Is there another leap for NZ Travel Sector?

  • Jun 19, 2020 NZST
  • Team Kalkine
Is there another leap for NZ Travel Sector?

Summary

  • New Zealand is at Alert Level 1 and borders are closed for almost all the travellers via air or sea routes. However, exceptions are made in specific cases.
  • Singapore’s Changi Airport has allowed travellers from New Zealand to transit through the airport to a growing number of international destinations with strict restrictions.
  • Travellers using Air New Zealand to travel domestically would experience changes. Preparations were being made.

According to an update from the New Zealand government, the country borders are presently closed to almost all travellers to prevent the spread of the coronavirus. The travel bans apply to all the arrivals either via air or through the sea. However, the government has placed certain exemptions in the case where New Zealand citizens, permanent residents and with a valid reason can travel to New Zealand, and they are not required to use the exceptions process. People who were granted a resident visa outside NZ and are moving to the country on that visa for the first time need to use the exemptions process as the travel ban applies to them.

COVID-19 status in the country

According to the data published by the Ministry of Health, New Zealand has three active cases of COVID-19 as on 19 June 2020 (9:00 AM NZST).

 

Source: ministry of health

 

At present, New Zealand is at Alert Level 1, and the COVID-19 exposure risk is low. Also, community transmission is not likely. People in Alert Level 1 can participate in society without any COVID-19 restriction. However, border restrictions are still in place.

Travellers from New Zealand could transit via Singapore’s Changi Airport

A recent update is coming from Singapore’s Changi Airport where the travellers from New Zealand would be able to transit through the airport to an increasing number of international destinations with tight restrictions.

Passengers transiting via Changi Airport would now have a new experience which is framed to safeguard the health and safety of the passengers as well as the workers and at the same time remain comfortable. Airport workers who would serve transit passengers will be instructed about the safe habits and actions to be taken.

A passenger arriving at the Changi Airport would meet the airport staff and would be guided to a Transit Holding Area (THA) in the terminal from where the next flight will be departing.

Passengers travelling on Singapore Airlines, SilkAir or Air New Zealand flights to and from Singapore and having 13 digits e-ticket numbers are eligible for transit.

The passengers can travel on Singapore Airlines, SilkAir and Scoot and cannot connect to other carriers once they are in Singapore.

Last week, Airbus A350-900s started operating twice a week from Singapore to Auckland and once a week to Christchurch.

In this backdrop, let us look at few NZX-listed stocks from the travel sector and see recent developments in these stocks.

Auckland International Airport (NZX:AIA)

Auckland International Airport, which noted a drop in the traffic during March 2020 by 42% and 97.5% in April 2020 because of the travel restriction imposed by the New Zealand Government, highlighted that the fall in traffic in May 2020, compared to the previous year, was 94.7%.

On 17 June 2020, AIA announced that a covenant waiver was agreed with US private placement investors and the banks. The waiver would give Auckland Airport enhanced financial flexibility. The Company also announced the confirmation of credit rating of A- by S&P. 

On 4 June 2020, Auckland Airport announced that it noted a 100% rise in the request for its fresh foodstuff in air-freighted exports to Singapore despite the coronavirus-linked decline in cargo capacity. Below are some items where significant improvement was seen in the demand.

  • Eggs demand improved by +506%.
  • Demand for beef increased +274%
  • Concentrated milk request rose +18802%
  • Demand for salmon increased by +346%
  • Demand for Lamb surged by +165%.

 

Apart from this, Auckland Airport, in its media release, pointed on the strong relationship between Singapore and New Zealand, which formalised in the New Zealand-Singapore Enhanced Partnership. The partnership has now completed its 1st anniversary.

Both the nations made efforts to keep their trade relations open and critical supplies open amid COVID-19 crisis. In April 2020, sixteen flights moved to and from Singapore. Singapore Airlines used nearly three flights weekly with 747-400 freighter. Also, it also operated a passenger aircraft (B777-300ER) to carry only cargo.

In June 2020, Singapore Airlines started five-times-a-week cargo-only passenger planes service (employing an Airbus A350-900) between NZ’s Auckland and Singapore, adding 175 tonnes worth of cargo volume each week for NZ exporters.

Kiwis Returned Home:

On 5 June 2020, the repatriation service flying from Delhi directly and reaching Auckland Airport brought NZ citizens home and offered a hint of viable upcoming airlinks between the two countries.

Stock Information:

AIA stock was trading at NZ$6.705 on 19 June 2020 (at 2:50 PM NZST), up by 2.37% from the previous close.

Air New Zealand Limited (ASX:AIR)

On 18 June 2020, Air New Zealand Limited announced an update on its 2020 earnings guidance. The Company anticipates the underlying loss (prior to other significant Items and taxes) to be around NZ$120 million for FY2020.

In the media release on 8 June 2020, Air New Zealand Limited updated on the changes which the customers might expect while travelling with the airline when the nation moves to Alert Level 1.

As per Nikki Goodman, General Manager Client Experience at Air New Zealand, Alert Level 1 marks a ‘back to normal’ for domestic flights. There would not be a need for social distancing, and unaccompanied minors could travel domestically. The customers would be able to travel around the country with pets as checked baggage.

Customers are urged to check-in for their respective flights using the Air New Zealand mobile application which would save their time. Below are a few changes which the customers will see at Alert Level 1:

  • Domestic lounges would be opened except for Auckland Domestic as it is going through refurbishment. Regional lounges at Wellington and Christchurch would be closed.
  • Customers would be provided hot food while other food items will be available at buffet and pre-portioned.
  • In-flight, the food and beverage service have resumed under Alert Level 2 except Koru Hour which would also soon be taken care in the upcoming weeks.
  • To ensure safety, high touch surfaces on the aircraft and lounges as well as airport spaces will be sanitised frequently.
  • Jet aircraft are equipped with hospital-grade air systems that screen viruses. Further, hand sanitiser would be accessible at the airport, kiosks, service desks & all the aircraft for customers as well as employee to use it when they want.

 

Update on domestic schedule for July and August:

On 4 June 2020, AIR announced the domestic schedule for the next two months, July and August 2020. The airline intends to manage ~55% of the domestic capacity during these two months.

Stock Information:

AIR stock was trading at NZ$1.530 on 19 June 2020 (at 2:50 PM NZST), down by 1.92% from the previous close.

Bottomline:

The permission to allow passengers travelling from Australia and New Zealand to the destination via Changi Airport or to travel domestically might be a small step, but it is a significant one towards getting the sector back on track.

 


Disclaimer
The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. The above article is NOT a solicitation or recommendation to buy, sell or hold the stock of the company (or companies) under discussion. Kalkine does not in any way endorse or recommend individuals, products or services that may be discussed on this site.

 

   
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