Virgin Australia has announced a slight reduction in its domestic flight operations over the upcoming months, attributing this decision to increased fuel expenses stemming from the ongoing conflict in Iran.

The airline plans to decrease its domestic flight capacity by 1 percent during the three-month period ending June 30. It has projected that fuel costs could exceed initial estimates by $30-40 million in the latter half of this financial year.

Virgin Australia has received assurances from its fuel suppliers regarding the availability of aviation fuel, which is expected to support operations through May 2026.

In its statement, Virgin noted that jet fuel prices have experienced significant volatility, more than doubling since the end of February 2026, which will affect fuel expenses for the June 2026 quarter.

To address these fluctuations in fuel prices, the airline intends to enhance its fuel hedging strategies in the short term. Additionally, it mentioned that various operational adjustments, including fare changes and capacity modifications, could be implemented gradually.

This update follows a recent announcement from Qantas, which indicated a potential impact of up to $800 million due to rising fuel costs, along with a reduction in its domestic flight capacity.

Despite the capacity cut in the current quarter, Virgin Australia remains optimistic, forecasting a 1 percent increase in domestic capacity for the entire second half of the financial year.