Airlines desperate for more Covid-19 assistance

Airlines’ recovery from the Covid crisis has been pushed back months by Sydney’s extended lockdown prompting calls for more government assistance.

Sydney Airport’s deserted baggage terminal as the city navigates an extended lockdown. Picture: Gaye Gerard.

Airlines’ recovery from the Covid-19 crisis has been pushed back months by Sydney’s extended lockdown, prompting calls for further government assistance.

After predictions Qantas and Jetstar would be back to 95 per cent of pre-Covid capacity by July, and Virgin Australia to 80 per cent, airlines are now operating at under 50 per cent.

Rex was even worse off, with deputy chairman John Sharp revealing the latest lockdown and border closures had shut down 80 per cent of the airline’s business.

According to Citi Research, domestic air travel was at just 43 per cent of pre-Covid capacity in the last week of June, compared to 52 per cent the previous week. Neither Qantas nor Virgin Australia was able to say how many flights had been cancelled in recent weeks, but it was believed to run well into the hundreds.

A Virgin Australia spokesman said the latest border upheaval had also forced the postponement of Sydney-Darwin and Sydney-Townsville services for the time being. Both routes had been due to resume this month.

Sydney’s northern beaches cluster in December cost Qantas $400m in earnings before interest and tax, and Mr Sharp said this outbreak was a “significant setback” for all carriers.

“You can’t lock the border between our two most populous states without it affecting the whole industry,” he said. “It’s a very significant closure because we’ve got Sydney effectively black-banned by every state and territory, and now nobody from New South Wales can go to Victoria unless they want to go through 14-days of quarantine.”

He said there was no chance any airline would be back to pre-Covid capacity this month, despite hopes that the vaccination rollout would help end lockdowns and snap border closures.

“Unfortunately this (outbreak) is taking us back to where we were at the beginning of the pandemic,” Mr Sharp said. “It’s going to be very hard for airlines.”

Although several federal government assistance programs were still in place for airlines, subsidising some regional and domestic routes, Mr Sharp said further help may be needed.

He said a half-price airfare initiative rolled out in May was not providing any benefit at the moment because so many interstate flights were unable to operate.

“No airline can continue to keep paying people when you can’t cover costs,” he said.

Former Qantas Group chief economist turned aviation consultant Tony Webber was optimistic the airline industry would rebound strongly from the current lockdown, and return to pre-Covid capacity later this year.

He said the emergence from Sydney’s lockdown would come as vaccination rates increased, boosting confidence in air travel.

“I would’ve thought that by the time you get into spring and summer, (airlines) will be close to where they were expecting to be,” Dr Webber said.