Tourism chiefs brace for Virgin Australia hit
The $122bn tourism industry has urged Virgin, its backers and the government to find a solution to the airline’s woes.
The nation’s $122bn tourism industry has urged Virgin, its backers and the government to find a solution to the airline’s woes, saying the Australian industry cannot operate with just a single carrier.
The comments came as tourism operators have been left reeling as official figures show a 26 per cent dive in international tourism arrivals in February as the coronavirus restrictions took hold, the first such plunge since the September 2001 terror attacks in New York. Steeper falls are expected to follow for the month of March.
While the Morrison government has made clear it wants Virgin to sort out its own issues, senior tourism executives such as Flight Centre managing director Graham Turner and multi-millionaire Chris Morris say Australian tourism cannot operate with an airline monopoly.
The struggling airline employs about 9000 staff and carries around 25 million passengers annually.
Virgin shares remained in a trading halt on Wednesday, as the federal government increased pressure on Virgin Australia’s shareholders to step up for the embattled airline, after effectively ruling out a company-specific $1.4bn assistance package.
Treasurer Josh Frydenberg on Wednesday repeated calls for shareholders to be Virgin Australia’s first point of call, instead of Australian taxpayers.
Virgin’s ownership is split between Etihad, Singapore Airlines and Chinese carriers HNA and Nanshan. Billionaire Richard Branson’s Virgin Group still has a 10 per cent stake, and 10 per cent of the airline’s shares are listed on the ASX.
Flight Centre chief executive Graham Turner said it was very important Australia had two airlines. “We have spoken to (Qantas chief executive) Alan Joyce a number of times over the years. He does not mind having competition,” he said.
“I don’t think it is in Qantas’s interest to have a monopoly. It’s the same with Flight Centre. If we had 80 per cent of the bricks and mortar travel market inevitably our systems and people get lazy.
“Competition is very important. It’s very important for us to have two airlines. It’s essential.”
Computershare founder Chris Morris, who privately controls a multi-million-dollar hospitality portfolio of 15 pubs, Orpheus Island Lodge in far north Queensland, the Ville Resort Casino in Townsville and a fleet of helicopters, is adamant Australia needs two airlines.
“There has to be competition, but I am totally against individual bailouts. Governments have got to be careful, but I think it’s essential for two airlines in Australia,” Mr Morris told The Australian late Wednesday.
Webjet managing director John Guscic said Virgin Australia provided a valuable service to the Australian consumer.
“The loss of such a key transportation provider would be very economically damaging to the recovery of the tourism sector, especially as we seek to rebuild domestic tourism in the fire-affected communities around Australia.”
Virgin chief executive Paul Scurrah is working on a restructuring plan with investment bank Houlihan Lokey. With the backing of Labor, he believes the airline is crucial to Australia’s economic recovery and the government should take an equity stake to secure its future.
As the coronavirus pandemic sweeps the global economy, an effective lockdown on tourism has forced Virgin to ground its international flights and cut back almost its entire domestic services. This has put pressure on its ability to repay its $5bn debt pile.
Prominent tourism identity Grant Hunt, the operator of 900 beds plus camping from Uluru to far north Queensland’s Mossman Gorge to the Home Valley Station in the Kimberleys, said: “You would have to think over time if there is only one single airline prices will be impacted.”
The Voyages Indigenous Tourism Australia chief executives said he was not favouring Qantas or Virgin. “We love them both, but it’s a better industry when we have two airlines.”
Asked if the federal government should intervene with a financial package to keep Virgin flying, Mr Hunt said: “I am not sure how we get there, but it would be good for Virgin to have a pathway out …(but) there are a lot of asks on the government at the moment — they can’t do everything.
“We need two airlines, that is as plain as I can be. We need capacity into our destinations.”
Another prominent travel industry executive said domestic services would pick up much faster if there were two carriers.
The comments come as official figures showed Australia recorded the first major fall in international tourism arrivals since the September 2001 terror attacks in the US.
Australian Bureau of Statistics international arrivals data for February 2020 reveals a 12.5 per cent drop in short-term overseas visitor arrivals from January.
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