News

16 Sep, 2021
Virgin Australia rescue was the ‘turnaround of the year’ for Deloitte
The Australian

It is the gong of their careers. The Virgin Australia restructuring team at Deloitte achieved the international business turnaround of the year, the first time for an Australia-based company.

The news from the global Turnaround Management Association in New York went public overnight on Tuesday. Deloitte Partners Sal Algeri, John Greig and Richard Hughes have shown how, done right, administrators can be turnaround wizards – not corporate undertakers.

In just 67 days from when Covid-19 hit in April last year, the team rescued Virgin from a spiral dive as it haemorrhaged cash with debts of $6.8bn. They saved 6000 jobs and delivered the restructured airline to Bain Capital after a hotly contested global sales process.

“We never wanted this airline to fail, given the national importance to the competitive aviation sector,” said Algeri, national manager for T&R. “We didn’t want this to be another Ansett. We wanted this to be a success.”

There were 50 groups of stakeholders to wrangle, 2000 creditors to negotiate with during lockdowns, and the fleet had to shrink from nine types of aircraft to two. And all in a bubble of media scrutiny.

From the start four partners worked together: Algeri, Greig, Hughes and Vaughan Strawbridge, who has since left Deloitte. The four met every morning and every evening for half an hour, seven days a week for three months.

“They were all really focused, not an ego in the room frankly, just really supportive of each other,” says Paul Scurrah, CEO of Virgin at the time.

While Strawbridge and Scurrah fronted the media, behind the scenes each partner was dealing with the myriad of issues and running a sales process in parallel.

Virgin was based in Brisbane. Richard Hughes, who was head of T&R Queensland, and John Greig, Deloitte’s state managing partner, took over day-to-day operations, from flight schedules and engineering to cashflow.

“The business burned $200m a month prior to the appointment and it was pretty challenging,” says Hughes. “As administrators we are personally liable for the debts of the company that we incur post appointment so if there is a wages bill that turns up on the second day we are personally liable for it. We had a lot of skin in the game as a result.”

With an airline sales process running through a pandemic the pressure was on. “That is why we had to divide and conquer between ourselves, getting to major creditors or stakeholders to reduce the ongoing monthly charges,” Algeri said. “To hold so many parties together we knew we had to move very quickly or parties would lose confidence.”

“The big opportunities were in the leasing,” says Hughes. “We were able to get some extensions to the rent-free period and then power-by-hour arrangements for aircraft.” That meant costs would better match revenue.

The ghost of Ansett, its drawn out administration and liquidation, were ever present. “We spoke about Ansett,” says Greig. “And we made a promise between the four of us in the wee hours of the night before our appointment that we would simply not allow the outcome that happened with Ansett to happen with Virgin. It was a bit of an emotional moment I would say.”

Scurrah was one of several Virgin staff who had been at Ansett. Hughes says getting on the same page as Scurrah with staff and management behind him was instrumental to success. “I can’t say enough positive about Paul. Imagine you are a CEO of a very large airline, you essentially cede control to us. That can become pretty difficult. Paul strategically and from a team perspective figured out that this was the best way for the airline and put aside a lot of his personal interests to see that the airline got though,” he says.

Scurrah was already a year into transforming Virgin with a new CFO, Keith Neate. At one point the airline ran only one Sydney to Melbourne flight a day. The government knocked back a $1.4bn support package, arguing that five foreign shareholders owned 90 per cent of the airline. But they too were in trouble.

“We had taken an airline generating $6bn a year in revenue to zero and you don’t know how long that is going to last. You have lease costs coming. The decision to go into administration quickly was the right one,” says Scurrah.

Media had speculated KordaMentha (of Ansett fame) would be called in, but Scurrah and the board chose Deloitte. “The speed with which the Deloitte guys built knowledge was incredible. Within a week I was learning things from them about our own company – that’s how good they were,” says Scurrah.

From the Monday of the appointment, Algeri was calling aircraft financiers. “We had 70-plus parties scattered around the world. We got to Friday and say wow, there’s a lot to do but they are onside. Next minute, photographs of bulldozers in front of aircraft.”

Worried they were being overlooked, Perth and Adelaide airports wanted to make a point. Algeri was back on the phone to financiers. “It was all about trust. We told them that their aircraft were safe and then the next moment they are sort of locked up on a tarmac somewhere.”

Things calmed down but there was another task airside: to simplify the fleet. “When you have to hand back 70 aircraft overnight, it just doesn’t happen,” Algeri says. “It’s like a used car lot, parts of aircraft are intermingled. An aircraft comes with a titled engine and componentry and when you have to hand that back it’s got to have all that stuff on it. I take my hat off to the team at Virgin that were so methodical.”

For Scurrah a lesson from Ansett was communication. “For a three-week period there was just absolute silence. It was the fear of not knowing what was going to happen. So we communicated about everything, every day to everyone. Even if there was nothing to tell them.”

From day one, the sales process also took off with an information memorandum out in seven days. US investment banks Houlihan Lokey and Morgan Stanley were brought on board to maximise the pool of candidates. The buyer needed to show it would operate Virgin in a blue sky of uncertainty.

Every decision was made by the four administrators together. A shortlist of five was landed, then two and one. Greig remembers hearing from one of the five cut out during the process. “They wrote us a long letter, saying you guys must think there are fairies in the bottom of the garden if you believe what some of the other parties are telling you in terms of getting a translation done.”

When Bain Capital was announced winner, Greig says another letter arrived. Apparently there were fairies at the bottom of the garden, it stated.

Deloitte secured $125m from Bain in interim funding, which took on the financial risk for the trading business from July 1, 2020 even though the administrators remained in control.

One sour note is that according to reports at the time, Bain, having told staff that Scurrah would lead the airline, then changed tack after the creditors (including staff) voted to approve it as preferred bidder. Scurrah now runs rail group Pacific National.

What’s striking about the Virgin turnaround is the complexity. Greig was absorbed in Velocity, which was not in administration – Deloitte controlled it through Virgin’s 100 per cent ownership. With 10 million members and contracts with suppliers, the loyalty program had value.

Hughes grappled with how thousands of creditors could vote during Covid. There was no off-the-shelf solution. Deloitte turned to Halo, a system used in the firm for whistleblower claims, which it adapted for creditor claims.

“We think we have saved the estate $3m or $4m,” says Hughes. “At the final meeting we had 7000 people vote and we were able to tell people the answer to over 15 resolutions by the end of the meeting.”

Of the 6500 bondholders, two hedge funds became noisy protagonists but were unsuccessful. Algeri, Grieg and Hughes are the trustees of funds for unsecured creditors and, subject to objections being sorted, a return of 10-13 per cent is still expected.

Above all, says Algeri, the team kept its promise to ensure Virgin Australia survived with most employees. “Cemented in our minds forever is the smiles on their faces that we received and the thank you.” It took Algeri until February this year to see those faces in Brisbane when Melbourne’s lockdown lifted briefly. Unfortunately, the lockdown is back. “We now can’t go and celebrate in the same state,” Algeri says.

