Ongoing tensions in the Middle East and a still volatile oil market has forced Qantas to cut capacity on its domestic network, throwing the travel plans of countless Australians into chaos.
The bombshell news came in a trading update released by the Flying Kangaroo on Tuesday.
Qantas said jet fuel prices had more than doubled since the US and Israel launched their military campaign against Iran in late February and “remain highly volatile”.
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While 90 per cent of the airline’s jet fuel prices for the second half of the current financial year are hedged it was largely exposed to movements in jet refining margins — the difference in price between crude oil and refined jet fuel.
That exposure has increased from $US20 a barrel in February to a peak of around $US120 as Iran’s stranglehold on the Strait of Hormuz has choked off oil to the rest of the world.
Qantas said it now expects fuel costs in the second half to soar to between $3.1 billion and $3.3b, up from a previous estimate of about $2.5b.
The ongoing ructions between the US and Iran and an unease ceasefire that is yet to deliver a deal on a lasting peace has foced Qantas to adjust capacity.
“Given the continued volatility in fuel prices and the global economic conditions, the group has reduced domestic capacity in 4Q26 by around 5 percentage points,” it said.
“Affected Qantas and Jetstar customers are being contacted directly and offered alternative flights or a refund.”
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