Australian government announces $715m bailout for airlines

written by Dylan Nicholson | March 18, 2020

The federal government has announced that $715 million in fees and industry levies for Australian airlines will be waived in a relief package aimed to help them through major hits to tourism from global COVID-19 travel bans.

Qantas has cut its international capacity by 90 per cent and Virgin Australia announced it would be grounding the entirety of its international fleet.

The federal government has also made strong calls not to travel overseas as containment measures are increased.

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QantasLink and Regional Express were the most punctual in September. (Seth Jaworski)
QantasLink and Regional Express were the most punctual in September. (Seth Jaworski)

The support package, announced on Wednesday, will refund and waive aviation fuel excise, air service charges and domestic and regional aviation security charges.

Deputy Prime Minister Michael McCormack said the “major relief package” would be backdated to apply to charges from 1 February, returning almost $160 million to the industry.

“Our airlines run on tight budgets at the best of times and these past few weeks have been particularly tough. I’ve been speaking with Australian airline executives every day and will continue to work with them to make sure they receive the support they need,” he said.

“Providing this assistance not only helps our airlines, but the entire aviation industry, regional Australians in particular and other industries such as tourism and trade, which rely on aviation.”

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There is not yet a date set for these support measures to end, with Deputy PM McCormack saying the government will continue to work with the aviation industry as it faces ongoing challenges from the coronavirus pandemic.

Calls for support had come from regional and international operating airlines as the challenges continue to mount, with regional airline Rex stating that small carriers may have only weeks of reserves left. Without government intervention, irreversible damage would occur to the across the industry.

In an open letter to the Deputy Prime Minister, Rex’s chief operating officer Neville Howell called for urgent action.

“Rex does not believe that Rex, and all other regional carriers, will be able to pull through this crisis without significant assistance if the health authorities’ projections prove accurate,” Howell wrote.

Howell argued Rex was “one of the few airlines in the world and the only Australian carrier that has continued to maintain uninterrupted profitability when faced with the series of severe global economic and environmental shocks of the past two decades, including war, fuel prices above US$120 a barrel, volcanic ash, GFC, the worst drought in 120 years, catastrophic bushfires [and] crippling pilot shortages”.

4 Comments

  • Anna

    says:

    Why don’t the airlines have an international fare sale for 12 months from now, allow 2 free changes but guarantee the price. Provide various upgrades for people who spend certain levels of $$, ie class upgrades, flight vouchers, meals etc . And use that money to help keep the airlines afloat?

  • Peter Ritty

    says:

    Agree with above. So sad but necessary for survival of QF. Have also lost .

  • PB

    says:

    Anna, there are legal ramifications since the old Compass Airlines failures I remember that ANZ and National Bank both wanted forward sale’s cash to be escrowed on the opinion that the cash was the ticket holder’s cash, not the airline’s. Considering that the two airlines are, technically, insolvent at this point (plane lease payments, borrowing debt obligations, staff salaries, yet zero income) .
    Australian bankruptcy laws obligate directors to cover losses when they trade past the point of insolvency – anachronistic laws that should be changed – but unless the government guarantees the debts of the airlines then they are insolvent from this day forward.
    The airline business model is awkward anyway – an industry with huge capital costs, huge fixed costs, and no guaranteed source of income. Now the income has evaporated and the banks would be looking carefully at their airline clients for liquidity and survival. Qantas is bleeding cash at such a rate as to question its survival unless the government guarantees its survival.

  • Keirnan Morgan

    says:

    When will Jetstar forward the credit travel coupons that they have promised?
    Secondly, when do Jetstar intend to honour Case ID 13743763 they promised to refund the credit card money that they fraudently took from my Credit Card over a week ago.

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