Virgin Australia has lowered fares to Los Angeles as plunging oil prices cut its fuel costs.
The $40 saving on economy fares and $50 for business class came as the airline moved to include the $680 fuel price surcharge on flights to LA in the base fare.
Qantas has not followed suit, but has launched an already planned sale that undercuts Virgin's new fares.
The change to Virgin's fuel surcharge comes as the consumer watchdog investigates whether the two airlines have misled consumers by maintaining surcharges on international flights.
Fuel surcharges were introduced in 2004 amid a spike in oil prices, and have been lifted several times, but have not moved since oil prices halved in recent months.
Virgin said on Thursday it was lowering fares for its services to LA from Sydney and Brisbane in anticipation that fuel costs would continue to remain at lower levels than the record highs seen in recent years.
But there will be no immediate change to prices on Virgin Australia's domestic routes, with the airline saying competition had already kept fares low.
"Over the past 10 years, despite oil prices reaching some historic highs, domestic airfares in Australia have gone down more than 20 per cent, driven by strong competition in the market," a spokeswoman said on Thursday.
Qantas said it would continue to monitor its fuel surcharges, but consumers were already getting competitive prices.
"The bottom line for consumers is that Qantas fares already in the market are some of the cheapest in years," a spokesman said.
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