Background: Qantas, its budget bro Jetstar and Virgin Australia are the biggest... and only... domestic airlines in Australia… apart from Rex on the regional routes. In fact, they control 98% of the domestic airline industry.

What happened: Now, Virgin Australia is cutting more flights on its less popular routes in May and June, on top of already-flagged fare increases. The reason is that fuel price hikes are expected to add $40 million to its operating costs. Meanwhile, Qantas has also announced a 5% cut to domestic flights, warning its fuel bill could jump by as much as $800 million.

What else: These cuts all come down to one thing: profitability. Airlines need each route to stack up financially, and when costs rise and planes aren't full, the RASK just doesn't add up

What's the key learning?

💡 Airlines measure whether a route is worth flying using something called RASK (revenue per available seat kilometre). It's essentially how much revenue each seat generates per kilometre, and it determines whether a route is viable.  

💡 Rising fuel costs quickly can put a LOT OF pressure on airline economics. As fuel gets more expensive, airlines need higher fares or fuller planes just to break even...which is harder on lower-demand routes.

💡 So when costs spike, underperforming routes, especially regional ones, are cut as airlines constantly reassess what's profitable.