“Yeah, we haven’t had a beer together yet,” says Richard ­Hughes.

 

16 Sep, 2021
Qantas plays Santa with release of pre-Christmas flight plan
The Australian

Qantas’s first commercial international flights in almost two years are set to takeoff on December 18, to London, Los Angeles, Vancouver and Singapore.

The services will depart from Melbourne and Sydney, and in the case of the London flights go via either Perth or Singapore.

The next day more destinations will come on line including Tokyo and Fiji, as well as flights from Brisbane to Singapore and Los Angeles.

Then on December 20, flights from Sydney to Honolulu will recommence potentially signalling a return to some semblance of normality for the travel industry.

Flights to New Zealand are also on sale for dates prior to Christmas, on the assumption the trans-Tasman bubble will restart by then.

According to the Qantas booking site, seats remained available for most flights although in the case of Sydney-London on December 18, the cheapest fares had all been snapped up.

Travellers should expect to pay between $1600 and $2300 one way for London and LA services, and slightly less for the return legs.

Qantas CEO Alan Joyce has made it clear the airline would require passengers to be fully vaccinated as a condition of boarding international flights, and depending on the destination, travellers may also need evidence of a negative Covid test within 72-hours of takeoff.

All services being sold carry the caveat of being “subject to government and regulatory approval”.

The federal government recently extended the ban on overseas travel to December 17 but restrictions were expected to ease once Australia’s vaccination rate hit 80 per cent of eligible people.

Mr Joyce remained hopeful flights would be able to resume a week before Christmas, and gradually ramp up in 2022.

Qantas recently indicated it was seeing enormous interest in the December flights with searches of those services tripling.

Hottest destinations included London, Los Angeles and Singapore from Sydney and Melbourne, as Covid-weary residents look to escape months of lockdown and restrictions.

Providing the flight schedule does resume as planned, Qantas was expecting to add Hong Kong to its destination list from February, followed by Bali, Thailand, Vietnam, the Philippines and Johannesburg from April.

A number of other airlines have also begun scheduling commercial flights on Australian routes from December 18, including Fiji Airways and Air Canada.

It’s not known as yet what quarantine requirements will be imposed for fully vaccinated travellers arriving from overseas or those returning to Australia.

Mr Joyce has indicated the continuation of mandatory hotel requirement would make the flights unviable but some form of home quarantine may be acceptable.

Further details of what will be required for international travel are expected to be revealed in coming weeks with foreign airlines calling for clarity and a streamlining of current airport processes.

13 Sep, 2021
Australia’s international COVID-19 vaccination passport scheme could launch as soon as October, after nearly 18 months of closed borders
Business Insider
  • The federal government is reportedly sticking with a plan to introduce international COVID-19 vaccination passports as early as October.
  • Such a plan could potentially allow Australians to leave the nation and for travellers to return without undergoing two weeks of hotel quarantine.
  • Any vaccine passport system would be contingent on home quarantine, Prime Minister Scott Morrison said.

The federal government is reportedly sticking with its plan to launch an internationally-recognised vaccine passport system as early as October, with Canberra actively discussing how to integrate COVID-19 jab status with check-in apps already used by the states and territories.

The Age reports the federal government intends to unveil international COVID-19 vaccination status certificates in a matter of weeks, marking what could be the next step towards the reopening of Australia’s international border.

Such passports would prove a traveler’s vaccination status when attempting to leave the country, and could feasibly list the vaccination status of Australians hoping to return from abroad.

The federal government’s eventual goal is to partner such vaccine passports with home quarantine, opposed to the current requirement for returning travelers to spend two weeks in hotel quarantine once landing in Australia.

The proposed vaccine passports would be available in hard-copy form or through a holder’s phone, with discussions underway over the use of QR codes to complement the system.

The federal government previously honed in on the ‘Visible Digital Seal’ technology touted by the International Civil Aviation Organisation.

In addition, Australian vaccine certificates, available via Medicare through a holder’s MyGov account, can already be added to a user’s digital wallet through Apple Wallet or Google Play.

Airline Qantas has already thrown its weight behind international vaccine passports.

In a statement provided to the paper, a spokesperson for Employment Minister Stuart Robert said further information on the passport scheme will be revealed soon.

 

Home quarantine a major goal

 

Appearing on Sky News on Tuesday, Prime Minister Scott Morrison said transitioning to safe home quarantine systems was a vital step towards a reopened border.

“To enable Australians to travel again – overseas, vaccinated Australians, for vaccinated Australians to come to Australia, for people to be able to move around – then home quarantine needs to work,” Morrison said.

South Australia has already launched a home quarantine trial for people returning from NSW and Victoria, implementing geolocation and facial recognition technology to ascertain the location of those isolating at home.

The Prime Minister also flagged his enthusiasm for vaccination certificates being used domestically, as Australia claws its way to the vaccination rate thresholds at which lockdowns and border closures will be avoided for lighter public health interventions.

Domestic restrictions for vaccinated travelers should be lifted first, said Morrison, who received an exemption from the ACT’s normal quarantine requirements after visiting Sydney over the weekend.

When you get to 80 per cent [vaccination rates], it says that domestic restrictions on vaccinated persons should be lifted,” he said.

“We’re not talking about willy-nilly movement of people who are unvaccinated across the country.

“We’re not talking about planeloads of COVID going from one state to the next, that’s a nonsense.

“That’s not what is under contemplation, and I don’t think any premier thinks that’s the case.”

The QR code-reading apps which are used by state contact tracing teams will also “need to be able to work to show whether someone has been vaccinated or not,” he added.

“We’re working with the states and territories to enable that.”

Existing state and territory property laws will enable business owners to refuse service to vaccinated patrons if they see fit, Morrison said.

With states and territories assessing how the existing vaccine certificates may be integrated into their check-in apps, all eyes are on the national vaccination rollout.

As of Monday, just over 39% of the eligible Australian population over 16 has been fully vaccinated.

7 Sep, 2021
Qantas says points pipeline puts loyalty goldmine back on track
SOURCE:
The Age
The Age

Qantas Loyalty – which makes money selling airline loyalty points to banks, retail partners and other airlines – was the company’s fastest growing division before the COVID-19 crisis and has continued bringing in cash and earnings during the pandemic as the airline’s fleet sat idle.

Olivia Wirth, the division’s chief executive, said the group was now confident it could return to its lofty pre-pandemic growth targets for Qantas Loyalty, after in consumer spending saw activity on Qantas-linked credit cards bounce back to normal levels in the June quarter.

She said the key to driving that growth over the next two years would be creating more opportunities for Qantas’ 13.6 million frequent flyer members to collect points during their everyday spending on the ground – where two-thirds of points are already earned.

“We’ve got a very strong pipeline of new partners and businesses over the next six to 12 months, and we believe we’ll be launching them into a market which is going to see a strong response from consumers,” Wirth said.

