Regional Australia is grappling with Qantas’s cancellation of a key route, as competitor Virgin Australia reveals its own price hikes and cutbacks.

Virgin, Australia’s second-largest airline, announced raises to airfares and cuts to capacity on Wednesday, a day after Qantas said it would reduce flights and lift fares because of the continued conflict in the Middle East.

It said on Tuesday its second-half fuel bill would rise by $800 million to $3.3 billion – prompting the decision to cancel all services between Adelaide and the regional South Australian city of Mount Gambier from May 18.

Qantas currently flies between the two cities four days a week. It cited fuel costs and declining demand for the cuts.

Regional Express (REX) Airlines, which flies to Adelaide and Melbourne seven days a week, will become the sole operator at Mount Gambier airport.

Qantas will also temporarily suspend two routes into Queensland, including Hamilton Island-Melbourne flights (from May 18 to June 29) and Darwin to Gold Coast (from May 18 to October 12).

Kerry Meares, who co-owns Coonawarra Experiences in Penola, said Qantas’s cancellation would reduce access to the region for visitors and locals.

“It just means that you’ll find people having to spend more time travelling on the road and taking more time out of the business to attend appointments or be involved in industry events,” she said.

Meares said driving to Adelaide for industry events meant multiple days off work.

“We were going for a medical appointment in June, plus an industry event. Now, we’ve got to decide whether we can continue,” she said.

“Probably what’s in the background for many operators, I would imagine now, is, ‘What does this mean for general visitation in terms of how many people will cancel trips or reconsider trips?’. A lot of people are starting to get Covid feels about this.”

Tourism operator Kerry Meares, with husband Simon, says the cuts are frustrating. Photo: Coonawarra Experiences

Mount Gambier MP Travis Fatchen said reliable and affordable transport was essential for the Limestone Coast.

“Not just for convenience, but for people needing to travel for medical appointments, for businesses to stay connected, and for specialists to access our community,” he said.

Fatchen said his immediate focus was on working with the state government and operators such as REX to ensure stable and reliable air services continued.

“We also need to look at practical ways to make regional travel more affordable. Other states are already doing this: Western Australia has a capped airfare scheme for regional residents, and Victoria has introduced capped regional public transport fares,” he said.

“These are the kinds of initiatives we should be exploring here in South Australia to support regional communities.

“At the end of the day, this is about making sure people in the Limestone Coast are not left behind. We need certainty, affordability, and solutions that actually work for the people who rely on these services every day.”

Kent Comley, the manager of Mount Gambier accommodation The Barn, was surprised and disappointed at the Qantas cut but said it was unlikely to have a major impact on his business.

He said there had already been cancellations at The Barn from people worried about fuel availability.

“I think we need to let this play out,” Comley said.

“The most important thing from our perspective is that customers are reassured that there is fuel supply in the regions and that they have confidence to travel.”

Meanwhile, Virgin Australia was confident about the effectiveness of its fuel hedging on Wednesday, despite facing an increased cost of $30-40 million in the second half of this financial year.

It said fare increases and capacity cuts would help protect earnings and left its profit outlook unchanged.

“Like the broader aviation sector, we are experiencing rising operating costs, now exacerbated by the situation in the Middle East,” a Virgin Australia spokesperson told InDaily.

“In response to the external operating environment, we have taken measured actions, including modest fare increases and targeted capacity adjustments.”

Virgin, which will report its fiscal 2026 results in August, still expects higher second-half underlying earnings than in the same half of last year, when it reported annual earnings of $664.4 million.

“The group continues to experience strong customer demand, with higher fuel costs largely mitigated through effective fuel-hedging and recent airfare and capacity adjustments,” the airline told the stock exchange on Wednesday.

Asked about the Qantas cancellations, federal Trade Minister Don Farrell said the government was “doing everything we can” to shore up fuel supplies.

“That is particularly concerning for a range of reasons, not just in the tourism space, but also the ability of people in Mount Gambier to get to Adelaide and vice versa,” Farrell said.

“Our objective at the moment is to try to find access to all those fuels that we need to keep those services running.”

Farrell flew to Singapore on Thursday for talks about fuel supplies. Prime Minister Anthony Albanese and Foreign Minister Penny Wong were in Brunei and Malaysia this week to do the same.

“We’re doing everything we can to ensure that we get access to all of the fuel we need to keep this country going,” Farrell said.

Republished from InDaily