Qantas Response to Rising Fuel Costs - Further Domestic, Regional and Tasman Fare Increase

Sydney, 24 March 2011

Qantas announced today it would again increase domestic, regional and Tasman air fares sold in Australia as part of its ongoing response to high oil and jet fuel prices.

Increases of up to $10 per sector will apply to domestic and regional fares for tickets issued on or after 31 March. Increases of up to eight per cent will also apply to Tasman fares.

Qantas Chief Executive Officer, Mr Alan Joyce, said the current situation presented a significant threat to airlines in Australia and around the world.

"The increasing price of fuel is a major concern for the Qantas Group and the global aviation industry," Mr Joyce said.

"Airlines have a range of options available to them to manage this significant cost, and Qantas is among the best in terms of using mechanisms such as hedging and fuel conservation.

"However the situation today is very different to the last fuel crisis, when the global economy was strong. This time, the world is still emerging from the Global Economic Crisis, and demand is still recovering.

"Since international fuel surcharges and domestic fares increased last month, jet fuel prices have increased by a further 15 per cent, to more than US$134 per barrel today.

"Even with favourable hedging in place, it is still at a much higher price than we can absorb. In spite of this hedging offset, fuel surcharges and fare increases, we will not be recovering the full impact of current and forecast fuel prices.

"Our ongoing response to this situation remains under review and we also cannot rule out further increases in surcharges and fares in the future."

Fuel costs for the Qantas Group in the second half of this financial year are expected to rise to $2 billion.

Year to date average prices for both Brent and Singapore Jet Fuel are at their highest since FY08 and at current prices, second half FY11 prices are forecast to be around 20 per cent higher than in the first half. The price of Singapore Jet Fuel has increased from an average of US$88 per barrel in September 2010, to US$120 per barrel in February, and is trading at more than US$134 per barrel today.

Issued by Qantas Corporate Communication (5089)