Is the sun shining again on the battered Australian travel sector?

Highlights

• Australia has recently decided to move ahead with the next stage of its border reopening.
• Qantas has planned to soon extend the airline’s services to offer Aussie’s only direct flights to continental Europe.
• Australian travel stocks have exhibited a promising recovery in the last six months. 

While the COVID-induced restrictions have been highly detrimental to the Australian tourism industry, the sector seems to be regaining momentum amid the country’s progress in fighting the pandemic. With travel players observing a brighter horizon ahead of Christmas, it seems that the sun is shining again on the battered travel sector.

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Australia has recently decided to move ahead with the next stage of its border reopening. Skilled migrants, international students and people with working-holiday visas are now freely allowed to travel to and from Australia if they are vaccinated. This phase of border reopening was postponed by Australia by almost two weeks owing to concerns around the Omicron variant. Australia’s decision to proceed with the border reopening has emerged as a sign that Omicron might not be as disruptive as initially feared.

Notably, the country’s largest airline Qantas has decided to soon extend the airline’s services to offer Aussie’s only direct flights to continental Europe. From June 2022, Qantas plans to offer return flights thrice a week from Sydney to Perth and then non-stop to the Italian capital of Rome.

Decent recovery in travel stocks

No doubt, the travel and leisure industry bore the brunt of declining consumer sentiment last year as lockdown restrictions took hold. However, the ongoing year seems different, with pent-up consumer demand building up in the tourism industry. While the international border restrictions continue to persist in Australia, speculations are rife that acceleration in vaccination rollout can prompt consumers to partake more diligently in travel-related leisure activities.

Much of this positive sentiment had already been realised following the reopening of interstate travel. Meanwhile, the promising recovery in the travel stocks over the last six months is exhibiting a similar positive trend.

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Catalysts shaping the travel sector

The huge underlying demand for domestic and international travel appears to have shored up investors’ confidence in the travel stocks. Moreover, the accelerating pace of vaccinations and gleaming signs of economic reopening seem to have strengthened investors’ faith in the travel segment.

Interestingly, the recent opening of Australia-Singapore ‘Vaccinated Travel Lane’ has also emerged as a booster shot for the travel industry. Fully vaccinated travellers from Singapore are now permitted into Sydney or Melbourne without the need to quarantine - part of the country’s gradual reopening of its borders that began in November.

Having said that, the travel sector is yet to unlock its full potential amid closed international borders. The successful control over the new virus outbreak and sooner reopening of border restrictions seem imperative to sustain recovery in the beaten sector.

All in all, the Delta variant has mandated the need for Australians to tread cautiously at a time when most nations are looking to ease international restrictions. However, the overhead costs of implementing COVID-appropriate measures in planes, airports and other vehicles could substantially impact the short-term revenue for some travel giants. Thus, Australia seems to be solely relying on its virus control measures that could enable passengers to fly freely, once again.

The following months could be highly crucial in determining whether the tourism sector can finally take a breath of relief or if the spur in travelling was just short-lived.

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