Qantas will reduce fuel surcharges on its international fares from tomorrow due to recent falls in world oil and jet fuel prices.

Surcharges on flights from Australia to the UK and Europe will be cut by $20 to $190.

The surcharges on flights to the US, Canada, South America, South Africa and India will be $15 lower at $150.

Surcharges on flights to Asia will be cut by $10 to $110, while flights to New Zealand will incur a surcharge of $70, a drop of $5.

Domestic fares will also be reduced by two to three per cent, Qantas executive general manager John Borghetti said.

Oil hit an eight-month low on Monday when it slipped under $US90 per barrel in New York trade as the global financial turmoil and plunging stock markets raised fears about slowing demand.

Crude oil futures have recently been trading within a band of about $US80 to $US95 a barrel, well below the record highs of $US147 reached in July.

However, Mr Borghetti warned that oil prices remained volatile.

"Although the price has fallen below $US100 in recent days, oil remains very volatile and a major challenge for the airline industry," Mr Borghetti said.

Qantas's fuel bill for the 2008/09 fiscal year would be $1.3 billion higher than the previous year, he said.

AAP