‘Planes in the air meant jobs on the ground’: taxpayers to prop up airlines until end of 2020

Taxpayers will continue to underwrite major domestic routes for the rest of the year, as well as essential air services to regional and remote communities until March, under a further extension of support measures for airlines to be announced on Monday.

Qantas and Virgin Australia have been subsidised to operate a minimum domestic network to all capital cities and 36 larger regional centres across all states and territories since April, with the program having already been extended once.

State border closures and mandatory quarantine requirements from a second wave of COVID-19 in Victoria has meant the Morrison government will continue to fund the programs on a shortfall subsidy basis, with the Commonwealth paying for any costs not covered by airline revenues.

The government expects the extension could be worth "hundreds of millions of dollars" to underwrite the cost of the network.

The government is continuing to offer support to the major airlines to keep major routes running

The Domestic Aviation Network Support Program has supported the top 50 busiest pre-COVID routes, while the regional program is propping up 270 weekly return services on 114 routes to 111 regional and remote locations across Australia.

The first eight-week DANS package was costed at $165 million, although both Qantas and Virgin have moved to increase domestic flights ahead of an expected uptick on demand as travel restrictions ease. The Commonwealth has already provided more than $1.3 billion to the industry for it to maintain limited operations.

Qantas, which has been forced to lay off 6000 workers, has called for government support for aviation to continue beyond March next year because airlines were in the middle of the biggest crisis the industry has ever faced.

The government has been subsidising the 50 busiest pre-COVID routes. Credit:Edwina Pickles

Deputy Prime Minister Michael McCormack said the final cost of the programs would be dependent on how quickly the broader economy recovers. He said planes in the air meant jobs on the ground.

“In regional Australia, flights are so central to local economies, underpinning many small businesses including tourism operators, whilst ensuring continued access to key medical supplies and personnel," the federal Transport Minister said.

“We acknowledge the disruption caused by current border arrangements has made life difficult in the aviation industry, with cancelled flights, refunds and passenger frustration.

“Uncertainty affects the ability of airlines and airports to plan for recovery and undermines consumer confidence, which amounts to a significant cost to industry and ultimately the Australian economy."

Tourism & Transport Forum, the industry’s peak body, has called for an additional $100 million in next week's budget for Australia’s international aviation carriers to assist with rebuilding their global network.

It also wants to fast-track the Trans-Tasman Bubble, and other priority international travel bubbles, as well as a wider $50 million Aviation Restoration Fund to restore additional route capacity.

The government pledged on Sunday to inject $250 million into the regional tourism industry in a bid to encourage more Australians to travel and experience a home-grown holiday when border restrictions are loosened.

The package includes a $50 million Regional Tourism Recovery initiative to assist businesses in regions heavily reliant on international tourism and $200 million for an additional round of the Building Better Regions Fund.

Mr McCormack said further assistance to the airlines would also deliver targeted support for regional tourism.

“We know regional tourism will help drive Australia’s economic recovery and today’s announcement of further support for key routes will be a big boost to local economies," he said.

“Prior to the pandemic, one in four Australians would travel by air to visit friends or family every year and by underwriting key routes, we are providing the opportunity for Australians to do just that.”

Sign up to our Coronavirus Update newsletter

Get our Coronavirus Update newsletter for the day’s crucial developments and the numbers you need to know. Sign up to The Sydney Morning Herald’s newsletter here and The Age’s here.

Most Viewed in Politics

Source: Read Full Article