Half-price flights aimed to spice up Australia’s ailing tourism

Australia’s government will subsidize 800,000 half-price airfares as a part of a A$1.2 billion package to prop up the nation’s ailing tourism industry. Stocks within the nation’s aviation and travel industries jumped.

To run from April 1 to July 31, the discounted fares are designed to assist tourism-dependent regions and will support airlines, hotels, and hospitality venues, Prime Minister Scott Morrison said during a statement. The package also includes further support for the international aviation industry and can expand a government-backed loan program to small and medium-sized businesses.

The subsidized tickets program “means more jobs and investment for the tourism and aviation sectors as Australia heads towards winning our fight against Covid-19 and therefore the restrictions that have hurt numerous businesses,” Morrison said.

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Australia’s domestic and international aviation industry has been badly damaged by the pandemic, whilst the state has managed to limit the waves of infections that have roiled Europe and therefore the U.S.

While the govt has provided billions of indirect economic stimulus to assist keep the economy afloat, it sees the necessity to deliver additional support as programs like JobKeeper -- which subsidizes businesses to stay employees -- wind down at the top of the month.

The economy powered into 2021, with gross domestic product jumping 3.1% within the final three months of last year from the prior quarter. Yet, the support package maybe a shot within the arm of an aviation industry shattered by coronavirus-related travel restrictions.

Qantas Airways Ltd., which is cutting a minimum of 8,500 jobs, lost about A$11 billion in revenue to the pandemic last year alone, quite half its normal annual sales. Its shares were up 2.9% at 10:52 a.m. in Sydney trading, while travel firm Webjet Ltd. gained 3.1%.

The national carrier said the govt package, which includes “direct support” for 7,500 Qantas employees impacted by international border closures, allows it to require more aircraft out of storage to organize for the opening of international borders, Chief military officer Alan Joyce said Thursday.

Domestically, the cut-price tickets are going to be available on 57 routes in Australia. “This package for us ticks all the boxes,” Joyce said.

Smaller rival Virgin Australia Airlines is under new ownership after collapsing in 2020. Global air travel isn’t expected to completely recover until 2024.

Morrison said Thursday that it had been too early to verify overseas travel would resume by October. Tourism operator Flight Centre Travel Group Ltd. said the package was “very small, very meager” and was unlikely to assist until international arrivals are allowed.

“Keeping the domestic borders open and getting the international borders open as soon as possible” was the sole way to turn around tourism, the company’s director Graham Turner said during a Nine Network interview.

Other details of the package include:

  • Qantas and Virgin Australia will receive support from April 1 to Oct. 31 to assist them to maintain an agreed core international capability
  • Extension of existing programs to Sept. 30, including ensuring passenger and cargo movement on key routes; waiving security charges; and supporting zoos, aquariums, and wildlife parks to take care of animal populations despite reduced revenue
  • Expanding and increasing its SME Loan Guarantee Scheme, targeting and tailoring it to support those businesses that are counting on JobKeeper; increasing it from A$1 million to A$5 million, and increasing the utmost eligible revenue from A$50 million to A$250 million

Reflecting months of pent-up demand, bookings for holiday flights within Australia are 10% to twenty above before the pandemic, Gareth Evans, CEO of low-cost carrier Jetstar, said Wednesday. Qantas-owned Jetstar aims to fly 90% of its pre-coronavirus schedule this month, Evans said.

“With all the borders open, just about, it’s looking pretty positive,” Evans said at an aviation conference. Qantas has said it'll operate 60% of its pre-virus domestic services this quarter, and 80% within the following three months.

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