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# Qantas Deepens Domestic Capacity Cuts as Fuel Forecast Rises
- URL: https://www.theamericanquorum.com/qantas-deepens-domestic-capacity-cuts-as-fuel-forecast-rises/
- Published: 2026-11-06T06:20:39.000Z
- Updated: 2026-11-06T06:20:39.000Z
- Description: Qantas now expects domestic capacity to fall 4 percent in the March quarter, twice the reduction it forecast in August. The group raised its fuel cost estimate while keeping modest international growth in its plans.
- Author: News Desk
- Tags: Travel

Qantas Group now expects to offer 4 percent less domestic capacity in the three months through March 2027 than it did a year earlier, twice the reduction it forecast in August. The Australian airline group also raised its estimate of fuel costs for the six months through December to A$3.75 billion, up A$150 million from its previous forecast.

The Nov. 6 [market update](https://www.nationaltribune.com.au/qantas-group-market-update-5/?ref=theamericanquorum.com) draws a distinction between trips within Australia and flights abroad. The group, which includes Qantas and its low-cost carrier Jetstar, still expects international capacity to grow modestly in the March quarter. It said it has adjusted both fares and flying in response to fuel costs and will continue doing so. It did not announce a uniform fare increase or identify individual domestic routes where travelers would see changes.

## The reduction is concentrated at home

The March quarter forecast puts Qantas Domestic capacity 5 percent below a year earlier and Jetstar Domestic capacity 3 percent lower, according to [Australian reporting](https://www.businessnewsaustralia.com/articles/qantas-capacity-cuts-and-fare-rises-loom-as-fuel-bill-forecast-to-hit-375b.html?ref=theamericanquorum.com). For the December quarter, group domestic capacity is expected to be 5 percent lower. International capacity, by contrast, is expected to rise 2 percent across the first half of the financial year and 1 percent in the March quarter. That leaves total group capacity flat for the half and down 1 percent in the March quarter.

In its [August results](https://investor.qantas.com/FormBuilder/%5FResource/%5Fmodule/doLLG5ufYkCyEPjF1tpgyw/file/2026FY/QAN%5FFY26%5FASX%5FMedia%5FRelease.pdf?ref=theamericanquorum.com), Qantas measured capacity in available seat kilometers, which multiply the seats offered by the distance flown. A reduction in that measure can reflect fewer departures, smaller aircraft or a shift in the mix of routes. It does not mean that 4 percent of scheduled flights will be canceled. For someone planning a connection within Australia, the group forecast is a reason to pay attention to the timetable for that particular journey, rather than an estimate of how many options they will lose.

## Fuel hedges soften the cost increase

The A$3.75 billion forecast is about 4 percent above the August estimate of A$3.6 billion. Qantas told investors it expects fuel prices to stay elevated through the financial year ending in June. As [Reuters](https://www.reuters.com/business/australian-carrier-qantas-sees-higher-first-half-fuel-costs-fiscal-2027-2026-11-05/?ref=theamericanquorum.com) reported, the group said it was about 85 percent hedged for that year, predominantly in Brent crude oil. Hedging can limit the effect of a move in the underlying oil price, but a crude oil contract does not necessarily offset a rise in the additional cost of turning crude into jet fuel.

That difference mattered in the previous financial year. Qantas said its Brent hedges provided a A$400 million benefit, but it was still largely exposed to changes in jet fuel refining margins. The latest estimate is also a forecast, not the final bill. What the airline spends will depend in part on fuel prices and how much it uses. The timing matters for passengers because schedules and fares can change while that cost is still uncertain.

## Higher revenue does not mean a fixed fare increase

Despite the more expensive fuel outlook, Qantas kept its forecast for total unit revenue growth of 8 to 10 percent for both its domestic and international businesses in the six months through December. [Australian Aviation](https://australianaviation.com.au/2026/11/qantas-eyes-fare-hike-reduced-capacity-amid-fuel-crisis/?ref=theamericanquorum.com) also reported that Qantas continues to see strong leisure demand. Unit revenue measures revenue relative to capacity. It can rise when flights fill more seats, when the mix of tickets changes or when fares rise. It is not an estimate of what the same ticket will cost a traveler next month.

The [competition regulator](https://www.accc.gov.au/media-release/the-qantas-group-and-virgin-australia-report-substantial-earnings-despite-increased-fuel-costs?ref=theamericanquorum.com) has already documented how tighter supply and resilient demand can affect Australian travelers. It found average domestic fares were 4 percent higher in June than a year earlier, before moderating in July. Seat capacity fell 2.3 percent in both May and June. The regulator said planned reductions could put upward pressure on fares, depending on fuel prices and airlines’ commercial decisions. Those earlier figures describe the whole domestic market, rather than the results of the cuts Qantas has just forecast.

## What the update means for upcoming trips

Qantas said some customers are redirecting international trips away from the Middle East, supporting demand across Qantas and Jetstar. That helps explain why the group can maintain plans for modest international growth even as it pares domestic flying. It also means an overseas itinerary with an onward flight within Australia can draw on two parts of the network moving in opposite directions. Growth across the international network says little about how many connections will be available after arrival.

The update gives no breakdown by airport or travel date. The clearest evidence of an effect on passengers will be changes to the flights offered on particular routes and the fares available for comparable trips. Qantas says it will give its next unit revenue outlook for the second half of the financial year when it reports in February. Until then, the firmest conclusion is that the group plans to fly less domestic capacity than it expected in August while preserving modest growth abroad.