Are Fuel Prices Qantas’ Biggest Problem?

Written By Gerry Mabarrack

 

Are Fuel Prices Qantas’ Biggest Problem?

A negotiation lens on how grievances are handled in the moments that matter

In its full-year result on 27 August 2026, Qantas reported an unexpected $610 million increase in its fuel bill over the final four months of the financial year.

Qantas responded quickly. It lifted fares, cut capacity and redeployed aircraft towards Europe. The net hit to earnings fell to $420 million.

Qantas had the information, the authority and the incentive to act.

Fuel is a cost the airline can measure, hedge and manage.

The harder cost to see is lost customer goodwill. It happens when a customer’s problem meets a policy and the outcome puts the relationship at risk.

Two recent stories and one publicised story from twenty years ago show how.

 

A correction that cost $1,000

A family member recently flew to the United States to meet his new grandson. He booked directly with Qantas.

The night before departure, he noticed an error on his ticket. His surname appeared twice.

His priority was simple. Get to the US and meet his grandson.

He also wanted the record corrected, a fair outcome for an innocent booking error and a quick fix at a sensible cost.

What followed was hours on the phone. The answer each time was ‘this is policy’.

The remedy finally offered was to cancel the ticket and buy a new one at the current fare.

It cost him another $1,000.

Same passenger. Same itinerary. Same destination.

Qantas states its policy for travel agents on its own website. A ‘name correction’ fixes an error in the name of the existing passenger. A ‘name change’ applies when the travel moves to someone else. The agency process allows certain corrections to be authorised and the ticket reissued.

His booking was direct, so I treat the agency terms as a guide only.

Those terms tell us something useful. Correcting an existing passenger’s name is an established process for Qantas. The $1,000 was the price of the remedy on offer. Fixing the surname itself was likely a far smaller task.

Qantas also has legitimate interests. Ticket integrity matters. Fare conditions matter. Systems need to work at scale. Revenue matters too.

So the better question is this: what could both parties have traded to reach a fair outcome even if a reissue was the only process available?

One fair trade might have been an $85 reissue fee and Qantas credits 2,500 frequent flyer points for the hours he spent on the phone.

He receives something he values. Qantas gives something that costs it relatively little. Its ticketing system and commercial model stay intact. So does the relationship.

A simple error ultimately cost the customer $1,000 and Qantas a great deal of goodwill.

 

What a once-in-a-lifetime trip is worth

A few weeks earlier, a friend travelled to Paris for a once-in-a-lifetime pilgrimage.

Her bag was offloaded and moved multiple times. She was also told several times it would reach her in Europe the following day. It eventually went back to Australia.

The window for the pilgrimage closed. She missed it.

The first compensation offer was $800. Further discussion has lifted that to a cash figure which should cover most of the clothing and other costs created by the missing luggage.

That is progress.

One question remains. What was the experience itself worth?

The Montreal Convention and Qantas’ Conditions of Carriage set a framework for delayed baggage and provable financial loss. Receipts establish the cost of clothing. Only she can really put a value on what the pilgrimage meant to her.

That requires a conversation with her.

The negotiation starts with the interests underneath the claim.

She wanted the pilgrimage. She put money, time and a great deal of emotional energy into being there.

Qantas has interests too. It needs a remedy that is commercially sensible, easy to explain and proportionate to what happened.

Those interests create room to trade.

She could put a value on the opportunity she lost. Qantas could explore restoring some or all of that value through future travel credit.

That gives her choices. She may return and complete the pilgrimage another time. She may decide the moment has passed and use the credit for a different trip.

Either way, Qantas restores meaningful value at a lower cost than a cash payment for the same amount and gets another opportunity to rebuild the relationship.

A good grievance remedy restores enough value for both parties to see the outcome as fair and gives the relationship a future.

 

The question that came too late

Twenty years ago, a Qantas passenger in New Zealand was told at check-in to put his insulin in his checked luggage for a flight from Auckland to Christchurch.

He became seriously ill during the flight. The severity of what followed was later questioned. The advice he received at check-in was clearly wrong.

When the story reached the media, Qantas apologised.

Qantas offered him a return flight. He also wanted help with about NZ$500 in medical costs.

A pretty reasonable proposal.

Someone needed to ask the question much earlier:

‘What would you like us to do to put this right?’

In my experience, the answer is usually reasonable.

 

Negotiation and grievance proposals

Every one of these situations created a grievance.

