If Virgin Australia collapses amid coronavirus restrictions WA flight prices could skyrocket


Updated

April 22, 2020 17:30:25

The tourism industry has warned if Virgin Australia collapses it could deliver a knockout blow to many West Australian businesses who were already on their knees as a result of coronavirus.

Key points:

  • Virgin Australia flies to seven regional towns in WA
  • The tourism industry — particularly up north — will be hard hit if it collapses
  • The peak season in the north was already hit by coronavirus restrictions

Tourism Council WA chief executive Evan Hall said among the hardest hit would be regional WA towns which were serviced by the airline.

“Virgin plays a critical role, particularly in regional Western Australia, bringing competition for aviation through to tourism towns like Broome and Kununurra and Kalgoorlie, and mining towns such as Karratha, Newman and Port Hedland,” he said.

“They’ve all been relying on Virgin competing with Qantas to keep the airfares down.”

Virgin Australia entered into voluntary administration yesterday after the Federal Government refused a request for it to step in with a $1.4 billion loan.

The airline had already stood down 80 per cent of its direct workforce and announced 1,000 redundancies in the past few weeks as coronavirus restrictions saw most air travel grind to a halt.

There are 1,606 West Australians employed by the airline, comprising 897 staff and 709 contractors.

No WA cash for Virgin

Premier Mark McGowan has ruled out the WA Government putting any money towards a bailout of the airline, which is headquartered in Brisbane.

“Virgin is not based here even though they have a significant workforce here,” he said.

“I think it really is a national issue and perhaps a Queensland Government issue, and the Western Australian Government doesn’t plan to put money into any bailout.”

Mr McGowan said he had been assured Virgin flights that serviced fly-in, fly-out mine sites in WA had not been interrupted.

“I’ve made contact with the mining industry to make sure that the FIFO flights up to various locations will continue and they have advised me that that will occur, so people will still be able to work, our mining industry will still be able to operate,” he said.

Cost of visiting regional WA could soar

In WA, Virgin Australia flies between Perth and the regional towns of Broome, Kalgoorlie, Karratha, Kununurra, Onslow, Port Hedland and Newman.

In most of these locations Virgin is one of just a handful of carriers flying there, while it is the sole operator for the Perth-Onslow route and the only operator to fly Perth-Kununurra all year round.

Department of Transport statistics from March 2019 show how many flights between Perth and regional WA the airline offered on an average week before coronavirus restrictions began:

  • Broome: 14
  • Kalgoorlie: 18
  • Karratha: 15
  • Kununurra: 5
  • Onslow: 5
  • Port Hedland: 12
  • Newman: 9

All of Virgin Australia’s regional services are now being underwritten by the Commonwealth Government, with the exception of flights to Onslow, which are underwritten by mining company Chevron.

Virgin indicated underwritten services would continue throughout the administration process.

That includes the route between Perth and the remote outposts of Christmas Island and the Cocos Keeling Islands, which Virgin flies twice a week.

The costs of flying in regional WA has long been a contentious issue in the state and has previously been the subject of a parliamentary inquiry.

Many residents of regional towns considered the cost of accessing air travel prohibitive.

Mr Hall said the price of air travel had long been an obstacle for developing regional tourism.

“While we had some competition between Virgin and Qantas, that’s not a lot of competition and traditionally we really saw those airlines pitch their fares for the corporate travellers, for the resources sector and so on, rather than try and discount fares for a large number of leisure visitors,” he said.

“It is critical that we have at least a two-carrier system, servicing not only interstate but regional Australia and airlines with connections to rest of the world.

“Otherwise we will simply see jobs lost in regional WA in those tourist towns that are dependent on visitors being able to fly in from Perth, from interstate and from overseas.”

Codeshare customers at risk

Mr Hall said tourists who did make use of flights to regional WA towns were often lucrative customers with deeper pockets, particularly international visitors.

“There are many tourism businesses, particularly in the north of the state, that are absolutely dependant on those high-yield fliers coming in from around the world,” he said.

But a loss of Virgin could dramatically limit the number of international visitors reaching regional towns due to the loss of codeshare arrangements Virgin has in place with larger international airlines, such as Singapore Airlines, Virgin Atlantic and ANA.

Codeshare is the term given to arrangements between airlines which involves synchronising schedules and often allows a customer to make one booking for a journey with multiple legs on multiple airlines.

“The codeshare between say Singapore Airlines and Virgin is currently offering the ability to make one booking and fly from say, Europe via Singapore, into Perth and onto Broome, with a seamless connection,” Mr Hall said.

“Without that local operator there is no longer the capacity for someone to do that booking on an airline like Singapore, all the way through to a regional WA town, and that’s a critical role that Virgin plays.”

Coronavirus ‘killed’ peak season for northern WA

Mr Hall said the timing of the coronavirus pandemic had more severely impacted tourism operators in the north-west of the state.

“A lot of tourism operators in the north, from Exmouth upwards, have not had any income coming in since November 2019,” he said.

“They don’t operate during the wet season and were due to open in March but the restrictions have absolutely killed the peak period for northern Western Australia.”

“They’ll go into another wet season afterwards, so they’re looking at 18 months without any income coming in to support their family business or their employees.”

Mr Hall said he feared a collapse of Virgin or any hike in fares would ruin any chance of recovery for those tourism operators in the north-west who survived this period.

West Aussies could stick to road trips

Mr Hall said he was also concerned West Australians, who were likely to be able to travel within WA before state and international borders were lifted, could be priced out of visiting regions outside of an easy driving distance.

“We’re certainly going to call on the airlines to be reasonable, but also State and Federal governments need to keep an eye on maintaining regional aviation access, keep the pressure down on airfares and enable Western Australians to travel in WA once again,” he said.

“It’s what will save the industry and, unless we can get people moving around the state again, the 110,000 jobs that rely on tourism in this state will go.

“If you can’t travel you don’t have tourism, you don’t have those tourism jobs.”

WA Transport Minister Rita Saffioti said work had begun before Virgin entered administration to ensure regional airports continued to be serviced by commercial flights throughout the coronavirus pandemic and in the aftermath.

“We’ve been in negotiations with the Commonwealth Government to ensure minimum levels of service within Western Australia. We continue to understand those minimum levels of service on intrastate routes will continue, but it is an ever-changing situation,” she said.

“I’m also looking at the entire airline industry because there is no doubt this is the biggest disruption it has experienced.

“For Western Australia, such a large state that relies so much on air services, we want to make sure that we have a sustainable, workable industry into the future.”

Ms Saffioti said her Government had been speaking with airlines including Qantas, REX and Skippers to assess whether they could extend existing routes to also cater for towns nearby to where they already offered flights.

What you need to know about coronavirus:

Topics:

covid-19,

infectious-diseases-other,

respiratory-diseases,

tourism,

air-transport,

diseases-and-disorders,

health,

perth-6000,

wa

First posted

April 22, 2020 16:38:10



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