BUDGET: Airline assistance, no extension to jobkeeper
The Australian Federal Treasurer, Josh Frydenberg announced this year’s budget last night (Tuesday 6 October) delayed by COVID-19 from its normal announcement in May.
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Airline industry employees were hoping for an extension of the JobKeeper program, which subsidised employees to the tune of AU$1,500 per fortnight until the end of September, and now offers AU$1,200 until March 2021.
Airline unions had hoped that the JobKeeper allowance would be extended further into next year – at least until mid-2021, and possibly with a return to the original rate of AU$1,500 per fortnight. The budget did not deliver on that wish.
Many stood down workers at Qantas and Virgin have been depending on the JobKeeper wage subsidy, and even Qantas has relied on it, even trying to game the system by not passing all the payment on to employees, for which it has received a rap over the knuckles from the Federal Court.
Come March, when the payments are currently legislated to cease, this could be a big blow to airlines and their employees unless domestic travel returns to something more like normal.
Aviation assistance for exports
However there is some good news in the budget, with AU$356 million being provided in support to Australian airlines through until the 2023-24 financial year.
The given reason is the 9% fall in export values that the current limitations on travel caused through international and state border closures.
It looks like the total aviation industry support the Australian Government will offer due to the COVID-19 pandemic, will be around AU$2.7 billion, according to the Australian Financial Review.
This is not a surprise, given there are 24,000 Qantas, Jetstar and Virgin Australia employees currently stood down, with a potential 11,500 airline associated workers facing the sack.
Oh, yes, and Virgin Australia collapsed into administration, before being purchased by Bain Capital.
The aviation industry has a difficult road ahead when it comes to sustainability. It’s going to require a relative revolution in technology, with ‘electric planes’ or hydrogen planes, or some form of jet engine that doesn’t require a carbon based fuel. And that is going to require the development of an alternative to jet engines probably.
It’s a big ask. It will take time to develop.
This move to home grown and manufactured SAF is a first step – maybe even a baby step in a very long road of innovation. In the long run, US$200 million won’t even touch the sides.
What the AU$356 million figure doesn’t cover is the money required to continue the support through the Domestic Aviation Network Support package, that is currently keeping flights moving across Australia. Essentially this scheme underwrites any losses the airlines might suffer from running routes to ensure what travel there is continues. The Commonwealth cites ‘commercial-in-confidence’ as the reason for non-disclosure.
On the other hand, if my recent experience on flights between Adelaide and Sydney, and the inflated cost of tickets is anything to go by, the subsidy won’t be required for much longer, provided Victoria gets its infection rate under control, and Queensland opens its borders in November, post-election, as planned.
The Federal government is counting on most domestic borders to be open by Christmas, and international borders to re-open by mid-2021.
Interestingly, the Budget does not expect Western Australia to re-open its borders until 2021.
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