Australia reduces airfares to 50% to boost tourism

SYDNEY, Australia: The Australian government unveiled A$1.2 billion tourism support package on Thursday, aimed at boosting local travel while international routes remain closed because of the coronavirus pandemic.

Australians will be able to buy half-price flights to a dozen domestic holiday spots under a new scheme to boost tourism.

The basket of airline ticket subsidies for travellers, cheap loans to small tour companies and financial aid for the country’s two largest airlines is designed to keep the critical sector ticking over until foreign tourists return.

“This package will take more tourists to our hotels and cafes, taking tours and exploring our backyard,” Prime Minister Scott Morrison told reporters in Sydney.

The list of subsidised destinations includes the Gold Coast, Cairns, the Whitsundays, Alice Springs and Broome.

“That 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.”

Tourism is a significant growth driver for the Australian economy, generating A$60.8 billion (US$47 billion) in the gross domestic product (GDP) in 2018/19 and employing about 5% of the country’s workforce.

The economy powered into 2021, with GDP jumping 3.1% in the final three months of last year from the prior quarter as some restrictions were lifted. Yet, the support package is a shot in the arm of an aviation industry shattered by coronavirus-related travel curbs.

The sector was hit hard when Australia closed its international borders – with a few exceptions for returning nationals and some others – a year ago to prevent the spread of Covid-19. A series of internal state and territory border closures sparked by Covid-19 outbreaks exacerbated the downturn.

The country’s two largest airlines, Qantas Airways Ltd and Virgin Australia, slashed flights and put planes into hibernation while thousands of people across the industry became reliant on a federal government wage subsidy programme, which expires this month.

Qantas, which is cutting at least 8,500 jobs, lost about 11 billion Australian dollars ($8.5bn) in revenue to the pandemic last year alone, more than half its normal annual sales.

The support package includes A$200 million (U$155 million) for Qantas Airways Ltd and Virgin Australia from April to October to help maintain aircraft that are not in service, bringing planes out of storage and wages for international flying staff.

“This programme allows those people to stay connected with Qantas so we don’t lose them … because when the borders open up, we need the capability to start as many flights as possible,” Qantas Chief Executive Alan Joyce said.

Qantas hopes to resume some international flights by the end of October when Australia expects to complete its national Covid-19 immunisation drive. Morrison said it was “too early” to confirm a projected date for the international border to reopen.

The 50% subsidies on some 800,000 plane tickets will be focused on destinations that usually rely heavily on foreign tourists, including Alice Springs and Kangaroo Island and will be available from April 1 until the end of July.

Shares of travel-related stocks led to gains on the Australian sharemarket, with travel agents Flight Centre Ltd up more than 10% and Webjet Ltd up more than 3% to trade near one-year intraday highs. Qantas was up 2% in early afternoon trading.

Not all industry groups were happy with the support package, which also includes cheap 10-year loans for small tourism companies, many of which are struggling under mounting debt.

“This narrowly targeted package is disenfranchising for many hard-working operators in the tourism industry whose plight is being ignored,” said John Hart, the executive chair of the tourism division of the Australian Chamber of Commerce and Industry.

“The package also fails to acknowledge that up until the Covid-19 pandemic, the tourism industry was poised for enormous growth.”