Aviation in ‘critical’ period for support

The next four to eight weeks are “critical” for the airline sector, senior government officials have told a parliamentary inquiry.

“It’s the volatility and never knowing,” transport department deputy secretary Christine Dacey said on Thursday at a Senate hearing into the future of Australia’s aviation sector post-COVID-19.

“Until we get an enduring domestic bubble I think this sector is in real strife.”

Qantas told the two-day hearing on Wednesday that it was in daily contact with the government, as airlines eye the end of aviation support and no more JobKeeper payments from March 28.

Ms Dacey said “conversations remain ongoing” on funding but the government wanted to avoid market distortion.

Treasury first assistant secretary Matthew Brine said the sector would take “several years” to recover to pre-COVID levels, when aviation directly contributed $20 billion a year to the economy and employed 90,000.

Treasurer Josh Frydenberg is now looking at “targeted” support,” Mr Brine said.

“The earlier a decision can be made, the better for confidence.”

Qantas is lobbying hard for a skills package to support pilots and engineers to get back up to speed, along with the extension of all aviation support packages at least until international borders reopen.

Tourism operators will also be vulnerable, unable to retain workers to cover the Easter holiday period without the cash handouts they are seeking from the treasurer to replace wage subsidies. 

Rex Airlines is keen to see regional subsidies remain to make routes viable for smaller communities and itself, while unions have called for an “AviationKeeper” wage subsidy to replace JobKeeper.

But former union boss Senator Tony Sheldon is concerned Rex is winning grants at the expense of Virgin and much smaller operators whose regional and remote commuters have stopped flying during the pandemic. 

Transport first assistant secretary Richard Wood said Rex was the largest recipient from a funding pool of $100 million to support cash flow, receiving $53.9 million, and Corporate Air – now trading as Link – was second with $6.3 million. But only $70 million has been distributed. 

Treasury dismissed an OECD report that showed Australia ranked 18 out of 28 countries in support to aviation during the pandemic.

Australia’s whole of economy support is very large compared to other countries and airlines benefited in particular from JobKeeper – supporting 31,000 aviation workers across 300 entities as at February 28, Mr Brine said.

Qantas received $726 million in JobKeeper, but still posted a loss of more than $1 billion in the first half of the 2020/21 financial year.

The Morrison government this week extended the international travel ban by another three months to June 17, which restricts airlines, cruise ships and airport retailers as well as travellers.

“We’re very conscious of the need in the aviation sector for continued support,” Mr Frydenberg told reporters on Wednesday.

“There has already been substantial support but the government recognises the need to retain a domestic sovereign capability in our aviation sector.”

Senator Sheldon is also worried local governments haven’t received the funding they will need to help regional airports stay open, but Mr Brine said regional airports are the responsibility of state governments.

Transport officials said they have started policy design for a five-year plan to be drawn up by June.

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