“There’s some categories where we’re not as strong as others, so we think there’s upside in really focusing on industries and sectors where frequently flyer isn’t currently participating in.”

Qantas already has more than 600 partner business, including Woolworths, BP, banks, and utilities providers; its own range of Qantas-brand insurance products; and direct-to-consumer online shopping and wine delivery businesses (which grew 14 and 29 per cent respectively last year).

Qantas’ targets for Loyalty, recommitted to last month, are for underlying earnings of $500 million to $600 million in the 2024 financial year, up from $376 million in (pre-pandemic) 2019 and $272 million in the 2021 financial year.

Jarden analyst Jakob Cakarnis said that with enough frequent flyer accounts to cover around 60 per cent of the population over 16 and over, Qantas Loyalty could not continue to grow simply by adding more members.

Instead, it needed to find new partners to sell points to and develop of its own Qantas-branded products and services to launch to envelope members in a whole Qantas Loyalty “ecosystem”.

“Once you get that customer using your platform, the incremental acquisition cost to get them to go and use your service over a number of platforms is really small,” Mr Cakarnis said.

“Almost every additional service they get you or I to use is incremental to their earnings.

“So... once people are in the ecosystem and they’re using it, then it’s just a matter of putting the right offer in front of them at the right time and that definitely drives a lot of leverage for the Qantas business.”

Loyalty was a bright spot for Qantas even before the pandemic grounded flights around the world. In 2019, it made more for the group ($376 million in pre-tax earnings) than the airline’s whole international arm ($323 million) and almost as much as its budget off-shoot Jetstar ($400 million).

Loyalty’s earnings fell 30 per cent from 2019 levels in 2021, but that $272 million profit offset some of the pain from Qantas flying business that drove it to a $1.8 billion underlying loss before tax.

Wirth said that crucial to Loyalty’s success going forward is the fact Qantas had kept its members engaged and earning points during the pandemic, despite them having few chances to use those points to book or upgrade flights. The value of unredeemed points on Qantas’ balance sheet has swollen by $600 million to $3 billion since June 2019.

“It feels counter-intuitive but their [members’] desire for travel… has strengthened during the last 12 months,” Wirth said. “In many ways, from a physiological perspective, it helps them plan and I guess get one step closer to that holiday.”

Qantas tried unconventional new ways to keep members engaged in the program: one member blew 2 million points buying a pair of business class Skybeds from a Qantas A380 in a “points auction”, while others spent points buying fully stocked drinks carts from its retired 747 jumbo jets.

The airline is now offering 1000 points, 15 membership tier status credits or a $20 voucher to all members who can show they have been vaccinated against COVID-19. Seventy per cent have chosen points and 20 per cent status credits so far.

Wirth committed to ensuring members would have more opportunities to use their balances, by making more seats on domestic and international flights available to be booked using just points.

Every seat was available to book with points on Qantas’ flights to New Zealand when the trans-Tasman travel bubble operated briefly earlier this year, leading to a 30 per cent jump in points redemption on those flights.

“We will be looking at similar plans for when the international network opens to make sure that our frequent flyers really benefit from saving their points and using them to fly internationally,” Wirth said.

“That’ll be really well-received by our members, and they’ll be snapped up as quickly as they can.”

7 Sep, 2021
Summer flights stranded as aviation staff shortages loom
SOURCE:
The Age
The Age

Airport ground handling companies have warned that flights will be stranded on the tarmac this summer because their employees are leaving the industry in droves after being excluded from the latest government aviation support package.

The Australian Aviation Ground Handling Industry Alliance (AAGHIA) said on Monday that flights could be cancelled between November and February due to a shortage of staff at third-party airport service providers, who load bags, check-in passengers, taxi aircraft on the runway, and conduct pre-flight safety checks.

“Hundreds of airline flights will be grounded this summer because thousands of critical aviation ground operations workers are leaving the industry,” AAGHIA representative Ann Maree Jackson told a senate inquiry into the future of aviation in Australia after the COVID-19 pandemic.

Ms Jackson said that while the federal government last month announced a $750-per-week support package for airline employees, the scheme excluded 9800 employees at third-party specialist providers such as Dnata and Swissport.

“Most of our staff have sought secondary employment simply to be able to pay bills and put food on the table,” she said.

“Our concern is that when the country opens up and flying resumes, those staff may not come back to us - that secondary employment is a little bit more stable than aviation is at the moment - and therefore we have to recruit new staff. That lead-in time will take us six months.”

AAGHIA estimated that around 6000 of its members’ employees were stood down from work and between 3000 to 4000 did not qualify for government disaster payments because they did not live areas in lockdown.

Ms Jackson said the problem would be easily fixed by expanding the government support scheme to include workers at specialist ground handlers, until domestic and then international travel resumes from November.

AAGHIA wrote to the Deputy Prime Minister and Transport minister Barnaby Joyce on August 3 and was still waiting for a reply, Ms Jackson said.

The $750-per-week Retaining Domestic Airline Capability (RDAC) package was announced in early August with the aim of maintaining aviation industry skills and knowledge so airlines could quickly restart their operations when borders reopened.

Diane Brown, acting deputy sectary of the Department of Infrastructure, Transport, Regional Development and Communications, said ground handling groups had not told the department it was concerned about flights being cancelled over summer.

“It’s true that ground support staff, where they’re not directly employed by airlines, are not receiving the same support as the airlines,” she said.

“It was a decision of government that RDAC apply to airlines. I’m not aware of all the factors they considered.”

Workers at Dnata, one of the country’s largest ground handling groups, were also unable to access JobKeeper payments because the company is ultimately owned by the government of Dubai.

Transport Workers Union national secretary Michael Kaine told the senate hearing there was a real concern that workers who were stood down without financial support would never return.

“The notion that these workers would flood back in is fanciful; we need to save them now, right now before they leave,” he said.

“[Australia] won’t have an aviation industry at all because it will be grounded for lack of skills.”

The TWU represents around 2000 Qantas ground handling workers whose jobs the airline outsourced late last year. The Federal Court has since found that Qantas’ move was illegal and the TWU is pushing to have the workers reinstated.

2 Sep, 2021
Virgin to lease nine more jets in fightback against Qantas
SOURCE:
The Age
The Age

Virgin Australia will lease nine more Boeing 737s over the next six months as it anticipates a rebound in domestic travel when the country is vaccinated and hopes to claw back market share lost to Qantas following its collapse last year.

Australia’s second largest airline said on Friday the new planes will expand its mainline fleet to 77 single-aisle jets by March 2022, with the first to arrive in October, in time for the peak summer travel period.

"These extra aircraft are an important part of our planning and ensure we’re ready to ramp up flying and meet the pent-up demand for domestic travel as soon as the opportunity presents itself,” Virgin chief executive Jayne Hrdlicka said.

Virgin’s market share has fallen from around 37 per cent to 25 per cent after the COVID-19 pandemic pushed it into voluntary administration in April 2020 and prompted a major restructure of its operations.

