Impact of Rising Fuel Prices on Domestic Tourism
The ongoing conflict in the Middle East has led to a significant increase in fuel prices, which is now affecting the domestic tourism sector. As a result, there has been a noticeable surge in cancellations ahead of the Easter long weekend, with airlines warning of growing cost pressures. Regional operators are taking proactive steps by offering fuel vouchers and flexible booking options to retain visitors. However, some travelers are choosing to scale back their trips or delay their travel plans altogether.
The federal government has confirmed that hundreds of service stations across the country have been affected by fuel shortages. This situation is compounded by recent data from Tourism Research Australia, which indicates that overnight visitor spending fell by $2.3 billion nationally in the year leading up to December 2025. The states most affected include Victoria, with a loss of $1.2 billion, New South Wales ($410 million), and Queensland ($379 million).
Local Business Challenges
Don Kemble, who runs the Murrurundi Caravan Park located about two hours north of Sydney, has experienced a dramatic shift in business. His park typically fills up during this time of year due to a local festival, an air show, and the Easter long weekend. However, he has had two to three cancellations each day recently.
“People are worried they’ll get to a regional or rural area and find they’re stuck and can’t get home,” Mr. Kemble said. “Normally at this time, we’d have six or eight vans a night. Tonight? Zero bookings.”
Reflections Holidays, which manages 40 holiday parks on government-owned land in NSW, is addressing the issue by issuing guests a $25 voucher to help with rising petrol costs. Executive manager Peter Chapman mentioned that employees who travel more than 10 kilometers to work will also receive a fuel allowance of up to $50 every fortnight.
“It’s about helping them continue their holidays and showing that operators are doing what we can to support both guests and our staff,” Mr. Chapman said. He added that the fear of fuel scarcity is influencing travel decisions, especially for those heading to remote communities.
Challenges in Northern Australia
In northern Australia, tourism operators are also feeling the impact of rising fuel costs, particularly reef operators who use large vessels to reach the Great Barrier Reef. Mark Olsen, the chief executive of Tourism Tropical North Queensland, stated that many businesses have seen costs rise by 50 to 60 percent, largely due to fuel price hikes.
“Marine tourism, bus tours, and accommodation providers are all feeling the squeeze,” he said.
Paula and Michael Candlish from Lake Macquarie in New South Wales, who have traveled 60,000 kilometers in their caravan over the past four and a half years, have postponed a planned trip to Western Australia in May due to fuel shortages.
“If you get stuck somewhere remote, there’s no way of getting help until a fuel tanker turns up,” Ms. Candlish said.
Effects on Pet Care Services
Michael Syms, who has run Sydney’s largest boarding facility for cats for decades, has also noticed a decline in business. Normally, his cattery would be fully booked over the Easter holiday period, but now people are canceling their bookings.
“People are cancelling. They’re not wanting to head out to New South Wales country areas because they’re worried they won’t get fuel and be able to get back,” he said. “I had a client that said he’s got enough fuel to get there, but he doesn’t know when he’ll be able to come back.”
To ease the burden on clients, Mr. Syms has introduced a pet taxi service, picking up cats directly from homes. He has also switched to an electric car for smaller trips, with a new electric van on the way. However, he noted that uncertainty around how long the fuel crisis will last is having a bigger impact than the price itself.
“If we knew this would be over in a week, people would just book, but right now, no-one knows,” he said.
Airline Adjustments
Airlines are also experiencing the effects of rising fuel costs. Jetstar has announced that it will cut about 12 percent of some trans-Tasman flights from May, including routes from Auckland to Sydney and Auckland to Brisbane. In Asia, Vietnam Airlines will cancel dozens of domestic flights from next month, according to the country’s aviation authority.
Associate Professor of Aviation Stephen Leib from Central Queensland University highlighted that these cuts will affect travelers. “It’s going to mean fewer choices, higher fares and less convenient flight schedules,” Dr. Leib said. He explained that airlines are opting to cut flights rather than raise prices because holiday-makers, who are Jetstar’s main customers, are very price sensitive.
“Some of these changes may have already been on the cards, higher fuel costs just accelerate those decisions,” he said.
Meanwhile, Qantas is increasing capacity on flights between Australia and Europe, with extra services between Perth and Rome and from Sydney to Paris via Singapore.
What are your experiences with rising fuel costs and how are they impacting your business or personal travel?
