Tourism industry will bounce back from Virgin collapse: Gutwein

Tasmania’s tourism indutsry is “robust”, but it may not survive expensive flights to and fro the mainland if Virgin Airlines folds, say tourism experts.

TASMANIA’S tourism industry will bounce back strongly from COVID-19 despite Virgin Australia going into voluntary administration, Premier Peter Gutwein says.

Virgin Australia today entered voluntary administration “to recapitalise the business and help ensure it emerges in a stronger financial position on the other side”, the company said in a statement.

Mr Gutwein said having two airlines in Australia was important for competiton, but the state’s tourism industry was an established and robust brand.

“We have the fantastic wilderness, the beautiful scenery, the Tasmania that so many of us have for a long period of time took for granted, which is now acknowledged around the world as being just such a fantastic location to visit — that will remain.

“Regardless of how many airlines are flying, we will see demand for the product, when the borders can be removed and reduced.”

Mr Gutwein said the State Government had not offered the airline any financial assistance along the lines of that offered by Queensland and NSW.

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Tourism Industry Council of Tasmania CEO Luke Martin said he was optimistic about the airline’s restructure and said history had shown that domestic travel bounced back strongly from major crises.

“It’s administration, not receivership, out of this will come a restructured Virgin or an alternative ownership structure,” he said.

“The reason that this is a good thing for Tasmania is that Virgin have tried to compete with Qantas on the mainland on business travel and have given up the low-cost leisure traveller.

“Hopefully what will come out of this is that they will compete more with Jetstar in that market.”

Mr Martin said there was also the potential for Tasmania to benefit from a boost in domestic travel during any period that there were still restrictions on international travel.

Federal Labor MP for Lyons Brian Mitchell said the loss of Virgin would be devastating for the state.

“This is absolutely catastrophic for Tasmania, it really is, particularly for regional Tasmania,” he said.

“If Virgin goes, we’re talking about a monopoly carrier again. Even if someone else does come in it takes years to get the contracts and routes in place.

In addition to the loss of up for 16,000 jobs, Mr Mitchell said Tasmania risked becoming an expensive destination for visitors under Qantas monopoly.

“We’ve grown used to seeing international travellers coming to Tasmania and spending up big.

“Now we’re going to have to rely on domestic travel. Qantas will cut the flights and the prices will go up. Tasmania will become an expensive destination from the mainland.”

Greens Senator Peter Whish-Wilson said airlines were essential services and the federal government should step in and take an equity stake to maintain competition in the market – particularly for the sake of Tasmania.

“We know we can’t do without them and they’re highly vulnerable to these external shocks which are completely out of their control,” he said.

“Things would come to a standstill here if it wasn’t for good air services.

“Look around the world, a lot of governments have equity positions in airlines.”

Federal Finance Minister Mathias Cormann has rejected calls for the Federal Government to buy a stake in Virgin Australia or to make a bailout loan.

Senator Cormann says the government wants to see two airlines remain in Australia, but cash would not be forthcoming.

“The government is not in the business of owning an airline,” the finance minister said.

“But we do want to see two airlines continue and we believe that the opportunities (are) there out of the administration process for that to happen.”

Administrators will look at ways to save the business including restructuring debt, as private equity firms circle, sparking hopes of a sale.

Virgin Australia Group Chief Executive Officer, Paul Scurrah, said: “Our decision today is about securing the future of the Virgin Australia Group and emerging on the other side of the COVID-19 crisis.

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Administrator Vaughan Strawbridge said the company said it would continue to operate its scheduled international and domestic flights.

“Our intention is to undertake a process to restructure and refinance the business and bring it out of administration as soon as possible.

“Australia needs a second airline and we are determined to keep flying. Virgin Australia will play a vital role in getting the Australian economy back on its feet after the COVID-19 pandemic by ensuring the country has access to competitive and high-quality air travel.”

The Transport Workers’ Union has appealed for government assistance to save the airline

The union’s national Michael Kaine said urgent action was needed to save jobs.

“The choice is to save 16,000 jobs and it is about whether to consign Australia to a monopoly by one airline which will mean the country will struggle to get back on its feet,” he said.

“Governments around the world are stepping up and supporting their aviation industry. Australia is an outlier on this and as we approach the eleventh hour on Virgin’s survival now is the time for a bold stance,” he added.