Strong numbers. Unfortunate timing.
The ABS Overseas Arrivals and Departures data for February 2026, released last week, captures Australia’s international border data in the final weeks before the Middle East conflict began to bite. The numbers are strong – in some respects stronger than pre-pandemic benchmarks. They are also, in all likelihood, the last relatively clean read we will get before the fuel shock, the airline capacity cuts and the cost-of-living squeeze hit where it hurts the most — the hip pockets of all Australians.
February is more than a monthly update. It is the benchmark against which the months ahead will be measured. For now.
What the February data shows
Short-term visitor arrivals in February 2026 were 943,220 – up sharply on February 2025 (787,770) and ahead of February 2019 (927,240). Meanwhile short-term resident returns were 891,460, slightly below February 2025 (923,360). Total arrivals came in at 1,986,720, up on February 2025 (1,870,730), and total departures at 1,675,760, also up year-on-year.
The inbound result is the standout. Short-term visitor arrivals exceeding both the February 2025 and the pre-pandemic benchmark is a genuine sign of how far the recovery had come. But not all the numbers are travelling in the right direction. The slight dip in resident returns may be an early signal of Australians pulling back on outbound travel as fares began to rise.
January 2026, released last month, tells the same story: short-term visitor arrivals of 716,680, resident returns of 1,665,100 (up 7.8 per cent year-on-year) and total arrivals of 2,519,500 – just below the pre-pandemic Januarys of 2019 (2.22 million) and 2020 (2.26 million), with outbound travel in January 2026 running clearly ahead of both 2019 and 2020 pre-pandemic levels. The TRA results for late 2025 are consistent with this picture. By the start of 2026, international travel activity had largely rebuilt.
What February can’t yet show
The military escalation in the Middle East did not begin until late February. The overwhelming majority of February travel was booked and travelled in a fundamentally different operating environment – one where Gulf airspace was open, fuel prices were at normal levels and households were not facing the kind of cost pressures that have emerged since. Any conflict-driven disruption to routes, capacity or consumer confidence is unlikely to be reflected in this data. February is the reference point. March and April releases will reveal if the ground has shifted and by how much.
The fuel bill is already biting
Qantas’s market update of 14 April laid it out plainly: jet fuel refining margins increased from around US$20 per barrel in February to a peak of around US$120, pushing the group’s estimated fuel cost for the second half of FY26 to between A$3.1 billion and A$3.3 billion, against a previous forecast of around A$2.5 billion. Qantas has hedged most of its crude oil exposure but carries significant unhedged refining margin risk, which is exactly where the shock has landed.
The operational response has been to cut domestic capacity by around five percentage points in the April to June quarter, while redeploying aircraft to European routes where yields are higher. Qantas and Jetstar international seat kilometres are holding broadly steady overall, but the network shape is changing. Capacity to the US has been cut; Paris and Rome are getting additional flights. Virgin Australia has also flagged roughly a one per cent capacity reduction and an increase of A$30 million to A$40 million in its second-half fuel bill.
Chinese carriers carry little to no fuel hedging protection, which means the current shock hit them harder and faster than most western airlines. Airlines including Air China, China Eastern, China Southern and Spring Airlines have been slashing their schedules, with confirmed reductions across regional Asian routes and some longer-haul services. At current price levels, the case for aggressive capacity growth into long-haul markets – including Australia – becomes harder to make. And the timing matters: Golden Week — one of the most significant outbound travel events in the Chinese calendar — is just weeks away.
Fewer seats means higher prices, and higher prices are a deterrent for price-sensitive visitors.
Cost of living: the other side of the equation
The fuel story is not just about airfares. Higher pump prices are already cutting a swathe through domestic household budgets via transport costs, freight and groceries. The pain at the petrol pump is forcing up inflation and making it impossible for the Reserve Bank to tighten the reins on further interest rate increases. Australian households have already been navigating a prolonged period of mortgage and rental stress; the addition of energy and food price hikes to the mix squeezes their discretionary spending even further.
That doesn’t mean people will stop travelling. But their decisions about destination, trip length, accommodation type and in-trip spending are all more constrained than they were a year ago. The surveys of domestic travel intent conducted before Easter showed most people still planning to travel, but with adjustments: shorter trips, closer-to-home destinations and sharper attention to value. A smaller proportion said they would cancel altogether, but cost thresholds matter, and they are being tested.
Inbound visitors making decisions about coming to Australia are navigating their own version of the same pressures: higher airfares because of fuel, potentially weaker exchange rates in some source markets, and their own domestic cost-of-living environment. Long-haul, price-sensitive visitors are the most exposed segment.
Operators are already feeling it on the ground
The border data, however, can only tell you so much. What it doesn’t reveal is what is happening on the ground at the operator level, where the pressures driven by domestic issues are already acute. The Queensland Tourism Industry Council this week warned publicly that time is running out for operators hit by years of compounding shocks – COVID, natural disasters, energy costs – with the fuel crisis now a tipping point. The core concern is that businesses are being forced to make decisions right now about whether they can afford to stay open. Queensland has seen revenue decline by 30 per cent across parts of the state, and QTIC estimates that even a small wave of closures could cost up to $943 million in lost economic activity and nearly 7,000 jobs. As such they are seeking a $50 million stabilisation package from government for the next 90 days.
The more immediate pressure for many regional operators is not a drop in international visitors. It is the collapse in domestic road-trip visitation over the recent school holidays with further losses likely in the months ahead – and critically in the important July school holidays when southerners are even more likely to head north, lured by the warmer Queensland weather. High pump prices and genuine uncertainty about fuel availability on long drives are keeping travellers closer to home. Queensland is most exposed given its reliance on the drive market from NSW and its own population centres, but the same dynamic is playing out across regional tourism economies nationally. The operators bearing the brunt are in remote and regional areas where fuel costs, transport dependencies and distance from major markets compound all the pressures they face.
February’s OAD numbers tell a story of a healthy recovery gaining pace. But the industry behind those numbers was already running on thin margins before this latest crisis hit.
What to watch for in March and beyond
March data will be the first release to capture the full toll the conflict is taking on travel. April will tell us whether any shift is sustained. The indicators worth watching are: short-term visitor arrivals by region, particularly from Northeast Asia; any change in the mix of short-term versus long-term arrivals from key markets; and resident returns, which will show whether Australians are being priced out of outbound travel by rising fares.
But the border data will only tell part of the story. The other part is playing out now in regional Queensland and tourism economies across the country – in occupancy rates, booking volumes, operator cashflow and the difficult decisions businesses are making about whether to trade through or cut their losses. Those signals will not show up in the OAD tables. They will show up in business surveys, industry body reporting and, eventually, in job numbers. Both sets of data matter, and neither should be read in isolation.
February 2026 confirms the recovery was real and, heading into the crisis, largely complete. But the fuel shock has arrived at the worst possible moment – for an airline industry repricing on the run, for inbound visitors weighing up the cost of getting here, and for operators on the ground who have absorbed years of compounding pressure and are now facing a tipping point. The next few months will test both the numbers and the industry behind them.
