Australian Government Extends Aviation Support Schemes to Boost Domestic Services

Qantas Airways plane takes off at Sydney Airport in Sydney on March 19, 2020. (Saeed Khan/AFP via Getty Images)

Australian airlines are assured of the financial resources needed to sustain domestic air travel services until the end of December after the federal government announced an extension of its support to the sector to facilitate the nation’s economic recovery from the pandemic induced by the CCP virus.

In the meantime, Qantas Group and Virgin Australia have confirmed the suspension of their subsidised international flights from June 8 after their government-contracted rescue flights expired.

The government has put in place more than $1.2 billion worth of measures since March to assist the aviation sector in coping with near-zero demand due to travel restrictions, including a $298 million scheme to keep regional airlines operating, and a $165 million underwriting for flights run by Virgin and Qantas to maintain a skeleton network across the country.

The deputy prime minister and the transport minister Michael McCormack confirmed on June 7 that a range of initiatives would be extended.

“We have kept the aviation sector going by funding minimum networks to get essential personnel and critical supplies to where they may be needed,” McCormack said in a statement.

He said the extension aimed to ensure “Australian airlines and operators can maintain essential air services” so that Australians can access domestic air travel as restrictions are relaxed.

This includes extending the Domestic Aviation Network Support (DANS) program to September 30, to maintain connectivity on major domestic air routes, and extending the Regional Airline Network Support program from September 30 to December 31, to ensure essential flights continue to regional communities.

The government will continue to cover operating shortfalls on a minimum number of flights on key routes, and on a limited number of regional route services.

The extension also applies to a range of measures under the $715 million Australian Airline Financial Relief program, which is made up of waivers of government charges backdated to February 1.

In addition, the $100 million Regional Airlines Funding Assistance program will be extended until December 31 or when the funds are exhausted.

Domestic Services Are Recovering

The announcement injects a much-needed boost to domestic network recovery, as Qantas Group and Regional Express Airways (REX) have both started to expand its domestic services from this month.

Qantas Group plans to increase its domestic flights by Qantas and Jetstar from just five percent of normal levels to 15 percent by the end of June, equating to more than 300 return flights per week, and further up to 40 percent for the July school holiday period if border restrictions have eased further by then.

In response, REX, the largest independent regional airline in the country, moved to double its flying schedule starting from June 6 to regional towns that are in competition with Qantas, including Albury and Wagga Wagga.

REX, which flagged a plan to launch flights between capital cities last month, is believed to be the largest beneficiary of the government’s support schemes for the aviation industry, having received a total of $67 million in grants as reported by the Australian Financial Review.

However, with domestic travel restrictions still in place, and international restrictions unlikely to ease in the near future, the road to recovery for the aviation industry will be slow.

Greg Bamber from Monash University, an expert in management and industrial relations in the aviation industry, told the ABC recently that the federal government needed to stump up funds, expecting up to three years for the air travel demand to return to pre-pandemic levels.

Given this, he warned that the aviation industry would collapse without government support.

Qantas also told the ABC that some flights it was currently operating were still commercially unviable due partly to ongoing interstate border restrictions.

Qantas and Virgin Suspended International Flights

While embracing the recovery of the domestic network, Qantas has ended its special government-underwritten flights to Auckland, Hong Kong, Los Angeles, and London, with the last of the subsidised international flights landing in Australia from Los Angeles on June 8.

The airline confirmed the suspension of the international flights in a statement provided to The Epoch Times, explaining that they were operated on a cost-recovery basis, with passenger revenue remitted to the government to offset the cost of operations.

“The temporary international network that Qantas was operating on behalf of the Federal Government has now ended,” the statement reads.

“We were proud to have helped thousands of Australians return home as well as taking foreign nationals back in the other direction.

“We’re particularly grateful to the crew who operated these regular flights together with charters to various other countries over the past few months.”

Qantas will continue to fly some international freight flights and said it was ready to fly some “ad hoc ” international services if required.

Virgin Australia, which entered voluntary administration in April, with more than $7 billion debt, has also suspended its weekly Brisbane to Los Angeles flights which were also underwritten by the government while rescue flights were operated.

The agreement, signed on May 8, had enabled the airline to operate one return service per week between the two cities.

The suspension leaves United Airlines’ daily Sydney to San Francisco service as the only direct passenger link between Australia and the United States.

Several international airlines are now offering flights from Australia through to the UK and Europe, including Qatar Airways, Emirates, Etihad Airways, and Cathay Pacific.

With international travel restrictions still in place, only Australian citizens, residents, and immediate family members can travel to Australia and must go into quarantine for 14 days on arrival.