Key Points:
- Qantas and Jetstar will extend their 5 percent domestic flight cuts through September due to soaring jet fuel prices.
- The ongoing Middle East conflict threatens the global aviation industry and caused an $800 million jump in fuel costs for Qantas.
- The Australian government secured an emergency shipment of 100 million liters of jet fuel to keep the transport sector moving.
- China supplies 32 percent of Australia’s jet fuel and recently agreed to slowly resume exports after halting them in March.
Qantas and Jetstar are extending their flight cancellations by three full months as a severe global fuel shortage continues to damage the aviation industry. The airlines will maintain a 5 percent cut to their domestic flights across Australia right through the end of September. They originally planned these specific reductions to only cover the months of May and June.
The ongoing military conflict in the Middle East, specifically the war between the United States and Iran, caused a massive spike in global oil prices. This crisis severely limited fuel supplies worldwide and forced airlines everywhere to pay much more just to operate their daily routes. In April, Qantas warned its investors that the current fuel crisis could cost the company an extra $800 million in unexpected expenses.
The fuel crunch is also forcing the airline to rearrange its international network. Qantas will cut its international capacity by 2 percentage points in the first quarter of 2027. The company will temporarily suspend its flights from Sydney to Bengaluru, India, starting in August. Both Qantas and Jetstar are also reducing their scheduled flights across the Tasman Sea to New Zealand.
Despite the heavy cuts, Qantas still sees strong customer demand for European holidays. The airline decided to extend its extra Perth-to-Rome flights for another three months, until the end of October. Qantas will also continue flying the popular Sydney-to-Paris route via Singapore. The airline says these network changes will add 2000 seats each week for passengers traveling between Australia and Europe.
To help stabilize the situation at home, the Australian government stepped in to buy emergency fuel supplies. Trade Minister Don Farrell announced the purchase of 100 million liters of jet fuel from Asian suppliers. The government will send this fuel to airports in Perth and Brisbane. They also bought 50 million liters of diesel for Darwin to keep truck drivers and remote mine workers moving.
A major part of the current shortage began when China restricted fuel exports in March to protect its domestic aviation market. Australia consumes about 10 billion liters of jet fuel every year. The country imports more than 80 percent of that total. Normally, China supplies roughly 32 percent, or 2.6 billion liters, while Singapore provides another 23 percent.
Australian Foreign Minister Penny Wong met with Chinese Foreign Minister Wang Yi on Wednesday to discuss the urgent supply issue. Following the meeting, Wong said China agreed to take a first step toward resuming jet fuel exports to Australia. Experts say any fuel arriving from China will take at least three weeks to reach Australian shores.
Energy experts warn that airlines will continue to cut flights if the market does not improve soon. George Boubouras, a managing director at K2 Asset Management, said airlines will normalize flight cancellations if fuel prices stay at their current high levels for another 30 days. He noted that China’s willingness to export fuel is a good sign, but airlines still face massive financial hurdles.
Jason Kururangi from Milford Asset Management said extra fuel supplies from China could prevent further route cancellations. He explained that fixing the supply shortage could eventually help push expensive ticket prices back down for travelers. However, economic analysts expect China to tightly control exactly how much fuel it sells to other nations while the Strait of Hormuz remains closed to shipping.
The crisis affects the entire region, not just Australian carriers. Virgin Australia started reducing its flight schedules and increasing ticket prices soon after the Middle East conflict began. Meanwhile, Fiji Airways announced this week that it will permanently cancel its route between Fiji and Dallas on September 7 due to soaring jet fuel costs and shifting customer demand.
