SYDNEY (BLOOMBERG) – Australia’s government will subsidise 800,000 half-price domestic flights as part of a A$1.2 billion (S$1.25 billion) package to prop up the nation’s ailing tourism industry.
To run from April 1 to July 31, the 50 per cent discounted air fares are designed to help tourism-dependent regions and should support airlines, hotels and hospitality venues, Prime Minister Scott Morrison said in a statement on Thursday (March 11). The package also includes further support for the international aviation industry, and will expand a government-backed loan programme to small and medium-sized businesses.
The subsidised tickets programme “means more jobs and investment for the tourism and aviation sectors as Australia heads towards winning our fight against Covid-19 and the restrictions that have hurt so many businesses,” Mr Morrison said.
Australia’s domestic and international aviation industry has been badly damaged by the pandemic, even as the nation has managed to restrict the waves of infections that have roiled Europe and the US.
While the government has provided billions in direct economic stimulus to help keep the economy afloat, it sees the need to deliver additional support as programmes such as JobKeeper – which subsidizes businesses to keep employees – wind down at the end of the month.
The economy powered into 2021, with gross domestic product jumping 3.1 per cent in the final three months of last year from the prior quarter. Yet, the support package is a shot in the arm to an aviation industry shattered by coronavirus-related travel restrictions.
Qantas Airways, which is cutting at least 8,500 jobs, lost about A$11 billion in revenue to the pandemic last year alone, more than half its normal annual sales.
The national carrier said the government package, which includes “direct support” for 7,500 Qantas employees impacted by international border closures, allows it to take more aircraft out of storage to prepare for the opening of international borders, its chief executive Alan Joyce said Thursday.
Domestically, the cut-price tickets will be available on 57 routes in Australia. “This package for us ticks all the boxes,” Mr Joyce said.
Smaller rival Virgin Australia Airlines is under new ownership after collapsing in 2020. Global air-travel isn’t expected to fully recover until 2024.
Mr Morrison said on Thursday that it was too early to confirm overseas travel would resume by October. Tourism operator Flight Centre Travel Group said the package was “very small, very meagre” and was unlikely to help until international arrivals are allowed.
“Keeping the domestic borders open and getting the international borders open as soon as possible” was the only way to turn around tourism, the company’s managing director, Graham Turner, said in a Nine Network interview.
Other details of the package include:
• Qantas and Virgin Australia will receive financial support from April 1 to Oct 31 to help them maintain an agreed core international capability
• Extension of existing programmes to Sept 30, including ensuring passenger and cargo movement on key routes; waiving security charges; and supporting zoos, aquariums and wildlife parks to maintain animal populations despite reduced revenue
• Expanding and extending its SME Loan Guarantee Scheme, targeting and tailoring it to support those businesses that have been relying on JobKeeper; increasing it from A$1 million to A$5 million, and increasing the maximum eligible revenue from A$50 million to A$250 million
Reflecting months of pent-up demand, bookings for holiday flights within Australia are 10 per cent to 20 per cent higher than before the pandemic, Gareth Evans, chief executive officer of low-cost carrier Jetstar, said on Wednesday. Qantas-owned Jetstar aims to fly 90 per cent of its pre-coronavirus schedule this month, Mr Evans said.
“With all the borders open, pretty much, it’s looking pretty positive,” Mr Evans said at an aviation conference. Qantas has said it will operate 60 per cent of its pre-virus domestic services this quarter, and 80 per cent in the following three months.