The Qantas Airways Limited (ASX: QAN) share price went up 3% today after it was announced that a two way bubble is going to form between Australia and New Zealand.
What happened with New Zealand travel?
As reported by many media outlets, including The Guardian, New Zealand Prime Minister Jacinda Ardern announced a two-way travel bubble between Australia and New Zealand as of 19 April 2021.
New Zealand has decided that that the risk of transmission from Australia to New Zealand is now low and quarantine-free travel can now, finally, commence.
However, Ardern warned that new COVID-19 cases could cause complications, particularly if the case was from an unknown source.
She said: “While we absolutely wish to encourage family and friends to reunite and visitors to come and enjoy the hospitality New Zealand is ready and waiting to offer, those undertaking travel on either side of the ditch will do so you were the guidance of flyer beware. People will need to plan for the possibility of travel being disrupted if there is an outbreak.”
There will be various measures to ensure there is limited chance of any passengers getting on board. There will be no passengers on that flight who have come from anywhere but Australia in the last 14 days. They will be flown by crew who have not flown on any high-risk routes for a set period of time. Those passengers will need to wear a mask and download the NZ tracer app.
How has Qantas responded?
It has been reported that Qantas will fly up to 122 return flights each week to New Zealand once the bubble opens.
Qantas and Jetstar will resume the previous 13 routes that were done before COVID-19, as well as two new routes, which will connect Auckland, Cairns and the Gold Coast. Flights will also be available for the whole year between Queenstown, Melbourne and Brisbane.
The Guardian quoted Qantas executive Andrew David, who said: “Restarting flights to New Zealand is about more than starting to rebuild our international network, it’s about reconnecting families and friends and getting more of our people back flying again. We know Australians are keen to head overseas again, so we expect strong demand for flights to New Zealand and there are many Kiwis who can’t wait for a winter escape to warmer weather in Australia.”
The final point reported was that Qantas believes the New Zealand routes will increase its operating capacity to 83% of pre-COVID-19 levels, which the airline says “reflects a high level of expected demand for what will be Australia’s only international destination for at least the next six months”.
What to make of this for Qantas?
This seems like a good step for Qantas. The international division has been suffering ever since the borders were shut. Whilst this won’t bring back all the lost profit, it opens up routes to one of Australia’s busiest pre-COVID destinations.
I think the Qantas share price could be one to watch over the coming year or two as more people look to travel again, particularly as the COVID-19 vaccinations ramp up. Getting planes and passengers in the air are key to getting the loss back to breakeven status.
However, airlines have been a difficult industry to make any money in over the long-term, and recently with COVID-19. There are plenty of ASX growth shares that are generating high levels of profit today.
