Soaring Jet Fuel Prices Pose Headwind for Western Sydney International Airport as Airlines Trim Capacity
Why It MattersFuel-driven capacity trimming is delaying new-entrant growth at greenfield airports, as carriers favour fuel-efficient aircraft on established routes and take a wait-and-see approach to new markets.
High jet fuel prices are forcing airlines to trim routes and capacity, creating a short-term headwind for Western Sydney International (WSI) Airport as it seeks to attract new carriers. Transport Minister Catherine King said her office was monitoring how airlines were coping with escalating costs, noting that every airline was grappling with the issue and that Middle Eastern hubs had repeatedly stopped and restarted operations, putting pressure on aviation across the board.
Oil and jet fuel prices have risen sharply since the US and Israel began a war against Iran in February, even as travel demand remains strong. Brent crude was at US$73 a barrel in early February and now trades at US$113. Benchmark Singapore jet kerosene traded at US$85 to US$95 per barrel before late February 2026, spiked to an all-time peak above US$240 per barrel in March, and now trades around US$175.
Qatar Airways, which recently committed to flying three return trips a week to WSI beginning next year, carried about 170,000 passengers a day before the war; that figure has settled at about 145,000, and its destinations have fallen from 180 to 170. Qantas has stopped flying A380s between Melbourne and Los Angeles, using smaller Boeing 787s instead. Virgin said it planned for domestic capacity to fall by 3 per cent in the first half of 2027, similar to the Qantas Group, which said it continues to adjust capacity in response to rising costs including fuel.
Michael Galvin of AvLaw Aviation Consulting said route cuts can be an astute move that lets airlines redeploy newer, more fuel-efficient aircraft, and that it may be a difficult time to attract new entrants to WSI as airlines take a wait-and-see approach. He added that WSI, being government-owned, lacks the impetus to make massive profits from the start. The curfew-free airport currently has four round-trip flights a day. Singapore Airlines will begin one daily return flight to Singapore Changi next month, and VietJet has also committed to WSI, although a UK asset freeze is expected to delay its plans.