That has allowed Qantas and its budget arm Jetstar to further their dominance and grow its market share from 60 per cent to almost 70 per cent, according to Macquarie research.

Ms Hrdlicka said Virgin’s extra fleet capacity will position it well to “reach our target share of 33 per cent of the domestic market” and fly to the destinations “our customers want with the frequency they expect”.

Virgin, now owned by US private equity giant Bain Capital, had 85 jets in its mainline domestic fleet before it collapsed under almost $7 billion in debt. The group had another 11 planes in its now shuttered international arm and its budget offshoot Tigerair before the pandemic.

The airline’s bullish outlook on domestic travel comes despite NSW and Victoria being in extended lockdowns due to COVID-19 outbreaks. Qantas CEO Alan Joyce said on Thursday he thinks the two states will be cut off from the rest of the country until the start of December.

Qantas said in its full-year results on Thursday that it expected to be flying at 38 per cent of pre-COVID domestic capacity in the September quarter, 52 per cent in the December quarter before rising to around 110 per cent in the first half of next calendar year.

Virgin said on Friday that it had also started planing the delivery of its first Boeing 737 MAX 10 aircraft from the middle of 2023.

The airline first ordered the new fleet of jets in 2012, however, delivery has repeatedly been delayed by the previously ASX-listed Virgin’s financial woes. Boeing’s new model jet was grounded globally in 2019 following two fatal crashes linked to a new flight control system. Aviation regulators, including Australia’s, have since cleared it to return to the skies.

 

2 Sep, 2021
Virgin Australia will enforce mandatory staff vaccination from November, saying the jab is ‘vital’ for workers and passengers alike
Business Insider
  • Virgin Australia has announced plans to make COVID-19 vaccination mandatory for all staff, with frontline workers jabbed by mid-November.
  • The airline’s bottom line has been ravaged by the pandemic and border closures, prompting CEO Jayne Hrdlicka to say vaccines are “the only solution”.
  • The plan is yet to be finalised, but the airline now joins rival Qantas and regional carrier Alliance Airlines in its plans to make the jab a staff requirement.

Virgin Australia plans to make COVID-19 vaccination mandatory for all frontline staff by November, joining the ranks of local carriers hoping to cut the coronavirus risks faced by both employees and passengers.

In a Monday statement, Virgin Australia proposed to make COVID-19 vaccinations mandatory for flight, ground, and airport crew from November 15, with jabs a requirement for office staff from March 2022.

The plan will be presented to employees and unions for consultation, the airline said.

Employees with medical exemptions will be considered on a case-by-case basis, with the airline also promising to run an education program to explain the overwhelming benefits of vaccination.

The carrier’s final policy position will be revealed later this month, but Virgin Australia says over 75% of its frontline workforce has already received at least one vaccine dose.

Virgin Australia, which posted a $3.1 billion loss for the 2020 financial year, has been ravaged by the pandemic and international border closures.

With high national vaccination rates flagged as the ticket out of on-again, off-again lockdowns and international isolation, Virgin Australia CEO Jayne Hrdlicka said driving jab rates is essential.

“Vaccination is the only solution to the situation Australia currently finds itself in, and something we have determined is vital to keep our team safe, given the high public exposure most of them encounter day to day,” she said.

With its pledge to vaccinate all staff, the company has pulled itself into line with rival carrier Qantas and fly-in, fly-out operator Alliance Airlines.

Like Qantas, Virgin Australia also plans to incentivise vaccination for passengers.

Its long-heralded VA-X and Win program, which promises rewards to staff and passengers who can prove they’ve been vaccinated, will come into effect next week, the airline said.

In June, Virgin Australia said the program would award one vaccinated traveler with a million Velocity Frequent Flyer Points, enough for a lengthy around-the world trip.

Dozens of free business class flights could be included as minor prizes, the airline added.

2 Sep, 2021
Rex delays jet deliveries until lockdowns end, borders reopen
The Sydney Morning Herald

The ASX-listed group launched a Sydney-Melbourne jet service in March, followed by flights to the Gold Coast and Adelaide, after securing $150 million in private equity funding to challenge Qantas and Virgin Australia on domestic air services.

Rex, which flies to around 60 regional and rural destinations, has leased six Boeing 737s and in June said it would fast-track the delivery of four more jets from the end of 2021 to September after receiving a better-than-expected response to its new services.

But on Tuesday Rex’s deputy chairman, John Sharp, said the airline had delayed delivery of those four planes until it knew it could operate without border restrictions or lockdowns.

“We’ve always said that we’ll scale up and scale down according to the circumstance,” Mr Sharp said, after the group reported an underlying after-tax loss of $12.7 million for the 2021 financial year.

“So we’ve delayed those [planes] until such time as things return to normal.”

Mr Sharp said the new jets would probably arrive by the middle of 2022, but warned the outlook for the travel industry remained highly uncertain despite the progress of Australia’s vaccine rollout

Countries with high vaccination rates like the UK, US and Israel had been hit with further waves of COVID-19 outbreaks that had resulted in some form of restrictions, he said. “We expect that vaccination rates are the answer to the problem; it’s just what level of vaccination across the country or across the state before premiers open up borders and remove lockdowns,” he said.

Mr Sharp said Rex’s new capital city services were performing better than expected before NSW and Victoria went into lockdown, but declined to reveal what average load factors (a measure of how full flights are) it was achieving.

The cash flow was better than expected, and we were not losing money in terms of cash,” he said.

Virgin Australia is ramping up the rebuild of its domestic fleet following its bankruptcy last year, saying last week it would lease nine more jets over the next six months. Qantas said last week it expected to be flying at 52 per cent of pre-COVID capacity in the December quarter before jumping to 10 per cent above pre-COVID levels in the first half of next calendar year.

Rex’s share price has fallen 42 per cent from $2.09 at the start of January to $1.20 on Tuesday (when it traded 1.7 per cent higher). Qantas’ shares have risen 4 per cent over the same period.

But Mr Sharp denied investors were losing confidence in its ambitious jet service strategy. “I think people are concerned about the effect that COVID is having,” he said. “Where the problem lies is not in the strategy; it’s in the circumstances that are beyond our control.”

Rex on Tuesday reported a $12.7 million underlying after-tax loss for the 12 months to June 30, after COVID-19 restrictions disrupted operations, compared to a $19.4 million loss in 2020.

Including an adjustment relating to its funding agreement with private equity firm PAG, the statutory loss after-tax loss was trimmed to $4.9 million.

Passenger revenue fell 41 per cent to $125 million but that was offset by $87 million in federal industry grants and subsidies including JobKeeper (up from $62 million in 2020).

Including government handouts, total revenue was $256 million, down from $321 million in 2020 and $317 million in 2019. Rex did not declare a dividend and did not give guidance.

 

1 Sep, 2021
Qantas plans to restart overseas flights in December if quarantine relaxed
SOURCE:
The Age
The Age

Qantas boss Alan Joyce says his airline’s plan to resume regular flights to London, North America and parts of Asia before Christmas hinges on whether the federal government will let travellers quarantine at home when they fly into Australia.

