Australia and New Zealand to Open Travel Bubble and Airlines Are Ready

Air New Zealand Ltd and Qantas Airways Ltd said on Tuesday they would ramp up flights between Australia and New Zealand to at least 70% of pre-pandemic levels once a two-way quarantine-free travel bubble opens on April 19.

The restart of a more regular schedule on the popular routes will help the airlines reduce their cash burn at a time when they are almost wholly reliant on their domestic markets for revenue.

Before the pandemic, Australia was New Zealand’s largest tourism market and demand for travel between the two countries represented around 20% of Air New Zealand’s revenue, the carrier said in a statement.

Air New Zealand said it would operate 70% of its pre-pandemic capacity from April 19, while Qantas and its low-cost Jetstar plan to operate 83% of pre-pandemic capacity.

In a boost to those carriers, rival Virgin Australia said on Tuesday it had suspended the sale of most New Zealand services until Oct. 31.

Qantas said its planned capacity represented a high level of expected demand for what could be Australia’s only quarantine-free international destination for at least the next six months.

However, it added that was moderated by the fact that international tourists beyond Australia and New Zealand normally account for about 20% of the passengers flying between the two countries.

Air New Zealand shares closed 5.5% higher, while Qantas shares were 3.1% higher at 0530 GMT.

Air New Zealand had previously guided the market to expect cash burn of NZ$45 million ($31.73 million) to NZ$55 million a month through June 30 at a time when most other international services are suspended.

The airline said the start of quarantine-free travel between New Zealand and Australia was expected to reduce cash burn, though it was not yet in a position to provide updated information.

“As such, the airline’s cash burn guidance has been suspended at this time,” Air New Zealand said.

($1 = 1.4184 New Zealand dollars)

(Reporting by Jamie Freed; Editing by Simon Cameron-Moore)

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