Qantas Response to High Fuel Prices

Sydney, 03 February 2011

Qantas announced today it would increase international fuel surcharges in response to rising oil and jet fuel prices. The changes will apply to tickets issued on or after 19 February.

Qantas Chief Executive Officer, Mr Alan Joyce, said oil and fuel prices had increased sharply in recent months.

"Year to date average prices for both West Texas Intermediate Crude Oil and Singapore Jet Fuel are at their highest since FY08, and second half FY11 prices are forecast to be around 20 per cent higher than in the first half," Mr Joyce said.

"The price of Singapore Jet Fuel, for example, has increased from an average of US$88 a barrel in September 2010, to US$110 a barrel in January 2011, and is US$117 a barrel today.

"Many airlines have already responded to this significant increase in their operating costs and adjusted their fuel surcharges and fares in recent weeks and months.

"Qantas has been closely monitoring the situation for some time now and has held off any move on surcharges for as long as possible.

"But based on industry forecasts, and our own assessment, prices will, at the very least, remain at their current higher levels."

For tickets on or after 19 February, the new fuel surcharges (A$ one way ex-Australia) will be:

- UK and Europe New $145 Previously $95
- Mainland USA, Canada, South America, South Africa and India New $115 Previously $85
- Asia, Pacific, Honolulu New $75 Previously $55

Prior to today's announcement, international surcharges had been reduced on four occasions since October 2006, and from as much as $210 one way between January and October 2008, when oil prices were at similar levels to today.

Qantas removed domestic and Tasman fuel surcharges in January 2009. Domestic and Tasman fares are under review.

Mr Joyce said Qantas would continue to closely monitor oil and fuel price movements.

"Even with a conservative but robust fuel hedging policy, our business will continue to be exposed to this significant cost increase," he said.

"Qantas surcharges will not fully recover this additional cost, and we cannot rule out further changes in the future."

Qantas has hedged 66 percent of its remaining fuel requirement in FY11 at a worst-case crude oil price of US$93.06 per barrel, including option premium.

Jetstar will not reintroduce fuel surcharges and remains committed to offering the lowest fares. Jetstar will address the impact of higher fuel prices via adjustments to air fares in selected markets and increases in ancillary revenue, including baggage charges.

Issued by Qantas Corporate Communication (5070)