Qantas steps up flights to Europe as travellers scramble for options in Iran war

Qantas will increase flights between Australia and Europe, as it responds to the strong demand driven by the fallout from the Iran war, which has led to thousands of flight cancellations by airlines using the Persian Gulf as a transit hub.

The nation’s biggest airline will increase flights to Paris from three to five a week, leaving from Sydney and transiting through Singapore. Departing from Sydney rather than Perth, where the flights are currently originating, will add 60 more seats on each flight, it said. Qantas will also fly daily now from Perth to Rome, up from four flights a week.

Qantas, like other major carriers, is responding to the disruptions in the Middle East, which have seen travel options through hubs such as Dubai, Doha and Abu Dhabi practically disappear as airlines were forced to cancel flights due to safety concerns. That in turn has increased appetite for flights between Australia and Europe that avoid the region, and has sent ticket prices through the roof.

A Sydney to London one-way ticket now averages more than $1500, roughly double last year’s price, according to an Alton Aviation Consultancy analysis of data from analytics firm Cirium.

Seeking to capture the stepped-up demand, the airline will also increase its Perth-Singapore service to 10 flights per week, timed to connect with its Singapore-Paris flights. At the same time, it will continue its daily Perth to London service via Singapore, even as it offers a direct London-Perth connection.

The changes take effect progressively for flights from mid-April and run until late July. Qantas is doing this by redeploying some Boeing 787s out of US routes and moving some Airbus A330 used for domestic flights onto international routes. It didn’t immediately respond to questions about pricing for the new flights, having increased fares on all international routes earlier this month.

Qantas’ schedule changes come as airlines and governments around the world are bracing for a shortfall of jet fuel supply as the fallout from the Iran war continues to ripple through the aviation industry, forcing carriers to avoid critical Middle Eastern hubs for months to come amid safety concerns.

Asia is particularly affected, due to its dependence on Mideast oil and its vulnerability to shortages linked to Iran’s effective closure of the Strait of Hormuz. Starting to feel the crunch from what is quickly shaping up as the biggest oil crisis since the 1970s, Asian governments are looking at fuel restrictions or rations to prevent domestic shortages, and airlines are making contingency plans.

While gulf carriers such as Emirates and Qatar Airways – international code-share partners of Qantas and Virgin Australia, respectively – continue to operate in the conflict region, albeit on vastly reduced schedules, Asian airlines such Cathay Pacific, Japan Airlines and Singapore Airlines have suspended their flights into the Middle East for the next two months.

Some international airlines have taken the region off their flight map for even longer, with Lufthansa confirming it has suspended most flights to the Middle East until late October “due to the volatile situation”. US aviation giant United Airlines’ chief executive Scott Kirby said this week his airline won’t fly back into the Middle East until October at the earliest.

Kirby said flying commercial planes in an area targeted by drones and missiles is “outside the envelope of” what United would be “willing to do”.

“I think that the war will end, and people will once again feel safe in the region,” he said.

Yet oil prices will remain “higher for longer” as the conflict and its aftermath play out for global markets, he warned.

After Brent crude oil prices shot as high as $US120 per barrel last week on the back of the hostilities, they have come back to $US98 on Thursday amid hopes a 15-point US peace plan could pave the way for an end to the war with Iran. Jet fuel has been particularly squeezed – almost doubling in price.

Despite hedging themselves against fuel price fluctuations, both Qantas and Virgin have hiked their airfares in response to the conflict. Qantas also pointed out that while it hedges the oil price, it doesn’t hedge the more volatile refining margins, or the cost of refineries to produce the jet fuel.

In this environment, airline ticket prices have jumped by an estimated 15 to 20 per cent since the conflict began at the end of February, Kirby said.

Tehran’s war strategy of striking neighbouring oil-producing countries in the Persian Gulf in retaliation for the US-Israel attacks, and blocking the crucial Strait of Hormuz, through which 20 per cent of the global oil supplies sails, has caught the US off guard.

With uncertainty about the length of the war and its follow-on effects spreading, Asian countries are scrambling to secure supply and protect their fuel stocks.

South Korean airlines have been notified about refuelling restrictions by some countries, and their government is discussing whether to redirect export-bound jet fuel to its domestic market, the nation’s transport ministry said in a statement to Bloomberg on Wednesday.

China and Thailand have tightened curbs on refined fuel exports to protect their own strategic stocks, while Australia temporarily cut 20 per cent in its minimum stockholding obligations for diesel and petrol amid dwindling imports. However, the country only produces 20 per cent of the jet fuel it needs.

In another sign of the war’s impact on aviation, Singapore has announced a delay on a planned sustainable aviation fuel (SAF) levy that airline customers were meant to start paying next month, due to the surge in fuel costs spurred by the Iran war. The extra charges will now begin October 1, Singapore’s civil aviation authority said on Wednesday.

Philippine Airlines’ president Richard Nuttall said the South-East Asian nation may soon resort to fuel rationing. In Vietnam, the aviation agency warned of potential jet fuel shortages from early April, and is cutting flights as a result.

Closer to home, Qantas’ budget carrier Jetstar this week cut more than 10 per cent of its flights between Australia and New Zealand, and within New Zealand in a move described as “temporary”.

How temporary it is will depend on how much longer the almost-four-week-old war drags on.

with Bloomberg

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