While outlining an optimistic course to restart his airline’s mothballed international operations, Mr Joyce on Thursday also said he expected NSW and Victoria will be shut off from the rest of Australia until early December, with vaccination the only way to bring the states’ spiralling COVID-19 outbreaks under control.

Trade and Tourism Minister Dan Tehan responded with caution, emphasising that Australia would have to hit 80 per cent vaccination levels before setting up travel bubbles with other countries that have high vaccination rates.

Mr Tehan praised the concept of at-home quarantine but noted only South Australia was trialling it so far. “Wouldn’t it be wonderful, especially for returning Australians, if there was an ability to be able to quarantine at home in the lead up to Christmas,” he said on Thursday.

The government in the federal budget said international travel would remain low until the middle of next year before gradually recovering. Mr Joyce forecast Australia’s two most populous states would not open up to the rest of the country until December.

“Our assumption for domestic [travel] is that both New South Wales and Victoria won’t see borders opening up to other states until December 1 … given that the path through this is to get to 70 to 80 per cent vaccination levels,” Mr Joyce told journalists after handing down a $1.7 billion statutory net loss for 2021.

The airline said it now intended to resume flights to “COVID-safe destinations” such as Singapore, the United States, Japan, the United Kingdom, Fiji, New Zealand and Canada from the middle of December when 80 per cent of Australia’s eligible population is expected to be vaccinated.

But demand would be very low if travellers still had to quarantine for 14 days in hotels when entering the country, Mr Joyce said, while many more Australians would be willing to travel if they could isolate at home. A quarantine-at-home trial is currently underway in South Australia for interstate travellers.

“The question we also need to resolve is what vaccinations are going to be acceptable,” he said, referring to international vaccines that aren’t approved for use in Australia.

1 Sep, 2021
Qantas plots flight path beyond delta
Financial Review

One would forgive Qantas shareholders for feeling an acute sense of déjà vu ahead of the airline’s full-year results on Thursday, when it will deliver its results along with more than 30 other ASX-listed companies.

Once again, lockdowns in the major engine rooms of its domestic network – Sydney and Melbourne – have clipped the carrier’s wings all while the international border is closed.

The last time the situation was comparable, Qantas fell to a $2 billion loss.

1 Sep, 2021
Qantas vaccination rewards program: Points, status credits or discounts on offer
SOURCE:
Traveller
Traveller

Qantas will launch its COVID-19 vaccination rewards campaign on Tuesday, giving frequent flyer members a choice of three different reward options.

Members who are 18 and over and fully vaccinated can choose either 1000 frequent flyer points, 15 status credits or a $20 flight discount voucher (for use with Qantas or Jetstar).

They will also be automatically entered in a draw to win one of 10 "mega prizes" - a year's worth of domestic flights, with free accommodation across 345 Accor hotels and free fuel from BP service stations.

Once international borders open, winners will also be able to take free flights on international routes with Qantas or Jetstar.

In order to claim the reward, members will need to upload their Medicare vaccination certificate via the Qantas app. Qantas said the certificate information would be deleted once it had been verified. The rewards will be available to people who have already been vaccinated, not just those who get vaccinated after the campaign begins.

Qantas chief executive Alan Joyce has been advocating for corporate Australia to push vaccinations for several months.

"Getting vaccinated is an important step that every Australian can take that brings us that little bit closer to life as we knew it," he said.

"As the national carrier, we want to recognise those who have made the effort to protect themselves and the community.

"Our crews can't wait to get back to reuniting family and friends, taking people on holiday and putting some energy back into the whole tourism industry. For us, getting the vaccine rate up to 70 and 80 per cent means thousands of people can go back to work."

The airline also released an advertisement aimed at encouraging vaccinations, with a focus on travel, which has been widely praised on social media. 

Last week the airline announced it would make vaccinations mandatory for its 22,000 staff, citing a staff survey that found overwhelming support for vaccines.

Qantas and Jetstar will require frontline staff to be double-vaccinated by November 15 and office staff to be double vaccinated by the end of March. Medical exemptions will be granted.

Mr Joyce has previously indicated that the airline may make vaccinations compulsory for passengers as well. Canada's government recently introduced legislation that will ban passengers from air travel in that country unless they are vaccinated. Some cruise lines in the US are also only allowing vaccinated passengers on board.

Several companies in the travel sector are also introducing vaccination incentive schemes, including Qantas rival Virgin Australia, which plans to launch a frequent flyer points giveaway once all Australian adults are eligible for vaccination.

Travel company Luxury Escapes is giving away $200 million worth of $200 discount vouchers for its holiday packages.

16 Aug, 2021
Jet fuel made of air and water may soon power guilt-free flying
The Australian

It would be harder to think of a fuel that is any cleaner. Take air, add water, and by a miracle of engineering, power an aeroplane.

That is the vision scientists believe will come to fruition in just a few short years.

Synthetic fuel - made by combining carbon dioxide sucked out of the air with hydrogen extracted from water - offers what many believe to be the best chance of achieving net zero aviation.

The Canadian firm Carbon Engineering and LanzaTech UK have teamed up to make this dream reality. Backed by British Airways and Virgin Atlantic, and some government funding, in March they will publish a feasibility plan outlining how they will produce 100 million litres of zero-emission jet fuel each year by the end of the 2020s.

“This is really the starting point,” said Amy Ruddock, Carbon Engineering’s vice-president for Europe. The team is looking for a site to base a production plant - with Port Talbot in south Wales and St Fergus in northeast Scotland the most likely options.

Getting the project going could take four years, she says. “The 100 million litres that we’re proposing is about 1 per cent of the UK’s needs each year. But you develop the first plant, and you learn, and you start to reduce costs,” Ruddock adds.

How realistic is this vision? Carbon Engineering has demonstrated it can use technology to gather CO2 from the air, and electrolysis to split water into hydrogen and oxygen.

The company has even shown it can combine the elements to make a synthetic fuel that can be used as a like-for-like replacement for traditional jet fuel.

When the fuel is burnt in a plane’s engines, the carbon dioxide is released back into the atmosphere, but because it was removed from there to begin with, the net result is zero emissions.

“We have been doing it at our pilot plant in British Columbia since 2017,” Ruddock said. “To date we have produced 50 litres.”

The amount is so small that it would take a jumbo jet just 12 seconds to burn through the entire stock produced so far.

And scaling it up to commercial levels is no mean feat. Simply providing the green electricity to electrolyse enough water into hydrogen to make sufficient fuel for Britain’s aviation needs would require a doubling of the country’s renewable energy output. But Ruddock insists this is just the beginning.

It is a problem that needs a solution. Aviation makes up 2-3 per cent of global greenhouse gas emissions. By 2050, it is projected to have consumed 25 per cent of the global carbon budget. Last month the Department of Transport published its draft “jet zero strategy”, which aims to demonstrate zero-emission transatlantic flight “within a generation” and reduce emissions from aviation to net zero by 2050.

