INTHEBLACK December 2021 - Magazine - Page 46
F E AT U R E
// C I V I L AV I AT I O N
Right: With Australia’s border
reopening from 1 November,
Qantas has restarted flights to
key international destinations.
Opposite: From November,
fully vaccinated travellers are
able to enter Victoria and New
South Wales without needing
to quarantine.
Airlines’ current operating conditions are largely
determined by the availability of their domestic
markets and the progress in vaccinations among the
countries in their networks. Asia-Pacific carriers, for
instance, derive 45 per cent of their RPKs (revenue
passenger kilometres) from domestic markets,
while European carriers are highly dependent on
international passenger revenues, with domestic
markets representing just 11 per cent of RPKs.
“The short-term outlook is that, until there is
greater certainty around lockdowns and border
closures, the industry will continue to experience
cyclical ups and downs,” says Dr Tony Webber,
academic at the University of New South Wales
and CEO of Airline Intelligence and Research.
“The long-term result? I don’t really see any
material impact,” adds Webber.
“The industry has responded to significant shocks
in the past. We just need to reach that milestone of
herd immunity.”
Such long-term optimism is shared by Neil
Hansford, chair of airline consultancy Strategic
Aviation Solutions. “For the international passenger
market in Australia, I expect we’ll see green bubbles
opening in the Pacific early next year,” he says.
“Domestically, if we can get over the lockdown
hurdles, I expect we’ll get back to the levels we were
46 ITB December 2021
GOVERNMENT
FINANCIAL RELIEF
MEASURES AND
CAPITAL MARKETS
HAVE FILLED THE
HOLE IN AIRLINE
BALANCE SHEETS
TO DATE.
at before the Delta strain, when there were more
routes being flown.
“There will be a challenge for regional carriers
like Rex, however, because much of its fleet is 30-35
years old, and that’s going to be a significant burden.”
Adele Labine-Romain, Australian tourism sector
leader at Deloitte and a partner within Deloitte
Access Economics’ economic and policy advisory
practice, says that, while a return to pre-COVID-19
levels within the next 24 months appears unlikely,
positive signs are emerging.
“The American domestic aviation market is
growing strongly,” she says. “European carriers
are waking up as people begin moving around.
“In Australia, we saw domestic carriers go from
20 per cent of pre-COVID-19 capacity to 90 per cent,
and then back down again to 30 per cent or 40 per cent
with the wave of restrictions in places like New
South Wales and Victoria from July this year.
“Those are significant shocks for a fairly concentrated
sector to be able to absorb,” adds Labine-Romain.
“However, from the reaction we’re seeing in other
markets, demand has the potential to come back.”
Government financial relief measures and capital
markets have filled the hole in airline balance sheets to
date. As of June 2021, pandemic-related government
support funding had reached US$170 billion