Qantas has pledged to absorb A$200 million (£105 million) in increased fuel costs at time when fare are already inflated.
Providing a market update, the Australian carrier revealed that fuel prices have risen by around 30% since May, including a 10% spike since August.
This is driven by a combination of higher oil prices, higher refiner margins and a lower Australian dollar.
The group’s half year fuel bill is expected to increase by approximately A$200 million to A$2.8 billion (£1.4 billion) after hedging, if the rises are sustained.
A further A$50 million (£26 million) impact is expected due to non-fuel related foreign exchange changes.
Qantas said: “The group will continue to absorb these higher costs, but will monitor fuel prices in the weeks ahead and, if current levels are sustained, will look to adjust its settings.
“Any changes would look to balance the recovery of higher costs with the importance of affordable travel in an environment where fares are already elevated.”
Travel demand remains strong, the company reported, as it committed an extra A$80 million (£42 million) to customer improvements in the current financial year in addition to A$150 million (£78 million) previously budgeted.
The airline said: “This additional investment is aimed at addressing a number of customer ‘pain points’ through improvements such as better contact centre resourcing and training, an increase in the number seats that can be redeemed with frequent flyer points, more generous recovery support when operational issues arise, a review of longstanding policies for fairness and improvements to the quality of inflight catering.
“Qantas is also working to accelerate some initiatives already underway, such as the re-platforming of the Qantas app. More detail on these actions will be shared in coming weeks.”
Latest survey data shows that travel remains a top spending priority among Qantas frequent flyers over the next six months, “well ahead” of entertainment, renovations and homewares.
New aircraft deliveries and wet-leasing arrangements will help Qantas and subsidiary Jetstar boost international capacity by 12 percentage points by the end of the calendar year – equivalent to an increase of almost 50 additional flights a week.
This includes Qantas resuming a Sydney-Shanghai service and new routes from Brisbane to Wellington and Honiara, as well as a new Jetstar service from Brisbane to Tokyo.