Qantas Airways Faces Rising Fuel Costs

Qantas Airways, Australia's flag carrier, has announced that it expects its fuel bill for the first half of fiscal 2024 to increase by AU$200 million (US$128.82 million). This surge is primarily due to higher oil prices and a lower Australian dollar. The airline anticipates a 7.7% rise in its first-half fuel bill, reaching AU$2.8 billion after hedging, if the current trend in energy prices continues. Since May, fuel prices have climbed by approximately 30%, with an additional 10% spike seen since August.

Qantas Airways acknowledges these escalating costs and emphasizes its commitment to absorbing them. However, the company plans to closely monitor fuel prices and potentially make adjustments if the current levels are maintained. Any changes implemented will seek to strike a balance between recovering higher costs and ensuring affordable travel, especially since fares are already elevated in the current environment.

In addition to the fuel-related impact, Qantas expects a further AU$50 million in expenses due to non-fuel related foreign exchange changes.

Furthermore, Qantas Airways aims to invest an extra AU$80 million in improving customer service. This decision comes in response to a series of mishaps and controversies faced by the airline. One such incident involved allegations by an Australian regulator that Qantas had been dishonest with customers by advertising tickets for flights it had already canceled—a total of more than 8,000 flights.

To rectify these issues and enhance customer service, the planned investment of AU$80 million will supplement the previously budgeted AU$150 million and will be funded from profits.