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Qantas, Virgin Australia Benefit From Latest Australian Stimulus Package
On Wednesday, the Prime Minister of Australia, Scott Morrison, announced a 1.2 billion Australian dollar ($920 million) stimulus package, targeted at the tourism sector of Australia. As part of the stimulus plan, the Australian government plans to subsidize 800,000 flights at half price, to encourage domestic air travel in Australia.
Focus on Tourism Regions
These flights will be aimed at 13 tourism-reliant regions like Cairns, Gold Coast and Alice Springs from April 1 to July 31. Qantas and Jetstar will operate 550,000 of these flights, for a total of 32,000 fares per week. Scott Morrison hopes that the half-price flights will encourage spending on tourism, due to the restrictions that devastated the travel sector.
By the second quarter of 2021, the Qantas Group expects 80% of its domestic Australian capacity to be restored. Low-cost subsidiary Jetstar expects to operate up to 90% of pre-COVID capacity. Rival Virgin Australia expects 70% of pre-pandemic capacity by Easter.
Furthermore, Qantas and Virgin Australia – the two largest carriers in Australia – will receive additional government support to retain their resources associated with international operations. Specifically, both airlines will receive AU$200 million ($155 million) to retain their workforce, retrain in preparation for international flying, etc. In total, the government expects to preserve 8600 jobs related to international airline travel. Qantas expects to maintain up to 7,500 of its workforce for international flying.
Recent scheduling data shows that Qantas does not anticipate the start of international flying until at least the end of October.
Finally, the government will allow cheap loans for small/medium-sized businesses, an alternative to its JobKeeper program. These loans are up to AU$5 million ($3.85 million) in value, with two-year repayment holidays. For reference, the JobKeeper program paid Australian businesses $1,185 every two weeks to prevent employee layoffs. However, these payments have dwindled and are set to end on March 31. The stimulus package presented on Wednesday serves as a replacement for the JobKeeper program.
Mixed Reactions from Airline Leaders, Unions
Some have disapproved of the stimulus, claiming that it isn’t enough. For example, the CEO of one of the largest travel agencies in Australia, Flight Centre, claimed that the package was “very small and very meager,” in an interview with 9 News. Instead, he claimed that the focus should be on reopening Australia’s borders for international travel as soon as possible.
Unions in Australia expressed their frustration, stating, “We question the thinking behind ripping away wage supports now. Stopping that support at the final hurdle makes no sense and amounts to a waste of the hundreds of millions of dollars spent to date.”
Meanwhile, Qantas Airways and Virgin Australia have welcomed the news with praise.
Virgin Australia CEO Jayne Hrdlicka, states, “We have so many amazing tourism destinations right here in Australia, and this program enables irresistible prices that will get Australians out exploring the multitude of historically relevant, interesting and beautiful places we are lucky enough to have in our domestic backyard. There really has never been a better time to fly.”
She adds, “The new domestic tourism support programs announced today are smart and well-targeted to deliver an economic boost where it is most needed. To be in the position where we can safely encourage and promote domestic travel puts us at the envy of the rest of the world.”
Meanwhile, Qantas CEO Alan Joyce states, “In total, this package is a lifeline for the broader travel and tourism sector in Australia, just as it’s trying to get back on its feet. Ultimately, it’s an investment in an industry that has always been a huge driver of economic activity and will be again.”
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