There are various potential to achieving this goal. Hydrogen fuel is one option. When fossil fuels are burnt, carbon dioxide is produced. When hydrogen is burnt, the by-product is simply water. And engineers know it works. After all, Nasa put a man on the moon using hydrogen rockets. But it takes up a lot of space, which would displace passengers.

Airbus is developing new hybrid-hydrogen aircraft designs, in which liquid hydrogen will be burnt by modified gas turbine engines. It aims to have one of its three “ZEROe” design concepts carrying commercial passengers by 2035. Electric-powered flight also holds potential. Trials are taking place to fly passengers between the Scottish islands and the mainland. But flying further distances proves problematic.

Finlay Asher, a former aircraft engineer who co-founded Safe Landing, a group for aviation workers concerned about climate change, said batteries and an electric motor were too heavy to replace jet fuel. As batteries improve, range will increase. But 80 per cent of aviation emissions come from flights longer than 1,450 kilometres.

Many critics believe that focusing on technological solutions which will not come to fruition for several years is a distraction. We simply need to fly less. “The big problem at the moment is the lack of policy,” Asher said. “The technology that is discussed is mainly a distraction, particularly in the short term. In the next 10 years none of these technologies are going to see any penetration.”

The problem is that jet fuel is cheap. So while aviation firms are happy to talk about technological solutions, there is no incentive for them to make the serious shift away from fossil fuels. Petrol and diesel are taxed at about 59 per cent, yet on jet fuel there is no tax at all.

“If we tax aviation fuel we could generate an extra pounds 10 billion a year,” said Asher. That would push companies away from fossil fuels while also generating revenue to be spent on green technologies.

The European Commission last month published a plan that would see aviation fuel duty gradually increased for ten years from 2023, though it did not propose a rate. New proposals by the UK last month did not include suggestions for a tax.

16 Aug, 2021
Rex to stand down staff from next week
Australian Financial Review

Rural carrier Regional Express is standing down hundreds of staff due to lockdowns and state border closures and expects to report an $18 million loss for the year to 30 June.

It leaves Virgin Australia as the final major domestic airline yet to stand down staff. However, Virgin is in consultation with unions about such action with a statement expected before the end of the week.

In a company-wide email seen by The Australian Financial Review, Regional Express’ management team told staff it would stand many down from August 16, with the “short-term measure” to last into September.

Affected workers will include pilots, engineers, ground handlers, sales, call centre, head office, and those in operational roles, according to the email.

The airline declined to say how many workers it would stand down.

5 Aug, 2021
Eyes on Virgin as Qantas stands down workers
The Conversation

Eyes are turning to Virgin Australia and how it approaches its staff after Qantas said it would stand down thousands across its main and Jetstar brands while grappling with the Sydney lockdown and other virus spot fires.

Virgin is expected to update its rosters as soon as Wednesday and has said before it will take all steps needed to “protect the airline for the long term”.

The carrier declined to comment on Tuesday but The Australian Financial Review understands it is working through the implications of the Morrison government’s new help program for domestic air crews before making a final decision on standing down staff.

Flight Attendants Association of Australia federal secretary Teri O’Toole said Virgin took a hit at the beginning of the Sydney lockdown in late June by not standing down staff and she did not expect a similar outcome this time.

“I just don’t think they’ll be able to afford it this time,” Ms O’Toole said.

The focus follows an announcement from Qantas that it would stand down 2500 domestic pilots, cabin crew and airport workers for an estimated two months in a move foreshadowed by chief executive Alan Joyce last month.

The stand-downs will take effect in the next fortnight and staff will be paid until mid-August. Qantas did not expect any permanent job losses.

Mr Joyce said this was the “last thing we want to do” and admitted the stand-downs could stretch past October. Other states may also lock Sydney residents out if the NSW government opens the state up again and they are not satisfied that the spread of COVID-19 in the largest state has been sufficiently eliminated.

Taxpayer-funded help on the way

“Two months is a reasonable assumption at the moment but that can change ... We will be doing this on a month-to-month basis so that we will have the flexibility if it does get better to activate people earlier [or] if it gets worse to extend the stand-downs for longer,” Mr Joyce said on Tuesday.

He commended the Morrison government’s latest retention package for the domestic aviation sector, which ensures that the airline gets the equivalent of $750 a week for 50 per cent of pilots and cabin crew once it is able to show a 30 per cent fall in turnover since Greater Sydney has been declared a hotspot.

Qantas means to pass the cash on to crew outside of NSW facing stand-down, and rely on idled NSW-based staff applying for the government’s enhanced COVID-19 disaster payment of $750 a week.

Ms O’Toole said this approach had created “incredible confusion” over whether people should access the disaster payment or must wait for the retention package to kick in.

She was furious that the members found out about the stand-downs in the news without prior notice to the union of the decision.

Ms O’Toole said the domestic retention package had created two classes of Qantas workers as idled international air crew – who are being paid under a similar retention scheme – are receiving only $500 a week.

Australian and International Pilots Association president Murray Butt was also concerned about the haste with which the stand-down decisions were made after the new support was announced.

“We have no idea why there is a disparity between the two schemes,” Mr Butt said. “And we weren’t aware the government subsidies was directly related to an announcement that stand-downs were occurring.

“A lot of the problem with this is that decisions are made on the run and people are scrambling to understand it. We would just like to understand the intention of these subsidies and who they’re targeting.”

About 8500 Qantas workers are now stood down – a total that includes 6000 international staff – or just over a third of the airline’s remaining staff.

Qantas sacked 8500 workers last year as it plotted the recovery from COVID-19 and stood down 20,000 workers at the height of the crisis.

Mr Joyce said this time it was very different, with Qantas not planning to hibernate jets as it did earlier in the pandemic.

He hoped the vaccine rollout would accelerate and that the 80 per cent inoculation threshold for international travel to return might still be reached by Christmas.

Mr Joyce said Qantas was operating at less than 40 per cent of its pre-pandemic capacity – a sharp turnaround from the close to 100 per cent level it was operating at just a few months ago – because of the rolling lockdown in Greater Sydney.

He hoped the new Brisbane outbreak would soon come under control and said an end to the crisis was in sight with the vaccine rollout under way.

“Hopefully, once other states open back up to South Australia and Victoria in the next week or so, and the current outbreak in Brisbane is brought under control, our domestic flying will come back to around 50 to 60 per cent of normal levels,” Mr Joyce said.

“We know that once borders do reopen, travel is at the top of people’s list and flying tends to come back quickly, so we can get our employees back to work.

“Higher vaccination rates are also key to being able to fly overseas again, and finally getting all our people back to work.”

 

30 Jul, 2021
Qantas is exploring the possibility of mandatory vaccines for its staff
Business Insider
  • Qantas is exploring a mandate that would require aviation workers to get a COVID-19 vaccine.
  • The airline said it had already strongly encouraged workers to get the jab and offered paid time off for appointments.
  • Just last week, a Qantas cabin crew member worked on six Queensland flights before testing positive for the virus.

