Sydney | Published on 27th January 2015 at 9:06

The Qantas Group has reduced charges for Frequent Flyer redemption bookings by up to $130 and will move to gradually restructure its international tariffs so that fuel surcharges are absorbed into base fares.

Overall fares will not change as a consequence of the surcharge gradually being absorbed into base fares, as prices advertised to customers already include taxes and charges. Qantas will continue to price competitively, with fares moving in line with the broader market.

While global fuel prices have fallen in recent months, international air fares are extremely competitive and are significantly lower than when surcharges were first introduced 10 years ago.

Given the size of the Qantas International network the process to absorb fuel surcharges into international base fares for up to 200 destinations will take time.  As overall fares are not changing, customers will not be disadvantaged.

This change to Qantas’ international fare structure is in addition to its regular sales activity. Last week, the airline lowered economy fares to Asia, the US and Europe by more than $300 as part of a sale.

From tomorrow, fuel-related charges that currently apply to Frequent Flyer on Qantas and Jetstar Classic Award redemption bookings will fall by up to $110 in Economy and up to $130 in Premium Economy on some routes for a return flight. Reductions will vary across the network but average around 14 per cent.

There is no change to redemption or earn rates, with the cut delivering a tangible benefit to Frequent Flyers.

Qantas Group CEO, Alan Joyce, said:  “If you look at the trends in global aviation over the past decade, costs and competition have been increasing while fares and airline margins have been falling.

“The dynamics of this market have seen Qantas International post significant losses in the past two years. Even now, yields remain significantly below pre-GFC levels and like the rest of the industry our strategy is to keep strengthening them.

“Factoring in lower fuel prices, IATA estimates that the net profit airlines make per passenger this year will rise by just $1 compared with last year, from $6 to $7.

“In a highly competitive environment where customers are already paying less than they were several years ago, lower oil prices can help put the industry on a more sustainable footing. It means airlines are in a better position to invest in the new aircraft, new lounges and new routes that ultimately benefit customers,” he said.