The original mistake starts it. The way the grievance is handled decides what happens next.

I learned this discipline at Scotwork, the negotiation training firm where I trained and later worked as a senior consultant and tutor.

The principle is simple.

If you are aggrieved, propose a remedy.

If you are receiving the grievance, ask the other party what they would like you to do to put it right.

Then listen.

Hear the proposal out in full. Question it, clarify it and summarise it. Probe the basis of the request to understand what is really driving it. Then try to give them what they want on terms that preserve the relationship.

Understanding interests is critical.

A position tells you what someone says they want. Their interests tell you why it matters.

The traveller’s position was ‘correct my ticket’. His interests were getting to the US to meet his grandson and paying a fair price to fix an innocent mistake.

The pilgrimage traveller may ask for compensation. Her deeper interest may be another opportunity to have the experience she lost.

Once you understand the interests, you can start looking for different ways to satisfy them.

That is where negotiation creates value.

 

High value can come at low cost

One of the most useful things to understand in negotiation is that something can be worth a great deal to one party and cost the other relatively little.

Frequent flyer points are an obvious example. A modest points credit can mean far more to an inconvenienced traveller than it costs the airline.

Travel credit can work the same way. The customer receives meaningful future value. The airline keeps the relationship and brings future spending back to itself.

Good trades look for those differences in value and cost.

Grievance handling gives both parties the opportunity to understand what matters to the other and find a remedy that feels fair.

That is where value can be created.

 

The loyalty paradox

To be fair to Qantas, its customer numbers look good.

Its FY26 result reported a domestic Net Promoter Score of 40, up seven points and its highest in a decade. Its reputation score rose from 69 to 74. Qantas Frequent Flyer grew to 18.9 million active members.

Its complaints page says the right thing too:

‘We treat complaints as an opportunity to put things right and improve our services.’

So how do these experiences fit?

Overall measures tell us how the business is performing across millions of journeys.

The more interesting question is what happens when something goes wrong.

A loyalty program that tracks millions of members, points and transactions should also recognise the individual moments that change a customer’s future behaviour.

A grievance can determine whether that customer comes back and what they tell other people.

That has real commercial value.

 

Where policy meets people

An extra $1,000 to fix a duplicated surname feels like a fine.

An opening offer of $800 for a once-in-a-lifetime opportunity feels like a ‘brush-off’ compared with what the customer believes she lost.

Fair outcomes need trained judgement and permission to decide.

That raises a governance question.

Policies exist for good reasons. They are usually designed to protect particular organisational interests.

Frontline teams need to understand those interests, recognise when applying the policy may put other interests at risk and know when they can resolve the matter themselves or need to escalate it quickly.

Value in these moments comes from judgement. Remove the judgement and the opportunity to create that value goes with it.

Eventually someone asks the question, ‘How will this be put right?’

Sometimes the customer asks it over and over.

Sometimes the media asks it.

Increasingly, regulators may ask it. Legislation introduced into federal Parliament in April 2026 would establish an independent Aviation Consumer Ombudsperson and pave the way for minimum standards covering complaint handling and remedies for baggage delays.

The commercial opportunity is to ask the question first and resolve the grievance while the relationship is still strong.

What this means for a medical practice

Every medical practice has its own version of ‘this is policy’.

A patient disputes a missed-appointment fee because they were in hospital.

A gap fee comes as a surprise.

A repeat script request arrives through the wrong channel.

The principles are the same.

Understand what the patient is trying to achieve.

Understand what the practice rule is there to preserve.

Ask what would put the matter right.

Understand the interests sitting underneath the proposal.

Then look for a remedy that carries real value for the patient on terms the practice can live with.

Most importantly, give your frontline team clear parameters for using their judgement.

A policy that keeps producing grievances is telling you something.

That is probably the next thing to look at.

 

Where loyalty is decided

Fuel prices will rise and fall.

Qantas has shown it can respond quickly when those costs move.

Customer goodwill moves one interaction at a time.

Grievance handling is one such moment where that goodwill can be strengthened or lost.

Every organisation makes mistakes.

The commercial question is what happens next.

Customers remember how they were treated long after they have forgotten the policy.

That is where loyalty is built…or permanently lost.

So here is the question worth asking this week.

What is your organisation’s version of ‘this is policy’ and what happens to the customer when they hear it?

Sources

 

Gerry Mabarrack
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