Travel shares signal flying start to recovery as borders set to reopen

Travel stocks have soared on the back of an overwhelming response to the announcement Australians would be free to travel overseas from November.

Emirates and Qantas plan to extend their partnership until 2028.

Travel stocks have soared on the back of an overwhelming response to the federal government announcement Australians would be free to travel overseas from November.

On Monday, Flight Centre recorded the biggest gain on the ASX200, lifting 9.6 per cent to $23.95 a share.

Webjet rose 2.9 per cent, Corporate Travel Management lifted 3.3 per cent, and Regional Express made 6.9 per cent, while Sydney Airport, Qantas, Air New Zealand and Alliance Aviation also made solid increases.

Flight Centre CEO Graham Turner said it was clear the appetite for travel had not been diminished by the Covid-19 pandemic, judging by the rebound in the northern hemisphere.

“Markets in Europe, the UK, North America have been coming back quite strongly for a while now and trans-Atlantic travel reopens on November 1,” Mr Turner said.

“I’m not sure how that affects the share price but we rely a lot on international travel whether it’s in Europe or elsewhere, and I presume that’s what’s influencing investors.”

Flight Centre CEO Graham Turner. Picture: Steve Pohlner

Rex deputy chairman John Sharp was pleasantly surprised by the 6.9 per cent jump in the airline’s share price to a six-month high of $1.70.

After recently extending the stand down of 500 staff until the end of October, Mr Sharp said the ASX gain reflected the fact the “worst is behind us and the best is ahead of us”.

“We’ve now got a very bright light burning at the end of a very short tunnel,” he said.

“We’ve got the lockdown being lifted in New South Wales very shortly, and we’ve got the prospect of it happening in Victoria. (Demand) won’t go from zero to hero overnight but it will ramp up.”

The gains came as drugmaker Merck pushes ahead with approval for a new Covid-19 pill that has been shown in clinical trials to cut the risk of hospitalisation by 50 per cent.

If approved it would be the first tablet treatment for Covid-19, and could contribute to reducing traveller angst about exposure to the virus.

Meanwhile, Webjet reported an immediate surge in demand for international flights following last Friday’s announcement that border restrictions would ease in November.

Webjet CEO David Galt said the number of bookings through the site more than doubled in the three days after the announcement, with flights to London in the greatest demand.

“There were also bookings to Vancouver, Denpasar, Los Angeles, Bangkok and Honolulu,” he said.

“Departures in December were most commonly sought after but interestingly, there were also promising volumes of searches for flights to destinations like Rome, Paris and Athens for departure in May, June and July 2022, showing that some Aussies are already thinking about European summer holidays.”

He said 38 per cent of bookings had a lead-in time of six months, while 37 per cent had allowed between 31 and 90 days before travel.

“We expect bookings to go from strength to strength in the coming weeks and months as travellers lock in much-anticipated plans to visit friends and family, and we look forward to helping all Australians travel internationally again,” Mr Galt said.

Qantas continued to celebrate its plans for an earlier than expected return to international flights in November, with an extension of its partnership with Emirates.

Due to expire in 2023, the new deal will see the two airlines continue to share networks and loyalty program benefits through to 2028, subject to regulatory approval.

Qantas CEO Alan Joyce said the deal marked “the continuation of the one of the most significant bilateral partnerships in aviation”.

“We called it ‘seismic’ when it launched in 2013 and it has been, especially in terms of what it’s meant for over 13 million people who have travelled on flights that form part of the deal,” Mr Joyce said.

“The premise of our partnership with Emirates has always been that no airline can fly everywhere but combined we can fly to most of the places our joint customers want to travel to.”

Emirates president Tim Clark said the announcement reinforced the airline’s commitment to the Australian market, which it had served for 25 years.

“As borders re-open, we look forward to restoring our Australian flight schedules including our popular A380 services, and to welcoming customers to experience our best-in-class partnership for many more years to come,” Sir Tim said.