Qantas Airways will remove domestic fuel surcharges from New Year's Day.
Qantas said on Tuesday the surcharge of $US18 per sector will end for tickets issued on or after Thursday, 1 January, for all Qantas domestic and QantasLink bookings.
Qantas last week announced that it had reduced its international and domestic fuel surcharges for the third time in recent months because of falling oil prices.
But executive general manager John Borghetti said international surcharges would remain due to its higher fuel costs associated with its overseas operations.
Qantas expects fuel bill this financial year will still be $A400 million higher than in 2007/08.
However, Qantas says domestic fuel surcharges still apply in New Zealand.
Budget airline Jetstar also said it would drop a domestic fuel surcharge from 1 January in response to lower oil and jet fuel prices.
Jetstar has already announced reductions to long-haul international fuel surcharges, a short-haul Asian fuel surcharge and on trans-Tasman routes.
Last week, Virgin Blue said it would eliminate its fuel surcharge on domestic flight airfares and cut the surcharges for Pacific Blue trans-Tasman and Pacific Island flights.