The fresh spending is the latest move by the government to prop up Australia’s lagging airline sector, which has seen 11,500 workers face the sack at major airlines Qantas and Virgin during the pandemic.
Around 24,000 staff remain stood down at the two companies and Virgin fell into voluntary administration under the strain of COVID-19, to be rescued by US private equity firm Bain Capital in a $3.5 billion sale.
Rural-focused carrier Regional Express has experienced its own troubles, and received a $54 million taxpayer-funded bailout in April, but it is now plotting an entrance to the lucrative “golden triangle” routes connecting Brisbane, Sydney and Melbourne next year.
Total support to reach $2.7 billion
All three airlines have received millions of dollars worth of government support already. The Morrison government had outlined $1.9 billion of spending prior to the budget, including cash to underwrite specific domestic and regional routes until the end of January and late March, respectively.
The budget did not reveal the future spending on the domestic package – Domestic Aviation Network Support – due to “commercial-in-confidence sensitivities”.
It did, however, say the regional package – Regional Aviation Network Support – made up part of a $428 million spend under a different category of COVID-19 relief along with delivery support for medical equipment.
“This brings the total government support for the aviation sector during COVID-19 to $2.7 billion,” budget papers said. “The decrease in expenses from 2020-21 is due to the temporary support ceasing at the end of 2020-21.”
Of the $355.9 million of new spending, the broad majority is going towards extending the International Freight Assistance Measure that was announced last April.
The scheme, which will now continue until June 30, 2021, is aimed at keeping export and importing channels open through work done by select carriers, and will cost $222.1 million in 2020-2021.
The broad majority of the rest of the new funding, about $110 million, will go to regulator the Civil Aviation Safety Authority. The remaining cash will go to another regulator, the Air Transport Safety Bureau.
The Australian Competition and Consumer Commission, which got increased responsibilities within aviation for the next three years in June, will receive $4.4 million to support these efforts over that period.
Meanwhile, international travel is pegged to remain low into 2021.
“Inbound and outbound international travel is expected to remain low through the latter part of 2021, after which a gradual recovery in international tourism is also assumed to occur,” budget papers said.
The International Air Transport Association, the global peak body for airlines, does not expect worldwide passenger traffic to recover until 2024.
In terms of tourism’s recovery, the government is investing $250 million in a Regional Tourism Recovery package with another $100 million earmarked specifically for tourism out of the Building Better Regions scheme.
Another $51 million is proportioned for “hard hit” tourism-centric areas like Far North Queensland and Tasmania.