Qantas Airways (ASX:QAN) said it will review airfare pricing every fortnight and potentially consolidate flights as the carrier grapples with surging fuel costs and market instability triggered by conflict in the Middle East.
Speaking at a Tourism Australia conference, Qantas Head of International Flying, Cam Wallace, described the current environment as the most challenging in his 30-year career, noting that fuel bills have escalated by an estimated $7 million to $15 million daily.
The volatility follows missile and drone attacks on major hubs, forcing partner carriers such as Emirates, Etihad, and Qatar Airways to scale back operations.
With the Middle East air corridor compromised, the Australian government has advised travellers to avoid transiting the region, leading to a surge in demand for routes via Perth and Asia.
Off-peak return fares to London have skyrocketed from $1,800 to $5,000, with passenger loads exceeding 90%.
While Macquarie analyst Ian Myles anticipates a $315 million hit to Qantas' 2026 earnings, higher fares and increased loads on UK routes are expected to offset the net impact to $174 million.
However, the airline faces additional pressure from a proposed 12% hike in Airservices Australia charges and a new government-mandated airline ombudsman scheme.