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Qantas has lifted fares and cut domestic flights amid a surge in travel demand away from airlines that transit through the troubled Middle East. The Australian airline says it has redeployed capacity from its US and domestic network to take advantage of the strong interest in Europe-bound travel - in particular to Paris and Rome - according to a market update released on Tuesday. Qantas plans to cut capacity across Qantas and Jetstar's domestic network by about 5% in May and June. This includes reducing the frequency on key routes between state capital cities, and cutting flights on some regional services. Persian Gulf carriers - including Emirates, Etihad and Qatar airlines - have been reducing services due to the Iran conflict, prompting passengers to seek alternatives. While Qantas is benefiting from demand for flights that transit through Asia, it says its jet fuel bill is rising sharply due to surging oil prices caused by the Iran conflict. "The group has taken action to mitigate the impact of the conflict in the Middle East, including international network changes, capacity adjustments and fare increases," Qantas said in a statement on Tuesday. The major changes include four temporary route suspensions: Melbourne - Hamilton Island (Qantas), Melbourne - Coffs Harbour (Qantas), Sydney - Busselton (Jetstar) and Darwin - Gold Coast (Jetstar). The suspensions mostly start in mid May. Qantas will also stop flying between Adelaide and Mount Gambier, indefinitely, citing low demand and high fuel costs. Qantas said its expected fuel bill for the second half of the 2026 financial year will be between $3.1bn and $3.3bn, up from its prior forecast of $2.2bn. To offset rising fuel costs, Qantas has increased ticket prices and prioritised flights towards high-demand European routes. It has warned it may need to take "further action", likely referring to further air fare increases. Airlines partially protect themselves against fuel increases by using hedging contracts that lock in a price for future fuel consumption. Shares in Qantas slid more than 3% in early trading on Tuesday, after releasing its market update, before staging a modest recovery.
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