Qantas Airways Ltd says higher fuel costs are behind the airline's decision to lift ticket prices for domestic, trans-Tasman and regional services by up to five per cent from later this month.
The fare hike follows last week's announcement that fuel surcharges on international flights would jump by almost 50 per cent on certain routes.
Qantas chief executive Alan Joyce said fuel surcharges for domestic, regional and trans-Tasman flights were removed in early 2009 and a "modest fare increase" was the best way to deal with the rise in jet fuel prices.
"While we have been absorbing higher fuel costs for some time, this increase is an appropriate response to this significant and additional cost to our business," Mr Joyce said in a statement.
Fare increases of up to five per cent would apply from February 25, Qantas said. A list of eight examples included in Qantas's statement showed this would add between $4 and $10 per one-way ticket.
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A one-way Sydney-Melbourne fare would increase to $109, from $104 currently, while travelling between Melbourne and Auckland would cost $10 more at $272 one-way.
Mr Joyce said the increases would not fully recover the costs associated with higher fuel prices and he could not rule out further fare hikes should they be necessary.
The year-to-date average price for West Texas Intermediate crude oil and Singapore jet fuel were at their highest since 2007/08, Qantas said and higher than first half 2010/11 prices.
"The price of Singapore jet fuel, for example, had increased from an average of $US88 a barrel in September 2010, to $US110 a barrel in January 2011, and is $US117 a barrel today," Qantas said.
The airline group said its wholly owned, low-cost subsidiary Jetstar would adjust air fares and increase ancillary charges, such as baggage fees, to combat the higher cost of fuel. Qantas is due to release its half year results on Thursday, February 17 and closed down three cents at $2.39.
Meanwhile, the explosion of a Rolls-Royce Trent 900 engine on board a Qantas A380 in November last year has cost the engine manufacturer STG56 million ($A89.71 million).
The figure was contained in Rolls-Royce's full year accounts for calendar 2010, published in the UK on Thursday night (AEDT).
"The costs provided for this failure, including incremental service and support costs, un-contracted settlements to all affected customers and the impact on the group's operational activity totalled STG56 million," Rolls-Royce said.
Qantas was in discussions with Rolls-Royce regarding compensation and has commenced proceedings in the Australian Federal Court should the two parties fail to reach an agreeable outcome.
