Half-Price Flights Aimed to Boost Australia’s Ailing Tourism

Australia’s government will subsidize 800,000 half-price airfares as part of a A$1.2 billion ($920 million) package to prop up the nation’s ailing tourism industry. Stocks in the nation’s aviation and travel industries jumped.

To run from April 1 to July 31, the discounted fares are designed to help tourism-dependent regions and should support airlines, hotels and hospitality venues, Prime Minister Scott Morrison said in a statement. The package also includes further support for the international aviation industry, and will 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 the restrictions that have hurt so many businesses,” 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 U.S.

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 programs 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% 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 Ltd., 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. 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 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, Chief Executive Officer 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,” 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.

Morrison said Thursday that it was too early to confirm 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 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 programs 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% to 20% higher than 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, pretty much, it’s looking pretty positive,” Evans said at an aviation conference. Qantas has said it will operate 60% of its pre-virus domestic services this quarter, and 80% in the following three months.

©2021 Bloomberg L.P.

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