Qantas, Jetstar suspend routes amid rising fuel prices

By Andrew Curran.

The Qantas Group is trimming domestic capacity by around 5% this quarter as its half year fuel bill blows out to over AUD3 billion (USD2.1 billion). While major trunk routes will lose some frequencies, some regional propellor and jet operated routes will have services suspended altogether.

Among the impacted routes, QantasLink operated Adelaide (ADL) – Mount Gambier (MGB) services will cease on May 18 with no planned restart date.

Qantas operated flights between Melbourne (MEL) – Hamilton Island (HTI) will go into hiatus between May 18 and June 28.

Qantas operated flights between Melbourne (MEL) – Coffs Harbour (CFS) will cease between May 18 and June 28.

Jetstar operated Sydney (SYD) – Busselton (BQB) services will end on May 18 with a planned restart on September 22.

Jetstar operated Coolangatta/Gold Coast (OOL) – Darwin (DRW) serviced will cease operating between May 18 and October 12.

In the case of the Adelaide – Mount Gambier services, QantasLink is unlikely to resume services given poor passenger patronage recently. QantasLink started flying to South Australia’s second largest city in 2021 when it launched a slew of new regional routes, several of which the airline has since ceased operating.

Jet fuel refining costs increase fivefold for Qantas

All five routes sit outside Australia’s top 50 busiest domestic routes. But Regional Express (REX) continues to operate on the Adelaide – Mount Gambier route, while Virgin Australia services the Melbourne – Hamilton Island city-pair.

“Jet fuel prices have more than doubled and remain highly volatile,” an April 14 Qantas Group filing with the Australian Stock Exchange reads. “The Group has hedged approximately 90% of its 2H26 exposure in crude oil but is largely exposed to movements in jet refining margins, which have increased from USD20 per barrel in February to a peak of around USD120.”

Virgin Australia is expected to announce its own capacity cuts in upcoming days given it also faces similar fuel price spikes and impacts on its balance sheet.

Across the Tasman, Air New Zealand last month announced capacity cuts across April and May and has recently extended those through June and July.

The Qantas Group says it continues to closely monitor events and can take further actions to mitigate fuel cost increases, if necessary.

The company says it maintains a strong financial position although its capital expenditure this financial year (ending June 30) will now be at or below AUD4.1 billion (USD2.9 million)  – towards the bottom end of the previously guided range.

Additionally, the airline has paused a planned AUD150 million (USD106.5 million) share buyback, citing “current uncertainty.” 

While the Qantas share price has dropped over 15% since mid-February, the company is opting to conserve cash given there is uncertainty about when the fuel price will ease back.

“We are closely monitoring the situation given the ongoing uncertainty in global fuel supply chains,” yesterday’s filing added.

Full planes to Europe not enough to offset rising costs

Neither Qantas nor Jetstar fly through any Gulf airports and Qantas flights to Europe continue to operate with near 100% passenger loads, many of whom are paying well above ordinary prices for their tickets.

But loads (and yields) in the other direction, towards the Americas, are weaker and Qantas is pulling aircraft off those routes to redeploy onto in-demand Europe flights, particularly flights to Paris (CDG) and Rome (FCO).

The Qantas Group says it will provide an update on the 2026/27 financial year outlook at a later date.

You can read yesterday’s stock exchange filing here.

Photo: Qantas.

Contact the writer: andrew@aerosouthpacific.com