Will 800,000 cheap airline tickets as part of a $1.2 billion spending package, be enough to hold off the pressures from the dying embers of the pandemic and closed borders on travel related stocks and industries?
Investors certainly gave the move the thumbs up yesterday, but the precise details haven’t been released and the amount of money to flow to actual travel or tourism venues looks light on.
Travel-related stocks jumped in the first 30 minutes of trading yesterday on the leaked news fresh stimulus to encourage Australians to take holidays in a post-pandemic world.
Most held onto to some (or all of the gains in a couple of cases) over the rest of the day.
Naturally, Qantas and Virgin both welcomed the plan for 800,000 half-price tickets for air travel between July and September.
But the scheme is for interstate travel and apart from one route – Adelaide to Kangaroo Island, intra state routes have missed out.
That will penalise people in southern Queensland wanting to travel north to Cairns and the Barrier Reef Islands, especially at Easter and the June long weekend.
Capital cities have missed out (Sydney is the biggest tourism market, or was and a major source of business travellers as well). They and the tens of thousands of people employed in hotels, eateries, bus tours and attractions will miss out on any benefits.
A new round of Victorian travel vouchers is also set to be released from Friday.
The plan is a more targeted and cheaper support plan to cover parts of the hard-hit tourism and travel sectors when JobKeeper subsidies end.
Flight Centre CEO Graham Turner said that 800,000 discount seats only equated to around two weeks domestic passenger traffic in pre-COVID times.
He doubted it would do much to prevent further widespread job losses once JobKeeper finished.
But something is better than nothing and this will be spread over a number of months to help keep demand steady and not just one big hit.
Rex, the new rival for Qantas and Virgin hit at the scheme, saying it looked like it is based on the Qantas network.
Perhaps that’s why Qantas CEO Alan Joyce was very happy yesterday.
He said the package was ”fantastic news for aviation and for the thousands of businesses, big and small, that rely on the tourism industry”.
“With the vaccine rollout now giving more certainty that state borders will stay open, this is the perfect time to provide stimulus and get people travelling domestically again,” he said.
So by the close there were some winners and not so winners among travel related stocks.
- Qantas, up 2.5% to $5.30
- Flight Centre, up 9.2% to $19.44
- Air New Zealand, up 3.2% to $1.59
- HelloWorld, up 4.8% to 2.41
- Webjet, up 3.7% to $6.08
- Corporate Travel, up 4.3% to $21.91
- Rex, up 1.8% to $1.68.
