Virgin, Qantas Adjust Fares and Capacity on Fuel Cost Surge

Virgin Australia and Qantas Airways, Australia's two largest airlines, announced adjustments to airfares and flight capacity on Wednesday to counter surging fuel costs driven by the ongoing conflict in the Middle East. The moves come amid jet fuel prices that have more than doubled since late February 2026, when U.S.-Israeli strikes on Iran began, disrupting global oil supplies through the Strait of Hormuz.

Virgin Australia, the country's second-largest carrier, forecast an additional A$30 million to A$40 million in fuel expenses for the second half of its fiscal year ending June 2026, compared to prior estimates. Fuel, which accounts for about 21 percent of its operating costs, has become extremely volatile, the airline told investors. To mitigate the impact, Virgin raised its revenue per available seat kilometer projection to 5 percent growth for the second half, up from an earlier range of 3 to 4 percent, through fare increases and capacity tweaks. Domestic capacity is now expected to rise by 1 percent overall in the period but fall by 1 percent in the June quarter. The airline maintained its full-year financial outlook, anticipating higher underlying earnings before...