Qantas Airways said on Friday that its fuel bill for the six months to December will be about A$3.75 billion, up from about A$3.6 billion it forecast in August, and that it will keep raising fares and trimming domestic flights to cover the cost. The update came in a market statement released to the Australian Securities Exchange before the airline's annual general meeting in Canberra.

For travelers across Asia and the Pacific, the message is that higher ticket prices are not going away soon. Qantas said forward curves show fuel prices staying elevated through its financial year, which ends in June 2027. For investors, the more important line was that demand is holding up: the group kept its first-half unit revenue guidance unchanged, which suggests passengers are still absorbing higher fares.

Qantas and Jetstar shift seats from domestic to international routes

The capacity figures show where the airline is pulling back. Qantas runs a July-to-June financial year, so its second quarter is October to December 2026 and its third quarter is January to March 2027.

Group domestic capacity, which covers both Qantas and the low-cost Jetstar, will be 5% lower in the October-to-December quarter than a year earlier, after a 1% cut in July to September, according to the market update. In January to March, domestic flying will be 4% lower, with the Qantas brand down 5% and Jetstar down 3%.

International flying moves the other way. Group international capacity is set to rise 2% in the current quarter and 1% in the March quarter, led by Qantas International. Jetstar's international capacity swings from a 2% cut in July to September to 2% growth in October to December.

Qantas said international demand on both brands "remains strong," helped by customers redirecting travel away from the Middle East. Chief Executive Vanessa Hudson told shareholders that the airline had moved aircraft onto Europe routes after the conflict began, adding around 16,000 seats to and from Europe in the June quarter as other carriers cut back. Domestic leisure demand is also strong, the company said, while non-resources corporate and government travel is stable and being watched closely.

The airline did not say how much fares will rise, saying only that it has adjusted and will keep adjusting fares and capacity in response to higher fuel costs.

Hedging cushions the fuel bill, for now

The A$3.75 billion estimate assumes the group buys about 16.2 million barrels of fuel in the half, including sustainable aviation fuel, at a market jet fuel price of roughly A$223 a barrel before hedging and other costs. Qantas said it is about 85% hedged for the full financial year, mostly in Brent crude, with significant participation if prices fall.

The new forecast is A$1.1 billion higher than the fuel bill for the same period a year earlier, The Sydney Morning Herald reported. Rico Merkert, an aviation professor at the University of Sydney, told the newspaper that the airline is prioritizing yield and profit over market share, and warned that the benefit of hedging is not permanent once contracts roll over at higher prices.

The rest of the guidance held. Total unit revenue, measured as revenue per available seat kilometer, is still expected to grow 8% to 10% for both domestic and international flying in the first half. Qantas Loyalty remains on track for 5% to 7% growth in underlying earnings before interest and tax for the year. Net capital spending for the year is now expected at the lower end of the A$4.3 billion to A$4.6 billion range.

Board Chair John Mullen said the group made an underlying profit before tax of A$2.06 billion in the year to June 2026 despite the fuel shock. He also said the board had decided not to go ahead with a A$150 million on-market share buyback announced in February, because the conflict and fuel volatility absorbed the surplus capital that would have funded it.

What it means for Asia routes

Qantas is still spending on long-haul flying. Hudson said the first Project Sunrise aircraft arrives in April, with the first nonstop Sydney-London flight due in October 2027. The airline also announced flights between Sydney and Cape Town from November next year, and Sydney-Las Vegas services start in December. Jetstar is flying refurbished Boeing 787s to destinations including Phuket and Seoul.

The pattern is familiar across the region. Asian carriers have carried more passengers this year while fuel has eaten into profits; Air China's third-quarter profit fell 93% even as traffic rose, and Japan Airlines and ANA reported lower first-half profits on a higher fuel bill.

Qantas said it will give guidance on unit revenue for January to June with its first-half results in February 2027. That release will show how much of the A$3.75 billion fuel bill the fare increases recovered.