CATO View for December

By Brett Jardine, Managing Director, Council of Australian Tour Operators

CATO over the last month has increased its lobbying efforts with government to call for the opening up of Australian Air Capacity by way of a 12-24 month Open Skies Agreement. Our tour operator and wholesaler members are seeing their post-COVID recovery curtailed by the severe lack of airline capacity and the resulting high prices being demanded by airlines.

Open Skies Agreements promote increased travel and trade, enable the creation of jobs, and facilitate economic growth. Their provisions include reciprocal obligations to eliminate government intervention in commercial air carrier decisions about routes, capacity, frequencies, and pricing.  

Here in Australia the impact of opening up air-capacity will provide the largest single boost to the recovery of the travel and tourism industry post-covid. It will create jobs throughout Australia, facilitate the growth of exports and help address critical labour shortages. We are therefore asking government to allow airlines that have the will and capability, to fly into major Australian hubs. 

There is significant demand for 2023 travel, however affordable air tickets are a major roadblock. Forward sales for international leisure travel are still more than 40% below 2019 levels, primarily due to limited air capacity.  We acknowledge the airlines are keen to recoup some heavy losses incurred during COVID but the international travel ecosystem goes way beyond airlines alone. There is a myriad of suppliers that deliver travel related products and services that all have a heavy reliance on access provided by affordable airfares.

A temporary open skies agreement provides the perfect opportunity for new carriers to test the Australian market and for existing carriers to increase flights and ports they fly into.  Airlines will always make decisions based on the economic viability of a route, however they are currently being held back artificially by historic bi-lateral agreements that do not work in the current environment as we seek to reconnect Australia with the world.  

An agreement to this would be a great outcome for Australians considering an international holiday in 2023, and would provide a huge boost to business and consumer confidence.