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The Iran war has been one of the most severe shocks to global aviation since
COVID-19, significantly impacting Qantas. It has increased fuel costs and airfares,
forced detours on key Europe routes, and reshaped demand and capacity across its
international network.

The biggest impact on Qantas has been the surge in oil and jet fuel prices.

Disruptions around the Strait of Hormuz have driven prices sharply higher, with jet
fuel reportedly rising from around $85–90 to as much as $150–200 per barrel. As
fuel is one of Qantas’ largest expenses, even with hedging, profits are under
pressure due to higher operating costs. These increases have been passed on to
customers, with international airfares rising by about 5%. Qantas has replaced hundreds
of domestic flights with smaller aircraft to save money on fuel. Rising fuel costs have also
been blamed by Jetstar for a decision to cut some of its flights.

The ACCC (consumer watchdog) is keeping close tabs on airfares as the Middle East conflict unfolds and has warned airlines not to mislead passengers about the impact of fuel price hikes.

The war has caused major airspace closures across the Middle East, a key corridor
between Australia and Europe. Airlines have been forced to reroute flights,
increasing travel time and fuel costs. Although Qantas’ current network is less
dependent on Middle Eastern hubs, its flagship nonstop Perth–London flight has
been temporarily rerouted to include a refuelling stop in Singapore to avoid hostile or
closed airspace.

However, there is a silver lining.

With Gulf hubs disrupted and many European and Middle Eastern airlines cancelling
or rerouting flights, Australians rebooking to Europe are increasingly choosing
Qantas. Its European services including Perth–London, Perth–Paris, seasonal
Rome, and services via Singapore routes are operating at over 90% load factors,
about 15 points above normal.

The conflict may also accelerate Qantas’ “Project Sunrise” nonstop A350 flights from
Sydney and Melbourne to London and other cities via polar and Southern Ocean
routes, bypassing the Middle East entirely.

Sources: Qantas hikes international airfares citing volatile oil prices by Luca Ittimani The
Guardian March 10th
ACCC warns Qantas, Virgin not to mislead passengers over airfares by Robyn Ironside The Australian March 24 th
Qantas replaces hundreds of flights with smaller jets to save fuel by Robyn Ironside The Australian March 26 th .

Image – Source: Qantas