Australia-based airlines that increased ticket prices to cope with skyrocketing international oil prices must now drop fares in line with falling oil prices, Australia's Treasurer Peter Costello says.

Qantas last month imposed further fuel surcharges on its international flights.

The hike took the surcharge on a return flight to Europe to $392, and a return flight to the United States to $290.

Since then, the price of both crude oil and jet fuel has fallen sharply, but the savings have not been passed on to consumers.

"I think those airlines that said they had to have surcharges because the oil price was going up should now be saying, 'well they can take off their surcharges because it is coming down again'," Mr Costello told Sky News.

"And I wouldn't expect airlines to hold temporary surcharges, which were put in place in relation to temporary conditions, to hold those surcharges once those conditions have passed." (Australian dollar is the currency used in this report)