Airlines are facing higher fuel costs and cutting fares at the same time. How does that work? |
Trying to book a flight right now can feel absurd. Qantas and Virgin Australia are warning that higher fuel costs and disruption linked to the Middle East conflict are putting pressure on fares and forcing capacity cuts.
Yet both airlines are running major domestic flight deals amid softer demand at home.
If airline costs are rising, why are some fares going up while others are on sale?
Travellers are seeing several disruptions collide at once.
The Middle East conflict has disrupted a major aviation corridor, affecting fuel supply and flight routes, while also reducing overall seat supply. At the same time, fuel prices have risen sharply, adding approximately A$145 per passenger on long-haul flights leaving Europe.
Capacity is tightening, too. Qantas and Virgin Australia have both reduced domestic flights in response to rising costs and uncertainty.
But demand has not disappeared, especially for long-haul travel to Europe, and all this is unfolding just as the northern summer peak season begins.
Longer routings, higher fuel costs, tighter capacity, seasonal travel and softer domestic demand are creating a volatile market for travellers.
How airlines........