Australia’s Qantas to Cut Domestic Flights Amid Fuel Price Surge

Australia’s largest airline will also redeploy flights to the US, and instead go to Paris and Rome.

Qantas Airways ground staff are seen on the tarmac near planes at the domestic terminal of Sydney International Airport in Sydney, Australia on Jan. 14, 2026. David Gray/ AFP via Getty Images

Australia’s flag carrier Qantas will cut domestic flights and redeploy capacity from the United States towards Europe as fuel prices double.

Qantas revealed fuel costs remained turbulent amid the Iran War in an update on its 2026 financial outlook, which noted that jet fuel prices have more than doubled and remain highly volatile.”

“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,” Qantas said.

Customers will be notified of which routes will be affected.

Meanwhile, in response to strong demand for European flights, Qantas will also add more options to Paris and Rome.

Qantas said it had fixed price contracts in place for about 90 percent of its crude oil but the airline was still exposed to surging jet fuel prices, which have jumped from about US$20 per barrel in February to as high as US$120.

As a result, the group now expects its fuel bill to cost between $3.1 billion or $3.3 billion.

“We are closely monitoring the situation given the ongoing uncertainty in global fuel supply chains,” Qantas added.

The move comes as other major carriers Air New Zealand, Air India, and Delta Airlines cut back on capacity amid surging jet fuel costs.

Qantas is Australia’s biggest airline founded in 1920 and operates two brands, Qantas and low cost airline Jetstar.

Listed on the Australian Stock Exchange (ASX), the airline flies across Australia, North America, Asia, Europe, Africa and to and from South America.

Overall, Qantas said it remains in a “strong financial position” and is progressing its 2027 financial year funding plans, even as it tightens capital spending.

Current FY26 capital expenditure is now expected to come in at or below $4.1 billion, at the lower end of its previous guidance range. Capital expenditure refers to the dollars spent by the company on buying and upgrading long-term assets including planes and buildings.

The company confirmed a $300 million interim dividend will be paid to shareholders on April 15, but its planned $150 million share buyback has not begun due to ongoing volatility.

Net debt is expected to sit at or above the middle of its target range by June 2026 and Qantas will delay its FY27 update.

Meanwhile, Qantas’ largest competition Virgin also faces disruption from the Middle East crisis with its codeshare flights with Qatar Airways suspended.

Virgin delivered a $279 million net profit after tax in its latest financial results (pdf) ahead of expectations despite inflation pressures.