LONDON – According to a study published by Ernst & Young, the Australian Government is losing A$319m per day due to disruption caused to the international and domestic air market.

The Business Council of Australia (BCA) has determined that the cost of the domestic shutdown in aviation has costed around A$17bn over the last seven months, with international flights costing A$61bn.

Photo: Aidan Pullino

Large Hit to the Economy

Commenting on this was the BCA CEO Jennifer Westacott who explained more about such losses incurred as a result of the COVID-forced shutdown.

“State border closures have seen passenger numbers on Australia’s busiest air routes plummet 91 per cent since March, crippling the aviation sector and causing harmful knock-on effects in tourism and hospitality. Every day flights remain grounded costs Australia A$69m or A$2.1bn a month. When you add in international aviation losses at A$250m a day or A$7.6bn per month, we are talking about an enormous hit to our economy.”

“We are calling on the national cabinet to announce a plan for domestic travel before December. Getting Australians flying again before Christmas would be a social and economic gift to the country, delivering an additional A$3.3bn.”

Photo: Aidan Pullino

Contributing Factors – Qantas’ View on Things, Volatile Virgin

The contributing factors behind some of the losses has come from the likes of Qantas (QF) and Virgin Australia (VA).

For QF, it had to heavily restructure back in June this year as well as canceling international flights until this month, which has now been extended into 2021. Back in May, the airline had to place Project Sunrise, the program for ultra-long-haul travel, on hold due to the continued financial effects of the pandemic.

Since then, the airline has been eyeing an international restart and has continued to commit to Sunrise despite the high level of disruption still taking place in the market.

As for Virgin Australia (VA), the airline actually went into administration back in April 2020 as the pandemic was throttling a lot of the airline’s finances. By June, it was announced the airline would be heading over to Bain Capital, saving thousands of jobs that could have been axed had a buyer not been found.

With that came plans for restructuring, such as the restructuring of lease arrangements with Avation over aircraft deliveries and more. Elements like that lead to the sale of the airline to Bain Capital to be approved by the Australian government. From there, it is now down to Jayne Hrdlicka, the new CEO of the airline to turn the airline around and bring it back to some level of normality and profitability.

Photo: James Field

Careful Approach Still Needed?

Of course, one thing that the pandemic has done, not just in Australia but around the world, is to balance the economic damage with the social damage of a country.

At the moment, the country is still taking a careful approach to the pandemic, similar to that of New Zealand who are very reluctant to open the borders currently.

As soon as the confidence builds up, then the border openings will come with that, meaning the likes of Qantas and Virgin Australia can begin to expand internationally once again.

Featured Image: Qantas Boeing 787-9 Dreamliner departing Brisbane Airport (BNE). Photo Credit: James Field

Like what you see online? Be sure to subscribe to Airways today, and get one per cent off using the code “AIRWAYSONE” – Click here to subscribe!