- Lockdowns and state border closures set to weaken and slow down the domestic travel recovery.
- Qantas airline standing down its staff signals the prospect of a longer road to recovery.
- The rise in infections lead to a blow to the tourism businesses.
With Australia battling a rise in COVID-19 cases, domestic travel has reduced drastically. While Australia’s domestic recovery was strong in H1 2021, the reintroduction of lockdowns and state border closures will serve as a blow, and set to weaken and slow down the domestic travel recovery. Additionally, Qantas airline standing down its staff signals the prospect of a longer road to recovery.
Quick domestic recovery in Australia could be in jeopardy with the cases spiking, and border closures getting extended, despite strengthening the domestic demand in H1 2021. The latest industry forecast expects the domestic travel to rebound to 93.8 million trips in 2021, returning to 80.4% of pre-COVID trips (2019), but the delta variant could hinder this expected strong recovery. Australia has been a leader in keeping COVID-19 under control with extremely low infection rates and strict international travel restrictions, kept cases at bay.
The rise in infections lead to a blow to the tourism businesses, currently reliant on domestic travelers until at least mid-2022, when international borders may reopen. If lockdowns persist and traveler confidence drops, demand may dampen, and Australia’s domestic recovery could be prolonged.
The recent restrictions have starved Australia’s tourism industry of trade, and the country’s biggest airline – Qantas – is beginning to feel the bite by standing down 2,500 employees.
Qantas’ recovery has focused on domestic routes with international borders largely closed. The carrier was beginning to experience meaningful recovery, although the rise in cases has become problematic. The sudden decline in domestic travels and expected extension of lockdowns has lowered the carrier’s hopeful outlook. Qantas’ quick actions will reduce the financial burden from the loss of traffic and should help protect the future viability of the airline. However, recovery could now be dampened once restrictions lift as it takes time to return employees and could slow the expansion efforts.
Australia has been slow to vaccinate its citizens due to low case rates. However, this poses a challenge and could delay the rebound in passenger demand if traveler confidence begins to take a hit.
The vaccine has provided a confidence boost to other nations and is beginning to underpin travel recovery. With limited vaccination progress, Australia is behind other countries. With low vaccination rates, travelers could be reluctant to travel without the vaccine as the risk has now increased. Therefore, recovery could now be delayed until the vaccination program gathers pace and Australian travelers become confident once again.
