Iran war: Qantas follows Air New Zealand in slashing domestic seat capacity
Tuesday, 14 April 2026
Qantas has followed Air New Zealand’s lead and has slashing its domestic capacity and is preparing to pay hundreds of millions of dollars more for fuel as the war in Iran sends the price of oil and jet fuel soaring.
The Australian airline announced on Tuesday it had also increased international airfares to help offset some of the escalating cost of fuel that has more than doubled and remains highly volatile.
Air New Zealand last month began cancelling some flights that were lightly booked, impacting the travel plans of nearly 44,000 passengers from mid March to early May.
Chief executive Nikhil Ravishankar said at the time the cuts would amount to about a 5% reduction in the number of flights mainly in lower-demand or off-peak times.
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The national carrier had also suspended its earnings guidance and increased ticket prices to account for the rise in fuel costs. Domestic fares were increased by $10, short-haul international by $20 and long-haul by $90.
Qantas said in a statement estimated fuel costs for the second half of the financial year had increased to between A$3.1 billion (NZ$3.7b) and A$3.3b, which was up between A$600 million and A$800m over that period.
The airline group, which includes Jetstar, said it would cut domestic capacity by about 5% and cancel flights that were not full and consolidate services between the state capital cities.
Jet fuel suppliers were confident in the fuel supply for the remainder of April and into May, it said.
Qantas said demand for travel to Europe remained strong as travellers sought out alternative routes to those that stopped over in the Middle East. It has redeployed some aircraft from the United States to increase services to Paris and Rome.
Westpac New Zealand chief economist Kelly Eckhold said New Zealand had been in a better position to access fuel supply and not needing to wine and dine officials in Asia like Australian Prime Minister Anthony Albanese.
New Zealand sourced most of its fuel supplies from Korea, Singapore, whereas Australia relied on some countries which eventually stopped exporting, particularly from China. “So I think they probably had to scramble to try to secure alternative supplies,” Eckhold said.
Harbour Asset Management aviation analyst Shane Solly said the Qantas cutbacks were “probably an indicator for what we may see from Air New Zealand”.
Getting fuel supplies was critical, rather than the price, he said. The challenge for airlines was whether they could recover that price increase, or feel a lag, Solly said.
Air New Zealand had already announced a degree of restructuring to reduce costs and it “wouldn't be unreasonable to expect some more of that to occur”, he said.
The airline had an extremely tough run coming out of Covid, followed by ongoing aircraft engine issues that grounded parts of its fleet. “So the business is probably going to be pushed to make some tough decisions about what routes they want to run or not,” Solly said.
It wouldn't be a surprise to see the Government offer some form of financial assistance along the lines of that it provided during Covid to maintain cashflow, Solly said.
A spokesperson for Prime Minister Christopher Luxon said the Government has been engaging closely with key industries affected by the global disruption to fuel supply, including aviation.
“We have also been in regular communication with our counterparts in Australia to share information about how we are each responding to the disruption and the impacts on our respective countries, but there have been no discussions specifically about working together to secure jet fuel,” the spokesperson said.
“New Zealand and Australian fuel importers source jet fuel from different places so the challenges will be slightly different, and fuel importers in New Zealand continue to report no material concerns with incoming shipments of jet fuel or any other fuel.”