Qantas is exploring a mandate that would require aviation workers to get a COVID-19 vaccine and is surveying staff about introducing the requirement itself.

The airline said it had already strongly encouraged workers to get the jab and offered paid time off for appointments because it was an essential service and had to guard against “severe disruptions”.

Qantas said vaccine mandates for airline workers were already in place in New Zealand as well as in NSW and South Australia.

 

But just last week, a Qantas cabin crew member worked on six Queensland flights before testing positive for the virus.

 

“Other states are looking at taking similar steps, including for domestic.”

 

“We welcome this, but without a national approach we’ll wind up with a patchwork of rules between the borders that our people cross multiple times a day,” Qantas said, pointing out that the mandate was something under consideration at national cabinet for airline workers and others.

 

“We’ve seen that just one COVID-positive employee can inadvertently shut down a freight facility or passenger terminal, which can have a big impact on the broader community and economy,” the carrier said in a statement.

 

“These are some of the key reasons why we believe a COVID vaccine should be a requirement for all aviation workers in Australia.”

 

“The Qantas group supports vaccination because we’re focused on creating the safest environment we can.

 

“We understand there are a lot of complicating factors for our people – including access to the vaccine and those who don’t want the vaccine or still have unanswered questions about it.

 

“But we need to find a path through those challenges if aviation is to return to normal.”

 

One of the questions in the survey will ask staff what stage in the vaccine program they are at. Qantas does not have a comprehensive account of how many of its workers are vaccinated, but is confident the proportion is higher than in the general population.

The Transport Workers Union this month said one in two aviation workers were fully vaccinated, according to a survey of its membership.

The airline is also mulling whether to offer incentives to passengers to get vaccinated through its frequent-flyer arm – Qantas Frequent Flyer is one of the largest loyalty programs in Australia – something that its primary rival Virgin Australia is about to do  with its VA-X program.

In June Virgin said it planned to give away free business class flights and 1 million Velocity frequent-flyer points. The promotion will open later in 2021, when all adults in Australia are eligible for vaccination.

 

Virgin Australia said at the time 65 per cent of its flight crews and airport teams had been vaccinated against COVID-19, while 52 per cent of its corporate teams were already vaccinated or had registered for appointments.

 

30 Jul, 2021
Qantas sets out terms of international travel
The Australian

Passengers travelling overseas with Qantas or Jetstar when international borders reopen will be required to carry a new “digital health pass” with information about Covid tests and vaccination status.

A day after Qantas appealed to the federal government to mandate Covid vaccinations for aviation workers, the airline has revealed what will be required of travellers in future.

The travel pass developed by the International Air Transport Association has been trialled by Qantas on overseas repatriation flights this year and is considered the most secure and convenient way to verify a passenger’s Covid status.

Delivered in the form of a free smart phone app, the pass allows vaccine certificates and proof of a negative Covid test from a certified testing lab to be uploaded before a flight.

The pass also ensures the passenger’s health information meets the requirements of the country to which they are travelling, and provides clearance to board the flight.

Qantas group chief customer officer Steph Tully said the digital health pass would be the key to getting international flights back into the air, and the airline’s employees back to work.

“Many governments are already requiring proof of vaccine or a negative Covid test result for international travel,” said Ms Tully.

“Even if it wasn’t a government requirement, Qantas has always been a leader in safety and we have a responsibility to our customers and crew.

“A digital health pass will connect customers with Covid testing facilities, health authorities and airlines, and ultimately enable the opening of more travel bubbles and borders.”

Already a number of countries where Qantas and Jetstar operate have announced requirements of either a proof of vaccine or negative Covid test result to enter without quarantine, including the UK, the US and Canada.

Ms Tully said final development work was underway to ensure the pass was ready when international flights resumed.

“We’re working closely with IATA to develop their travel pass to make the process as seamless as possible for Qantas and Jetstar customers as international borders start to re-open,” she said.

IATA senior vice president for operations, safety and security Nick Careen welcomed the Qantas Group’s decision to use the travel pass.

“IATA Travel Pass delivers an advantage over other solutions in that the app enables travellers to create a digital ID derived from a government issued document such as a passport,” Mr Careen said.

“This means that airlines and governments can have full confidence in the test/vaccine results both from a content and identity perspective. Being able to validate the vaccination status of Australians returning from overseas is critical to enable Australia’s four-phase national Covid response plan announced earlier this month.”

Qantas and Jetstar have previously announced plans to resume regular international flights from mid-December but doubt remains over whether borders will reopen by then.

The federal budget indicated the government did not expect Australia to allow international travel until mid-2022.

28 Jun, 2021
Qantas execs to feel the pinch of the super rise
The Art of Business Travel

Senior Qantas executives, including chief executive Alan Joyce, will see their take home pay pinched from July 1 after the superannuation rate rises from 9.5 per cent to 10 per cent.

Qantas workers will be broadly unaffected as many enterprise agreements include 10 per cent superannuation contributions already. The remaining employees currently on 9.5 per cent contributions covered by an industrial deal will get the boost without a hit to their take-home pay.

“Executives, who have super contributions included as part of a total wage package, will see a slight reduction in their take home pay as a result of the legislative changes,” an airline spokeswoman said.

The Australian Financial Review understands the carve out is inclusive of the entire group management committee and chief executive Mr Joyce as well.

Qantas has experienced an immense financial toll during the COVID-19 pandemic, tripping to a $1.1 billion loss in the half-year to December 31, shedding nearly a third of its workforce and grounding much of its fleet.

The company has raised about $2.6 billion of debt through the crisis and raised another $1.4 billion from shareholders to help it remain in the air too.

28 Jun, 2021
Virgin to give away business class flights
Financial Review

Virgin Australia says 65 per cent of its flight crews and airport teams have been vaccinated against COVID-19, as the airline announced plans to award free tickets and frequent flyer points to passengers taking up the jab.

A survey of Virgin staff has revealed 52 per cent of its corporate teams are already vaccinated or have registered for appointments. Frontline air crews were among key workers given priority access to vaccination.

As part of its planned “VA-X & Win” competition, Virgin said it plans to give away free business class flights and 1 million Velocity frequent flyer points. The promotion will open later in 2021, when all adults in Australia are eligible for vaccination.

Virgin staff will also be encouraged to take up vaccination, with flexible work arrangements available to facilitate appointment times. Extra annual leave, lounge memberships and business class flights will be on offer for staff in a separate competition for staff.

A spokeswoman said Virgin believed it had a responsibility to speak up and encourage the community to be vaccinated.

 

Australia’s vaccination rollout has passed 6.86 million doses on Wednesday.

More than two-thirds of over 70s have had at least one vaccine shot, along with nearly 50 per cent of over 50s. Of the eligible adult population, now more than 27.3 per cent have had at least one shot.

