Qantas warns of 20 per cent hike in international airfares amid fuel bill increases

The Aussie airline has dropped an unwelcome bombshell for jetsetters, with costs set to soar even higher ahead of the September holidays.

If you have noticed a change to Qantas’ ticket prices, it’s because the airline is “passing on” its costs to passengers amid rising fuel costs.

While addressing the media during the airline’s full years results for 2022, Qantas CEO Alan Joyce said the carrier will continue to pass on increased costs of fuel to its customers.

In face, Qantas has confirmed it will increase domestic airfares by 10 per cent and international fares 20 per cent and simultaneously reduce flights to about 93 per cent of 2019 levels.

The changes will add up to $300 to some flights.

“It’s fair to say that we’ve seen a dramatic rise in fuel,” Mr Joyce told reporters on Thursday.

“For this year, we’re forecasting that we will be 60 per cent higher in fuel costs than we were back in 2019 before Covid.

“That means we’ll have a billion dollars more in the fuel bill compared to ’19, and we’ll only have 75 per cent of our international flying and less than 100 per cent of our domestic flying, so that’s a huge increase in costs.”

“We will still offer value for people but it is a cost we have to pass on; it’s a cost we can’t digest given what we have gone through.”

It comes as Mr Joyce also announced the airline will cut flights from some of its busiest Australian routes as it struggles to cope with the high fuel prices and staffing shortages at airports.

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Qantas CEO Alan Joyce said the company will continue to ‘pass on’ increased costs of fuel to customers. Picture: Lisa Maree Williams/Getty Images

It will cut domestic capacity through to March 2023.

In a statement, Qantas said the impact on customers was expected to be “minimal” as flights would be removed “mostly from high frequency routes”.

“Those affected will be contacted directly with alternatives as close as possible to their original timing, usually within one to two hours,” the statement read.

There are no changes to the carrier’s international flights.

The airline has been able to recover the cost of high fuel prices in the international market through higher fares, but has been unable to do so in the domestic market, Mr Joyce said in June.

He said the company is forecasting a 60 per cent rise in fuel costs this year compared to 2019. Picture: NCA NewsWire/Dan Peled

Tourism expert Dr David Beirman said given Qantas announced a $1.19 billion dollar loss for

the financial year 2021-2022 – on top of a more than $5 billion loss the year before – the airline, together with others, is not in any position to engage in long bouts of fare discounting in the foreseeable future.

“There were some cheap fares about in late 2021 and early 2022 to stimulate demand when travel began the big rebound after Covid restrictions were relaxed in Australia and internationally,” Dr Beirman, from the University of Technology, Sydney, told news.com.au.

It comes as Mr Joyce said the airline will cut flights from some of its busiest Australian routes as it struggles to cope with the high cost of fuel. Picture: NCA NewsWire /Brendan Beckett

However, he said Qantas’ need to peg back past losses, the added costs of rehiring workers let go during the pandemic and rising fuel costs amid Russia’s invasion of Ukraine, makes it all but “inevitable” airfares will rise and fuel prices will remain high this year and possibly into 2023.

“Alternative fuels, which are being sought by any airlines including Qantas, may present a slim chance of addressing fuel prices in the medium to long-term,” Dr Beirman said.

“But I think it’s likely that all those millions of people who are keen to resume air travel are more than likely to find it more expensive in 2022 and 2023 than in the pre-Covid years.”

Dr Beirman said one thing that all airlines are acutely aware of is that fuel is the biggest cost component for airlines.

“[It] accounts for 40 per cent of costs for full-service carriers like Qantas and over 50 per cent of costs for low-cost carriers like Jetstar.”

Following Qantas’ announcement of a new route from Australia to New York – via Auckland, Dr Beirman said the possible reason the airline is keen on long-haul flights is fuel costs per kilometre are lower than short haul domestic flights.

“In simple terms, the longer and higher they are in the air, the less fuel they consume per kilometre. Take offs and landings really chew up the fuel.”