Qantas flags 20 per cent hike in international airfares on back of bumper fuel bill

Qantas boss Alan Joyce flags airfare hikes of up to 20 per cent for international travel, adding up to $300 to some tickets as fuel costs rise. And domestic flights are also going to cost more.

Australians are facing fewer flights and jacked-up prices ahead of the September holidays to counter Qantas’ soaring fuel bill, with the national airline’s chief executive Alan Joyce suggesting travellers book with Jetstar if they want cheaper fares.

Qantas revealed on Thursday it will be forced to increase domestic airfares by 10 per cent and international fares 20 per cent, at the same time as reducing flying to about 93 per cent of 2019 levels, adding up to $300 to some flights.

With a more than $1bn loss in the past financial year, the flight cuts and the price hikes will add pressure to an airline under fire in recent months for long delays and mishandled baggage as Qantas tries to put the Covid-19 pandemic behind it.

Mr Joyce said the changes were needed to help the Qantas Group return to profit after a third year of massive losses.

In the 2022 financial year, Qantas recorded a $1.86bn statutory before tax loss, $85m more than the previous year.

Qantas Group CEO Alan Joyce says higher airfares will be needed to account for a fuel bill that was $1bn above that in 2019. Picture: Lisa Maree Williams/Getty

Although a return to profit was expected in 2023, Mr Joyce said higher airfares would be needed to account for a fuel bill that was $1bn above that in 2019.

“We have to pass that on because we can’t digest that after $7bn of losses in three years,” Mr Joyce said.

“I think a lot of airlines around the world are doing the same thing.”

A 10 per cent hike in current fares on Melbourne-Sydney, would see the price climb from $230 one way to just over $250, while Brisbane-Sydney would jump from $269 to $295.

Travellers heading overseas would pay $238 more for a $1192 seat from Sydney to Los Angeles and Melbourne-London fares would climb from $1109 to $1330.

Mr Joyce said anyone looking for cheap fares would still be able to find them, at Jetstar.

“Jetstar is estimated to carry 13 million people in the coming year, and five million of them will travel, even in this oil price environment, for under $100 and 10 million will travel for under $200,” he said.

“Some of the taxi fares for Melbourne to Tullamarine are more than that so we will still continue to offer that value for people out there but it is a cost we have to pass on. It’s a cost we can’t digest given what we’ve been through.”

Air New Zealand CEO Greg Foran said they were also increasing airfares in response to soaring fuel prices but admitted to much steeper hikes.

“We’re probably up about 20 per cent domestically, and up between 40 and 45 per cent across the Tasman, and about 50 per cent on long haul flights,” Mr Foran said.

“We obviously track how we’re sitting against all competitors and that’s what we’re seeing around the place at the moment.”

As well as paying more for flights, Qantas travellers could find it harder to find a seat on the service they wanted as capacity was further reduced in the lead up to Christmas.

Mr Joyce said they were planning a further reduction in flights of around 10 per cent by the year’s end, in response to higher fuel costs and operational challenges.

The cutbacks meant Qantas would have far fewer flights in the air than it did over Easter, when the airline was at 110 per cent of pre-Covid capacity.

In December, Qantas would be at 93 per cent of 2019 levels and Jetstar 100 per cent, down from 120 per cent in April.

In an effort to keep their most loyal customers happy, $400m had been found to upgrade and expand lounges in Adelaide, Auckland, Port Hedland and Rockhampton.

The funds also covered the recently announced $50 travel credit for frequent flyers, and preparations for a new route from Auckland to New York, scheduled for takeoff next June.

Mr Joyce said the route would alleviate the need for passengers to transit through Los Angeles International., which he believed would be preferable to many.

“It’s a significant advantage. (Auckland) is a lot better and easier airport to connect through,” he said. “Also we have 11 flights a day from Sydney, Melbourne and Brisbane into Auckland and hopefully some more destinations by June that will be able to connect with this.”

Air New Zealand was due to start its own Auckland-New York route in a few weeks, and Mr Foran said he “was not the slightest bit surprised” that Qantas was planning to compete with them.

“New Zealand is two-and-a-half hours closer and we of course get underway in just three weeks,” said Mr Foran.

“We’ll do our best to hoover up every bit of available demand that’s there and we’ll look forward to Qantas joining us in nine months, and we’ll give them a wave as we pass each other in the sky.”

Originally published as Qantas flags 20 per cent hike in international airfares on back of bumper fuel bill