Qantas and Virgin Australia are taking strategic steps to bolster their financial positions by focusing on domestic travel. This move comes as fuel prices continue to soar due to the ongoing conflict in the Middle East, raising concerns about the sustainability of their international operations in the coming months.
Both airlines have launched extensive domestic ticket sales, with Qantas recently highlighting a potential $800 million increase in fuel expenses linked to the rising energy costs caused by the conflict. The situation has prompted a shift in focus towards local travel, as airlines seek to maintain revenue streams amid uncertain global conditions.
Qantas is offering a week-long sale of domestic tickets that will run through March 2027. One-way economy fares start at $99 for routes from east coast capitals, while one-way business fares begin at $299. The sale includes key dates such as the King’s Birthday long weekend in June and the winter school holidays, making it an attractive option for travelers looking to explore Australia.
Virgin Australia has also introduced a major sale, offering half a million economy fares in New South Wales. Fares start at $55 one-way from Sydney to Byron Bay and $255 between Sydney and Perth. The airline emphasized that this initiative is aimed at making local travel more accessible, especially in light of the recent energy shocks and concerns over long-haul flights to Europe.
The airline acknowledged a “modest” increase in overall fares due to the fuel price shock, which is expected to add $30 million to $40 million to its fuel bill during the June half. Virgin is also committed to maintaining accessible Velocity Frequent Flyer Reward Seats for its loyalty program members.
The conflict in the Middle East has had a significant impact on Persian Gulf-based airlines such as Emirates, Qatar Airways, and Etihad. These carriers have faced disruptions due to attacks and threats to their hubs by Iranian drones and missiles. Additionally, Iran has closed the Strait of Hormuz, a critical shipping lane for oil bound for Asian refineries, including those serving Australian airlines.
Oil prices have surged from around $US60 a barrel in the past year to $US112 in early April. Sustained higher oil and jet fuel prices have forced Qantas, Virgin, and other international carriers to reduce capacity and cut routes.
Professor of Aviation at Griffith University, Tim Ryley, noted that airlines are adapting quickly to the changing environment. He said, “They are having to move quickly. Airlines which are more agile and dynamic are more likely to succeed in these kinds of scenarios.”
Ryley added that airlines can no longer rely on traditional strategies for network planning and pricing. Instead, the focus is shifting towards crisis management and dynamic, adaptive planning.
Qantas Domestic CEO Markus Svensson stated that “Australians’ appetite for travel continues,” and the current sale would “support our customers planning their next trip around Australia over the next 12 months.”
Salim Hijazeen, associate lecturer of aviation at Swinburne University of Technology, highlighted that airlines are keen to sustain demand in the current market conditions. Unlike during the COVID crisis, when travel demand plummeted, the recent ticket sales indicate that “demand for travel is still there despite the increase in fuel prices for airlines.”
Qantas recently flagged a jump in fuel costs, stating that growth in its international unit revenue per available seat kilometre (RASK) in the second half is now expected to be 4 to 6 per cent, double the previous forecast. Virgin, meanwhile, expects domestic RASK growth of 5 per cent for the six months to June, and 6 per cent for the June quarter.
Hijazeen explained that these sales are more about stimulating additional demand and keeping passenger load factors high. Load factor is crucial in aviation, as once a flight departs with an empty seat, that revenue is lost forever.
Qantas’ sale of 2 million domestic seats runs until April 28, unless sold out before then. Virgin’s sales, covering travel dates from May to December, run until April 26, unless sold out prior.
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