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Qantas Airways (ASX: QAN) has launched a major domestic sale covering more than two million discounted seats across 90 routes just one week after warning the Middle East crisis had blown out its second-half fuel bill by up to $800 million and announcing domestic capacity cuts and fare increases.
The sale, which offers one-way economy fares from $99 and business-class fares from $299, covers travel through March 2027 including the June long weekend and winter school holidays - a period that coincides with the airline's flagged pullback of about 5 percentage points in domestic capacity during the fourth quarter of FY26.
Last week, Qantas disclosed that jet refining margins had spiked from around US$20 per barrel in February to a peak of US$120 per barrel, pushing its second-half fuel cost estimate to between $3.1 billion and $3.3 billion.
In response, the airline warned that it would cut routes and increase fares to combat the higher fuel bill.
A day later, Virgin Australia followed suit with an announcement that is also would be reducing capacity and lifting fares to cover rising fuel costs.
Qantas Domestic CEO Markus Svensson has framed the airfare sale announced today around customer appetite rather than the need to fill seats, pointing to strong recent travel volumes.
“We’ve just had a bumper Easter holidays with more than a million customers travelling around our domestic network and this sale is timed for those planning where to head next," says Svensson.
"We have millions of discounted seats across more than 90 routes, including some of Australia’s most popular holiday destinations, from tropical beaches and much-loved regional towns to city escapes.”
Svensson says the sale is designed to offer customers access to popular capital city and regional routes at lower price points, with destinations spanning every state and territory.
The sale includes one-way economy fares starting from $99 on routes from Adelaide, Brisbane, Melbourne, Gold Coast and Sydney, and one-way business fares that start from $299 on popular routes from Adelaide, Brisbane, Sydney, Melbourne and Hobart.
The Middle East crisis has led to a volatile market for the travel sector with many passengers forced to change travel plans amid rising costs.
The drop in demand follows a broader weakening of air travel reported earlier this year after Bureau of Infrastructure and Transport Research Economics data revealed domestic load factors fell from 84.1 per cent in January last year to 81.1 per cent in January this year, with available seat kilometres up 2.6 per cent over the same period even as passenger numbers declined 0.8 per cent.
The Australian Competition and Consumer Commission (ACCC) also notes that domestic capacity growth has outpaced passenger demand for six consecutive months.
The ACCC, meanwhile, is keeping a close watch on how airlines respond to the fuel cost environment.
Commissioner Anna Brakey last month said the regulator was monitoring the impact on domestic aviation pricing, noting that Qantas and Virgin Australia together account for about 99 per cent of domestic flights.
“While market conditions will ultimately determine the cost of flying, we are closely monitoring price movements, market behaviour and the airlines’ representations to consumers, and will act if there is behaviour that contravenes competition and consumer laws,” Brakey said.
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