SYDNEY - AUSTRALIA'S flagship airline Qantas Airways said on Thursday it will increase fares from June 4 in response to record oil prices, and has also increased its fuel hedging programme for next year.

The airline said international fares will rise by around 4 per cent and domestic fares by around 3 per cent following increases of around 3 per cent and 3.5 per cent respectively from May 9.

Qantas Chief Executive Geoff Dixon said in a statement that the increases were unavoidable given continuing high oil prices.

In the face of the higher costs, the airline will also review its network and schedules across its mainline, regional and discount Jetstar flying brands.

'Oil and jet fuel prices continue to break records, with West Texas Intermediate spot crude oil passing US$134 (S$182) a barrel overnight and Singapore Jet Fuel today trading at nearly US$166 a barrel,' Mr Dixon said.

Qantas has increased its fuel hedging and has covered 59 per cent of its expected crude oil requirements for the year to June 2009, at US$111.81 a barrel for West Texas Intermediate spot, inclusive of option premium. -- AP