Airline uncertainty raises alarm for local business community
Posted on April 21st, 2020
Following initial concerns raised by Capricorn Enterprise on 7th April 2020, the first Regional Tourism Organisation in Queensland to make a public statement about the looming airline crisis, a series of events has escalated.
As COVID-19 continues to lay waste across the nation, leaving multiple businesses destroyed, Capricorn Enterprise is expressing concerned alarm on behalf of local businesses and calling on the Federal Government, in partnership with its States and Territories, to afford financial solutions that will keep Virgin Airlines in the skies.
In the face of the severe uncertainty that has left Virgin Australia fighting to survive and entering into voluntary administration today, key concerns are focussed on our region’s broader business community, which will be severely impacted if future-proofing plans for regional Queensland are not resolved.
With business movements through Rockhampton airport accounting for 60% of passenger travel on Virgin Australia and 70-80% on Qantas (552,623 total passengers – 2018/19), the risk of facing a monopoly airline will have far reaching, and ongoing damaging effects for every single business within our region.
Capricorn Enterprise CEO, Mary Carroll said, “Of all the hits that industry has taken so far with the global pandemic, the collapse of Virgin Australia, should they not survive, would be the single biggest blow to the travel and tourism industry.”
“Government’s role is to step in when there is market failure as well as provide critical transport infrastructure, so there is absolutely no question that government support is required to keep the nation’s two significant airlines flying,” said Mary.
“2019 saw a record number of visitors to our Capricorn region (from Central Highlands to the Keppel Islands) with 1.2million domestic and international overnight visitors spending $668million dollars and staying for 5.45million visitor nights. In addition, we saw 1.5million day trip visitors spending $286 million dollars.”
“The business visitor makes up 40% of all visitors to our region (491,000), so it is critical to industry that two strong domestic airlines continue operating into the future.”
“If Virgin was to disappear, Qantas would effectively have a monopoly of the Australian skies once again, making business, family and holiday travel come at an extremely high price. We absolutely need two commercial passenger airlines flying to regional Queensland.”
Whilst we have been appreciative of the three federal packages that have been announced, including the $715 million rescue package (fees and levy relief), $198 million regional airline network support program (smaller airline applications ie. Alliance, Rex) and $165 million subsidy for city to city and regional flights (including three flights return per week ROK – BNE), there is an opportunity for government to become equity partners in Virgin Australia.
With Rockhampton’s airport servicing over half a million business and leisure passengers per year, the need to support Virgin in resolving their company’s future direction quickly to escape insolvency is vital to our region.
“It’s important to place emphasis on the voluntary part of administration. The airline is seeking critical time to work with potential investors on their financial solution and the Australian government with its partnering bodies. With assistance, the federal and state governments are in a position to help solve the problem for the good of the entire community, who will be most affected if a collapse was permitted,” said Mary.
“Both Qantas and Virgin are listed on the Australian Stock Exchange with Qantas restricted to retaining 51% majority Australian owned, and Virgin being currently 90% foreign owned.”
Qantas is owned by Air Canada, JetBlue, WestJet Airlines, EasyJet and Qantas Airways.
Virgin is owned by Singapore Airlines 20% (Singapore), Nanshan 20% (China), HNA Group 20% (China), Etihad Airways 20% (United Arab Emirates) and Richard Branson’s Virgin Group 10% and minor shareholders 10%.
Aviation experts have warned that if the Government refuses to rescue the failing airline now at the proposed $1.4 billion injection, it will leave the Qantas group with no competition. This monopoly situation could cost travellers an estimated $50 billion over 10 years, calculated by a 25-30% increase in airfares to the consumer.
“It remains in all of our interests to ensure that two strong domestic airlines continue operating to keep the air fair and get more people, including vital business travel back in the skies as soon as we can.”
Over the weekend, Queensland State Development Minister Cameron Dick offered a conditional lifeline to Virgin of $200million in state assistance if the airline’s headquarters remained in Brisbane.
Whilst Velocity Frequent Flyer Points cannot be currently redeemed, the points themselves are not affected by this voluntary administration.