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Travel & Leisure

Australia's half-price tickets lift airlines but hotels remain grounded

$930m stimulus leaves accommodation sector 'for dead,' critics say

Virgin Australia aircraft at Sydney Airport after a thunderstorm. The airline went bankrupt last year in the wake of the pandemic but hopes to receive a boost from the cheap fares.   © Reuters

SYDNEY -- Australia's pandemic-ravaged aviation industry has welcomed government stimulus measures for domestic tourism, while hotels and other businesses in the travel sector criticize that the support they need to stay afloat is nowhere to be found.

The 1.2 billion Australian dollar ($930 million) package unveiled last month features federal subsidies for 800,000 half-price air tickets to 13 popular regions, including Cairns and the Gold Coast. The sale runs through the end of July for travel through September.

The response to the discounted flight program has been "fantastic," CEO Alan Joyce of Qantas Group said in a statement last week. Over 250,000 tickets were sold in the first two weeks of the sale, reported Australia's largest airline, which is bracing for a roughly 60% drop in revenue in the year through June from two years earlier.

The nation's second-largest airline, Virgin Australia, filed for bankruptcy last year due to the pandemic.

Virgin Australia saw reservations made in the first 15 hours of the plan more than quadruple from the preceding week. Popular flights include Melbourne to the Gold Coast, selling for AU$78. The country's No. 2 carrier was bought by Bain Capital after collapsing last year.

The program to get people flying again is giving a tailwind to airlines, especially as the slow winter season approaches.

Meanwhile, other tourism players are not happy with Prime Minister Scott Morrison's package, which also includes support to protect aviation jobs and low-cost loans.

The stimulus measures leave Sydney and Melbourne "for dead," the Accommodation Association, which represents nearly 3,500 hotels, said. Hotels in the two metropolitan cities "desperately need immediate support," the association's CEO Dean Long said last month, noting that their booking rate for the coming three months stood below 10%.

The Australian Tourism Industry Council is upset as well. The government's support was "targeted and short-term," Executive Director Simon Westaway said. "Businesses hit by border restrictions and low travel confidence get little from this package."

Travelers spent AU$146.4 billion, including on airfares, in Australia during 2019, with 30% coming from international guests, government data shows.

Tourism accounted for 3.1% of Australia's gross domestic product in the year to June 2019. A quarantine-free travel bubble with New Zealand opened this week, but the two major international gateways -- Sydney and Melbourne -- remain quiet with the borders closed to travelers from the rest of the world.

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