Qantas CEO Alan Joyce said he expects airfares will rise as the cost of oil skyrockets.
The rising price of oil is impacting fuel prices, with the carrier’s oil hedging contracts set to expire later this year.
Joyce said Qantas would need to raise fares by 7 per cent.
“Seven percent is not massive but it will have an impact on some levels of travel out there,” he said at a conference hosted by The Australian Financial Review.
“If it moves further, for every $US4 on the barrel, it’s another per cent that airfares have to improve by.”
Joyce said the airline has hedged 90 per cent of its fuel needs through the end of June and 50 per cent in the following quarter.
“(Hedging) gives us time to react to that higher fuel price,” he said. “If we stay at these levels, airfares are going to have to go up.”
Joyce also warned that other carriers may have to ramp up their airfares even higher.
“None of the American airlines hedge. So that means that they are completely exposed to it now,” he said.
“A lot of the Asia carriers have a lot lower level of hedging. And we think a lot of our domestic carriers don’t have hedging.
“So the imperative for them to move is a lot bigger than the imperative that we have to move.”