The ASX travel sector shares will be on watch today as the government announced the new support measures for businesses like Qantas Airways Limited (ASX: QAN).
What’s the new stimulus for the ASX travel sector?
According to reporting by media, such as the Australian Financial Review, the federal government is going to stump up half of the cost of airfares for 800,000 domestic travellers who go to destinations that are normally supported by international tourists.
This seems like it could have the dual benefit of supporting airlines such as Qantas, Virgin and so on, as well as providing support for the struggling regional locations.
There will also be “retention payments” to the two major airlines between April and October when international travel is expected to restart.
However, in order for the airlines to get these payments, they must keep a total of 8,600 internationally-focused airline staff on the books.
Another measure to help a wide range of businesses is an expansion of the low-interest loan scheme to help both travel and non-travel businesses. With the new plan, the businesses will be able to borrow up to $5 million for 10 years with a 2-year non-repayment period for both interest and the principal, according to the AFR. Around 350,000 businesses will be eligible for this.
What destinations are going to get supported?
The government is expected to support flights to the Gold Coast, Kangaroo Island, the Whitsundays and Mackay region, Cairns, Maroochydore, Merimbula, Avalon, Alice Springs, Uluru, Launceston, Devonport, Burnie and Broome.
More destinations could be added in time, such as the ‘Black Summer’ bushfire locations.
But, for this plan to work, the federal government pointed out that state borders can’t be rushed closed.
What do ASX travel share CEOs think of this?
As I’m sure you could guess, the Qantas CEO Alan Joyce loves the idea: “This is great news for Australian aviation. This is great news for Australian tourism. This is great news for Qantas, but particularly for Qantas employees, who have suffered pretty badly over the last year.”
However, the Flight Centre Travel Group Ltd (ASX: FLT) CEO Graham Turner was not impressed. The AFR quoted Mr Turner, who said it was pretty disappointing: “There is nothing in it for us. I don’t think it will help tourism either. We are a large organisation. We can survive until the borders reopen but there is going to be a lot of small businesses suffer through this, unfortunately. It is a very small, very meagre package at the best.”
Mr Turner said that 800,000 tickets only equated to up to two weeks of normal domestic travel. He’s focused on international travel reopening.
It will be interesting to see what the share prices of Qantas, Flight Centre, Sydney Airport Holdings Pty Ltd (ASX: SYD), Webjet Limited (ASX: WEB), Helloworld Travel Ltd (ASX: HLO) and Corporate Travel Management Ltd (ASX: CTD).
