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Qantas is to scrap fuel surcharges on international flights, but will raise its base fares to compensate for the cut.
The Australian carrier said overall fares will not change as a consequence of the surcharge “gradually being absorbed into base fares”.
“Qantas will continue to price competitively, with fares moving in line with the broader market,” the airline said in a statement.
The move comes as airlines face increasing pressure to cut fares on falling oil prices. Oil is around 60 per cent cheaper now than its peak in June last year and last month IATA predicted fares to drop 5 per cent in 2015.
"If you look at the trends in global aviation over the past decade, costs and competition have been increasing while fares and airline margins have been falling," said chief executive Alan Joyce in a statement.
"The dynamics of this market have seen Qantas International post significant losses in the past two years," he said, adding that yields were still significantly lower than before the global financial crisis.
The move by Qantas follows an announcement from Emirates last week that it plans to cut fuel surcharges and Qatar Airways is expected to follow.