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Check out three top independent experts’ views of the Federal Government’s $1.2 billion half price flights stimulus package!

April 9, 2021 Business News, Headline News 1 Comment Email Email

It is great to have top and most importantly independent and for that read no bias, including no political or industry bias, experts assess a Federal Government programme and in this case, the $1.2 billion stimulus package to get Australians spending on domestic holidays, with nearly 800,000 half-price fares reported to be available to book from 1 April.

While some in the industry say that undoubtedly the subsidy is great news for the airlines, in that the subsidy will go straight into their already very full with cash pockets and provide another Federal Government subsidy to their bottom line, they also question whether the subsidy will do anything for regional tourism in Australia and will it benefit the many thousands of tourism dependent SMEs and travel companies and agencies, that are struggling right now??

Our experts in aviation, consumer law and cultural economics from RMIT University are Associate Professor Chrystal Zhang, whose key topics include the airline industry, airports, airline business models, route development, airline liberalisation, safety and traveller behaviour; Dr James Gilchrist Stewart, whose key topics include consumer law and competition law and Dr Meg Elkins, whose key topics include behavioural economics, cultural economics, public policy evaluation, wellbeing and poverty

Associate Professor Chrystal Zhang, is an airline industry expert in RMIT’s School of Engineering and is a regular commentator on airline business models, route development, airline liberalisation, safety and traveller behaviour, and she commented before our chat, “Prices on each of the 10 routes included in the federal government’s stimulus package may vary significantly, ranging from just above $100 to more than $500, one way”, adding, “Demand, time and day of flight, airline and cabin class impact fare prices” and “While each airline has its own money-making strategies, they all want to maximise the margin on each seat.”

She also commented that. “Likely, only a limited number of half-price fares will be available for travel in the immediate few weeks after they go on sale, as airlines have justified grounds to optimise revenue”, and “Travellers will have the best chance of getting a cheaper fare if they travel later in the eligible time frame (July, August and September) but avoid school holidays and weekends.”

She added, “Bargain hunters should look at routes like Darwin to Cairns, Adelaide to Gold Coast and Avalon to Gold Coast, with one-way fares likely to drop $50 to $80”, and “Since the stimulus package was announced earlier this month, Qantas and Virgin Australia have said they won’t increase airfares but will pass the benefits on to consumers”, “Therefore, these airlines could be held accountable for their behaviour to ensure that travellers really benefit from the government’s policies and collectively contribute to reviving the economy.”

Dr James Gilchrist Stewart  is a lecturer in law at RMIT’s Graduate School of Business and Law, with his research interests including consumer and contract law and he said before our chat, “It’s unlikely Qantas and Virgin will inflate their prices, as airlines are directly benefiting from this scheme”, adding, “the ACCC has been monitoring airfares eligible for the 50% discount and there’s a lot of scrutiny on airlines generally”, “However, with the end of JobKeeper coming at the same time as these cheap airfares, there’s a possibility accommodation providers and tourism operators may increase their pricing.”

He added, “The bigger question here is whether day trips, equipment hire and food and beverage suddenly get more expensive as tourism operators are desperate, especially as autumn and winter can be quiet at the best of times” and “Worst case scenario is a $4 beer could cost $12.”

He said, “Holidays are a lot more complicated now given the constant risk of COVID-19 border closures” adding, “Every airline, accommodation and tourism operator have their own terms and conditions – meaning if there’s a lockdown or similar, consumers must unravel multiple contracts for one holiday” and “The constant threat of border closures, like we saw with the Brisbane outbreak, may result in contractual frustration – where the contract can’t be completed as it’s out of everyone’s control”.  “This is a potential consequence of the federal government trying to get people out of their home state and exploring Australia. There’s only one intrastate flight route at the minute – Adelaide to Kangaroo Island – whereas more flights within states might have been a better way to go.”

Dr Meg Elkins, a Senior Lecturer in RMIT’s School of Economics, Finance and Marketing and the Behavioural Business Lab, with her research interests including cultural and development economics, wellbeing and public policy evaluation said, “Cheap, subsidised airfares are all about psychology and our perception of value”, adding, “We feel better about handing over money for a subsidised fare than the same amount for a normal fare”, and “We will buy the subsidised ticket if we perceive value in the prospect of a holiday outweighs the negative prospect of the holiday voucher being cancelled due to COVID-19 restrictions.”

She added, “The anticipation of missing out will prompt consumers to risk the prospect of the holidays being cancelled”, and “The discounted fares will appeal to those who may regret missing out”, and “Those planning on travelling during this time anyway will revert to their original travel preferences, while those more adventurous will take advantage of the discounts or risk FOMO”.

She also said, “Those who are safety-seeking and risk-averse in the first place will stay closer to home (safety) and start finding other ways to fulfil travel needs”, and “Overall, there is little return on investment for the government”, and  “There will be a boost for travel, but only for those who were already predisposed to travel”, and “There will be no impact on those who are risk-averse in these situations.”

To check out what they had to say in our chat, which was very interesting indeed, check out the video below:-

A Report by John Alwyn-Jones

Currently there is "1 comment" on this Article:

  1. gnits says:

    …..maintaining jobkeeper program to at least the travel sector will have more economic impact than this half price flights program…the program is almost like a government sponsored wholesale scam…. targetting what regional areas… jees.. you don’t need to look far… city hotels are the one’s suffering the most because of the inbound travel lock out… hello… hello… hello…

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