SYDNEY (AFP) - Qantas said on Tuesday it was reducing fuel surcharges for its international flights, with chief executive Alan Joyce adding that the fall in petrol prices was helping the airline's bottom line.

Pressure had been mounting on Qantas to reconsider its use of fuel surcharges after fierce rival Virgin Australia last week scrapped such fees for its flights to the United States.

The lastest move by Qantas will see fuel surcharges gradually absorbed into base fares, the company said in a statement, but overall prices would remain the same. The Australian flag carrier argued that its ticket costs were already competitive. "We are seeing significant benefit coming through on fuel and that will help our international business get back into profits and it will help Qantas invest in the customer," Mr Joyce said on Tuesday.

He stressed that the highly competitive nature of the aviation market, rather than plunging oil prices, was behind the decline in fares in recent years. "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," Mr Joyce said in a statement earlier on Tuesday. "In a highly competitive environment where customers are already paying less than they were several years ago, lower oil prices can help put the industry on a more sustainable footing."

Several international carriers have already signalled their intentions to wind back fuel surcharges - among them Japan Airlines and Qatar Airways - amid the plunge in crude prices, which have lost more than half its value since June on weak demand and a global supply glut.

Australia's consumer watchdog said earlier this month it was investigating the reasons cited for fuel surcharges and whether airlines were making misleading, deceptive or false representations about such additional costs.

Qantas frequent flyer customers will benefit from the price restructure, which means they no longer have to pay an additional fee for the fuel surcharges on top of the points they use to redeem flights.

Economy passengers could save A$110 (S$117) on return flights to the US and premium economy passengers A$130 on return fares to South Africa.

Correction: The previous version of this story said that Qantas was dropping its fuel surcharge. The company has since clarified that the surcharge is being reduced and absorbed into base fares.