tackle rising fuel prices.Sydney Morning Herald - Latest News: “Qantas is hiking airfares and making deeper cuts to its domestic flight schedules early next year to tackle rising fuel prices.”
- SupportedQantas will reduce flying in Australia by 4 per cent in the first three months of 2027.Sydney Morning Herald - Latest News: “The airline will reduce flying in Australia by 4 per cent in the first three months of 2027, it said on Friday.”
- SupportedThe 4 per cent reduction is double the 2 per cent cut Qantas forecast in August.Sydney Morning Herald - Latest News: “That’s double the 2 per cent cut that Qantas forecast in August.”
- SupportedQantas and its low-cost unit Jetstar are both scaling back their schedules.Sydney Morning Herald - Latest News: “Low-cost unit Jetstar and Qantas, the premium brand, are both scaling back their schedules.”
- SupportedQantas expects its fuel bill for the final six months of 2026 to be $3.75 billion, up from $3.6 billion previously forecast.Sydney Morning Herald - Latest News: “The company’s fuel bill for the final six months of 2026 is now expected to be $3.75 billion, up from a previous forecast of $3.6 billion.”
- SupportedThe updated fuel outlook reflects the prolonged impact of the war in Iran, which has driven energy prices higher around the world.Sydney Morning Herald - Latest News: “The fresh outlook reflects the prolonged impact of the war in Iran, which has led to a stubborn jump in energy prices around the world.”
- SupportedIn Australia, long distances between cities make flying almost unavoidable.Sydney Morning Herald - Latest News: “Higher fares in Australia, where vast distances between cities make flying almost unavoidable, would add to growing cost-of-living pressures stemming from rising interest rates.”
- SupportedHigher airfares in Australia would add to cost-of-living pressures stemming from rising interest rates.Sydney Morning Herald - Latest News: “Higher fares in Australia, where vast distances between cities make flying almost unavoidable, would add to growing cost-of-living pressures stemming from rising interest rates.”
- SupportedQantas said, in a statement, “The group has and will continue to adjust fares and capacity in response to higher fuel costs.”Sydney Morning Herald - Latest News: ““The group has and will continue to adjust fares and capacity in response to higher fuel costs,” Qantas said in its statement.”
- SupportedQantas said, in a statement, “Demand remains resilient as customers continue to prioritise travel.”Sydney Morning Herald - Latest News: ““Demand remains resilient as customers continue to prioritise travel.””