High jet fuel prices are forcing airlines to trim routes and capacity, creating a short-term headwind for the fledgling Western Sydney International (WSI) Airport as it attempts to lure new carriers.
Transport Minister Catherine King said her office was monitoring how airlines were coping with the escalating costs, as Sydney’s newest airport seeks new carriers.
“Every airline is grappling with that at the moment,” King told this masthead, the week Australia’s newest airport opened. “Obviously, the Middle Eastern airlines in particular, huge booming hubs suddenly almost stopping overnight and then restarting and then stopping again.”
“That is creating a lot of pressure on aviation across the board at the moment and so we always keep an eye on all of that,” she said.
The price of oil and of jet fuel have skyrocketed since the US and Israel began a war against Iran in February, driving up the cost of aviation even as demand for travel remains strong.
Qatar Airways recently committed to flying three return trips to WSI a week beginning next year. The Doha-based airline, a partner to Virgin, used to fly 170,000 passengers globally a day before the US/Israel-Iran War erupted in February. That figure has now settled to about 145,000 passengers daily. Tellingly, the number of destinations has fallen from 180 to 170 over that time.
For the sector, trimming capacity can mean flying smaller planes on the same routes or flying routes less frequently, as carriers are more reluctant to risk costly flying time on uncertain destinations and hubs.
Michael Galvin director at AvLaw Aviation Consulting said airlines cutting their routes now can be a “very astute move”.
“It’s an opportunity for airlines to review their, their route planning, their networks, to ensure they’ve got the most efficient aircraft operating in the highest revenue sectors.
“Routes that may have been marginal, for some time that have been subsidised by more profitable routes, are really being examined closely and capacity reduced on some of those routes.
“Hence, you’ll look at airlines, putting newer aircraft with more efficient engines that are more fuel efficient onto some of these routes and retiring or parking, temporarily sometimes, aircraft that are less efficient.”
Qantas, for example, has stopped flying its A380s to between Melbourne and Los Angeles and is now using the smaller Boeing 787 fleet for this service.
Galvin said it may be a difficult time to attract new entrants to WSI, with airlines adopting a “little bit of wait and see” approach.
In early February, Brent crude cost $US73 a barrel – now, it’s trading at $US113 ($161). Leading up to late February 2026, benchmark Singapore jet kerosene traded in the $US85 to $US95 per barrel range. It spiked to an all-time peak above $US240 per barrel in March and today trades around $US175 with no price relief in sight.
In its latest results, Virgin said it planned for domestic capacity to fall by 3 per cent in the first half of 2027, a number similar to the Qantas Group (which includes Jetstar) over the same period. Qantas said it continues “to make adjustments to capacity in response to increasing costs, including fuel”.
Capacity across airlines in the Asia-Pacific region saw capacity declined for the fourth month in a row in September, International Air Transportation Association numbers show.
In the that region, airlines cut 387,000 seats in the week to October 19 as part of a broader worldwide trend where carriers quietly unwound growth plans amid weaker demand, high fuel prices, and fading fuel hedging protections.
Across other regions, capacity losses were even steeper, with Europe shedding nearly 1.6 million seats and North America dropping 758,000 in the same time, according to data from the Centre for Aviation and OAG.
One advantage WSI has over other airports, though, is that being government-owned, it doesn’t have the same the impetus to make “massive profits” from the start, Galvin said.
“It’s not the same as if it was owned by the big superannuation funds that own most of the other airports.”
It’s in this climate that WSI, a curfew-free government funded airport offering alternative access to and from Sydney, is keen to attract more airlines. Currently, the airport has four round trip flights a day.
Next month Singapore Airlines will begin flying one daily return flight to Singapore Changi.
Low-cost carrier VietJet has also committed to WSI. Recent legal rulings in the UK have resulted in an asset freeze which is expected to delay the roll-out of a Vietjet-backed domestic airline named Cherrie Air.
King said: “We obviously keep an eye on all of the players across the aviation market, but we would really like to see them here and to be successful here at Western Sydney, and they’ve made that commitment and we’re looking forward to having them here.”
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