It was revealed on Wednesday that less than a third of Australia’s aged care workforce has reported receiving a COVID-19 vaccination.

24 Jun, 2021
Travellers win from tumbling airfares as competition heats up
SOURCE:
The Age
The Age

Australians are enjoying some of the cheapest domestic airfares in a decade as airlines cut ticket prices to coax travellers back into the sky and country carrier Rex injects fresh competition into major city routes.

The Australia Competition and Consumer Commission said on Thursday that the impact of Rex (Regional Express) moving onto domestic services could be seen in lower prices on all six routes it has entered.

That was especially the case on the Sydney-Melbourne corridor, Australia’s busiest, where the cheapest available economy fare fell to its lowest level in a decade, the competition watchdog said in its latest airline monitoring report.

“As well as the airlines trying to get people flying again... the entry of Rex has certainly meant that to a lot of destinations, the airfares are extremely good at the moment,” ACCC chair Rod Sims said.

The ACCC notes in its report that Sydney-Brisbane and Melbourne-Brisbane, which Rex is not flying, has not seen the same fall in ticket prices as Sydney-Melbourne, which “highlights the new entrant’s role in increasing competition and lowering airfares delivering benefits to consumers”.

Rex, which for two decades has flown turboprop aircraft to regional and rural destinations around the country, has leased a small fleet of Boeing 737 jet aircraft and launched on Sydney-Melbourne in March.

Rex, Virgin, Qantas and its budget arm Jetstar are also now all flying on Melbourne–Gold Coast, Melbourne–Adelaide and Sydney–Gold Coast. It is the first time three airline groups have been competing for travellers since Virgin bought a majority stake in Tigerair in 2013.

Rex is also servicing Sydney-Canberra and is due to start flying Melbourne-Canberra next week.

Mr Sims said the ACCC was continuing to investigate whether there was merit to claims by Rex that Qantas and Virgin were dumping capacity on certain routes to squeeze the smaller airline out of the market.

Qantas has added 45 new routes to its domestic network since the start of the pandemic and intends its capacity to be 7 per cent higher next financial year compared to 2019, with Jetstar to be 20 per cent higher.

The airline said on Thursday it had expanded its three-year agreement with aviation services group Alliance to operate Embraer E190 jet aircraft on some smaller routes.

Alliance is already flying five of its 94-seat E190s for Qantas on routes such as Canberra-Adelaide, and the expanded deal means Qantas now has options over 18 aircraft, up from 14.

Chief executive Alan Joyce said the E190 was perfect for connecting capital cities and regional centres with services that would not have worked with Qantas’ larger Boeing 737s.

Meanwhile another three Airbus A320s will move from Jetstar’s Singapore subsidiary back to Australia to fly domestically, joining six already here from Jetstar Japan and five Boeing 787 Dreamliners set to operate domestic flights to meet demand.

“Since travel demand started to recover about a year ago, our strategy has been to think creatively about how we use our fleet to add capacity back in, generate revenue and get more of our people back to work,” Mr Joyce said.

Mr Joyce said forward bookings suggested demand for travel to and from Melbourne would rebound quickly with the easing of restrictions following its latest lockdown.

The ACCC said in its report that the Qantas Group’s market share was now 69 per cent, up from 61 per cent before the pandemic. That follows Virgin shutting down its Tigerair offshoot when it went into administration last year, and Jetstar benefit from strong leisure travel demand.

Domestic airline capacity has been steadily recovering following the almost total grounding of air-travel last year and was back to 55 per cent of pre-pandemic levels in March. However the recent COVID-19 outbreak in Melbourne has been a setback by halting most interstate travel.

The ACCC said the federal government scheme to subsidise 800,000 half-priced flights as part of a $1.2 billion assistance package for the pandemic-stricken aviation industry also helped drive down fares.

24 Jun, 2021
Airlines set to put billions into flying taxis
SOURCE:
The Age
The Age

Flying taxis moved a step closer to becoming a fixture buzzing across urban skyscapes, as a closely watched effort was unveiled in Los Angeles and startups in the UK and Brazil made commercial breakthroughs.

Vertical Aerospace, based in Bristol, England, won conditional orders for as many as 1000 electric aircraft that could total $US4 billion ($5.2 billion) from buyers including American Airlines and Virgin Atlantic Airways it said.

Meanwhile, Brazil’s Embraer said it’s in talks to merge its unit developing electric vertical takeoff and landing aircraft into a public company, sending the stock surging.

And in California, startup Archer Aviation showcased its future eVTOL after nabbing a $US20 million investment from United Airlines. The carrier plans to buy as many as 200 of the aircraft, dubbed Maker.

While none are certified for commercial use, approvals for electric flying taxis could come as early as 2024, according to Europe’s top aviation regulator. Airlines are placing orders because they see the potential to develop a new business tied to local transport, as their main activity shuttling people on longer trips comes under pressure over carbon emissions and the impact of the Covid-19 pandemic.

“We believe that this is the beginning of the next big evolution of urban air mobility,” said Domhnal Slattery, chief executive officer of aircraft lessor Avolon Holdings, which is investing $US15 million in Vertical Aerospace. “This is probably as significant as the jet age.”

Flying taxis are designed to accommodate just a few passengers, akin to an electrified helicopter. But they are quieter, more agile and emission-free, utilising multiple small electric rotors.

The aircraft are designed to make short trips, with a range of 160 kilometres or less, and are expected to ferry well-heeled commuters above congestion-plagued urban spots - to the airport, for example, or a weekend getaway. Many eVTOL makers plan to eventually transition to pilotless aircraft.

The popularity of special purpose acquisition vehicles has been a catalyst to the budding industry.

Vertical Aerospace is going public through a reverse merger with Broadstone Acquisition in a SPAC deal that values the combined companies’ equity at about $US2.2 billion.

Archer, based in Palo Alto, California, plans to merge with a SPAC run by investment banker Ken Moelis later this year that would value the combined company at about $US3.8 billion. Archer expects the Maker will make its first flights in the fourth quarter and begin commercial production next year, assisted by the automaker Stellantis. Service is projected to start in Los Angeles and Miami in 2024.

“There’s definitely a really big long-term industry here,” said e-commerce entrepreneur Marc Lore, Archer’s largest individual investor. “I don’t really think anybody would disagree with that.”

Embraer surged 15 per cent on Thursday (US time) after confirming that it’s in talks to merge its Eve Urban Air Mobility division with blank-cheque company Zanite Acquisition, giving it a valuation of about $US2 billion.

Two other eVTOL companies, Joby Aviation and Lilium GmbH, have agreed to go public through SPAC mergers. Another German startup, Volocopter GmbH, has backing from airport operator Atlantia SpA and others.

Last week, Eve said it struck a partnership with Halo Aviation, a helicopter travel provider in the US and UK, with delivery of 200 aircraft starting in 2026.

Commercial use of eVTOLs is expected to begin with carrying packages before passengers are added to the cabins.

And automated flights, without pilots, will come around five years later, as global regulators work out their approaches to safety.

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