Jetstar overhead locker fees, starting at $25 one-way and rising to $52 on longer routes, are just the opening move in what budget carrier chief executive Stephanie Tully has described as a full pipeline of charges designed to strip the base fare down to its barest minimum.
Tully told investors on Thursday that Jetstar had ‘many more to come’ beyond the carry-on baggage fee that triggered a wave of consumer backlash when it was announced last month. ‘We’ve got a whole pipeline of ancillary [non-seat] initiatives,’ she said. The direction of travel is unambiguous: non-seat fees will do more of the revenue heavy lifting.
How the Jetstar Overhead Locker Fees Actually Work
Under the new model, Jetstar will remove its 7kg carry-on weight limit from February 2027. Passengers who want to use an overhead locker will pay a Priority Carry-on fee instead.
The pricing is tiered by route distance. The Guardian reports fees of $25 for Launceston to Sydney, $33 for Sydney to Melbourne, and from $52 for Cairns and longer routes. Passengers travelling with only an underseat bag, sized within Jetstar’s 56 x 36 x 23cm limit, can still place it in the overhead locker if space permits, at no extra charge.
Non-seat fees, including check-in baggage, preferred seats, cancellation rights, and meals, already generate more than $1 billion of Jetstar’s $6 billion annual revenue. Tully said that figure would rise significantly. The median Jetstar fare was close to $150 in the year to June, up from nearly $100 in 2022. Separating more services from the ticket price is the mechanism for keeping the advertised number low while extracting more per passenger.
Jetstar reported a 55 per cent surge in underlying earnings for the fiscal year ended 30 June and carried a record 16 million passengers domestically, according to The Straits Times. A business growing that fast has both the confidence and the commercial logic to test how far unbundling can go.
The Profit Picture at Qantas is Murkier Than the Headlines Suggest
The group results announced Thursday present a conflict worth pausing on. The original results commentary cited a pre-tax underlying profit of A$2.06 billion for the year to 30 June, attributing the decline to higher fuel costs. The Straits Times, however, reports an underlying profit before tax of A$2.39 billion for the same period, beating the Visible Alpha consensus estimate of A$2.38 billion and above the prior year’s A$2.08 billion. The Straits Times figure, which is more consistent with being described as the second-best result on record, is used here; it is possible the lower figure refers to a different profit measure or a sub-period.
Either way, fiscal 2023’s A$2.47 billion underlying profit before tax remains the record. And what is beyond dispute is the fuel cost pressure: Qantas absorbed an additional $610 million in fuel costs across its network, with older A380s particularly exposed. The airline now plans to start retiring those aircraft in 2028 rather than 2032, and is weighing Airbus A350-1000s and Boeing 787 Dreamliners as replacements, with up to 20 additional planes expected from 2030.
Qantas chief executive Vanessa Hudson was direct about the commercial response. ‘We are not saying that everything that can be done has been done, because we’re going to continue to drive where we see demand,’ she told analysts. ‘We’re going to continue to push to maximise revenue and clearly, obviously, maximise earnings.’ Fare increases, she made clear, remain on the table.
Overall revenue rose 7% to $25.5 billion. The loyalty scheme delivered a 12% increase in underlying earnings to $625 million, with Uber the fastest-growing points source. Qantas still expects loyalty earnings to reach at least $800 million by 2030, and guides to at least 5% growth in the coming financial year, even as banks reform credit card reward schemes ahead of the surcharge ban.
For the first half of fiscal 2026, Qantas expects domestic unit revenue growth of 3 to 5 per cent, down from 5 per cent in the prior year. A modest deceleration, not a reversal.
On Thursday, Qantas announced a final dividend of 16.5 Australian cents per share and a special dividend of 9.9 cents. The full-year ordinary payout of 33 cents is the highest in 17 years; the full-year special dividend of 19.8 cents is the first since fiscal year 2000. The share price rose more than 4% in early afternoon trading.
The real test for Jetstar’s unbundling strategy comes in February 2027, when the overhead locker fee goes live. Passenger load factors on the routes where the tiered pricing is sharpest will tell Tully quickly whether travellers baulk or simply pay up, as they have at every other airline that has walked this road before her.
