Qantas has warned passengers could face further airfare increases as persistently high jet fuel prices continue to put pressure on the airline’s operating costs, despite strong demand for domestic and international travel.
In a trading update ahead of its annual general meeting on Friday, 6 November, Qantas said fuel prices were expected to remain elevated throughout the 2026/27 financial year, largely due to the ongoing conflict in the Middle East.
The airline has allocated $3.8 billion to cover fuel costs for the first half of the financial year and has hedged approximately 85 per cent of its annual fuel requirements, primarily against Brent crude oil prices.
“The group has and will continue to adjust fares and capacity in response to higher fuel costs,” Qantas said.
Brent crude oil prices have risen above US$100 per barrel, compared with approximately US$60 before the United States attacked Iran in February.
The sustained increase in fuel costs has already affected the airline’s financial performance. In August, Qantas reported a 19.8 per cent decline in net profit to $1.3 billion for the 2025/26 financial year.
Underlying pre-tax profit also fell 13.8 per cent to $2.1 billion, despite revenue increasing 7.1 per cent to $25.5 billion.
The airline has since cancelled a planned $150 million share buyback as it manages higher operating expenses.
Travel demand remains strong
Despite the cost pressures, Qantas said demand for domestic and international travel remained resilient.
The airline expects total revenue per available seat kilometre (TRASK), a key measure of airline revenue performance, to increase by up to 10 per cent in the first half of 2026/27, largely driven by international travel.
“International demand across Qantas and Jetstar remains strong, supported by customers redirecting travel away from the Middle East,” the airline said.
“Domestic leisure demand remains strong.”
Corporate and government travel demand has remained stable, although Qantas said it would continue monitoring these segments.
Meanwhile, the airline expects capital expenditure to come in at the lower end of its previously forecast range of $4.3 billion to $4.6 billion.
Project Sunrise expansion moves closer
Qantas is also progressing its long-haul expansion strategy, with the first of 12 Airbus A350-1000ULR aircraft scheduled for delivery in April 2027.
The aircraft will support the airline’s Project Sunrise initiative, which aims to introduce non-stop flights from Sydney to London beginning in October 2027, followed by Sydney to New York services in 2028.
Qantas expects the ultra-long-haul services to generate an additional $400 million in annual earnings once the full fleet is operational by the 2030/31 financial year.
The expansion comes as the airline balances investment in future growth with ongoing fuel price volatility and pressure on operating costs.
