Insights

Qantas (ASX:QAN) share price rises despite fears tourism will struggle after JobKeeper

Qantas (ASX:QAN) shares are rising despite an economist’s warning tourism will struggle after JobKeeper, even with the new stimulus package.
The post Qantas (ASX:QAN) share price rises despite fears tourism will struggle after JobKeeper appeared first on The Motley Fool Australia. –

rising airline asx share price represented by boy playing with toy plane

In an exclusive interview with The Motley Fool, UNSW Professor of Economics Richard Holden is warning the tourism sector will struggle when the JobKeeper payment winds up at the end of this month.

As the government looks set to introduce an airfare ticket subsidy to soften the blow, Qantas Airways Limited (ASX: QAN) and Flight Centre Travel Group Ltd (ASX: FLT) shares are both surging higher in morning trade. Experience Co Ltd (ASX: EXP) shares have failed to respond to the news and are currently trading nearly 2% lower. 

At the time of writing, the respective share prices of these companies are $5.35, $19.20 and 25 cents.

The federal government’s new domestic tourism program

Announced last night, the government is set to introduce a $1.2 billion package aimed at the domestic tourism sector as it weens the industry off of wage subsidies.

The proposal would see domestic airline tickets cut by 50% to the following regional centres:

  • The Gold Coast
  • Cairns
  • The Whitsundays
  • The Sunshine Coast
  • Alice Springs/Uluru
  • Launceston
  • Devonport
  • Burnie
  • Broome
  • Avalon
  • Merimbula
  • Kangaroo Island

As The Guardian’s political reporter, Amy Remeikis noted, most/if not all the towns listed are in marginal federal electorates. 

What do these tourism areas all have in common? Oh nothing. Just that they’re seats the government either wants to win, or needs to keep 🤷‍♀️ pic.twitter.com/W8hCpIzmUM

— Amy Remeikis (@AmyRemeikis) March 10, 2021

As a part of the package, Qantas and Virgin will need to provide monthly reports to the Commonwealth on international flight readiness.

Professor Holden does not believe the package is adequate.

“It’s something but not nearly enough in my view.” He told this reporter.

“It relies on a strong response from the rest of Australians and that is highly uncertain. It’s very different [to] the kind of guarantee provided by JobKeeper.”

Professor Holden warned generally about the government’s proclivity for austerity.

“[The Morrison government’s] fiscal policy has too much emphasis on a budget surplus sooner rather than later.” “The economy [pre-pandemic] was not good. Per capita GDP growth was 0, inflation was below [RBA targets], and wages were stagnating.”

“Until the economy can really open up – we can’t be withdrawing fiscal policy. If anything, we should see more [government spending].”

Those in the tourism sector feel likewise. Talking to the Australian Financial Review (AFR), Tourism Australia and Experience Co. chair Bob East said he would prefer direct grants or a continuation of the subsidy.

“I’d love to say I’m hearing there will be direct grants for tourism operators, but I’m not.”

Part of the scheme also entails granting small and medium enterprises loans of up to $5 million.

Quoted in the AFR, Queensland Tourism Industry Council chief executive Daniel Gschwind says debt is the last thing these businesses want.

“We can’t get excited about no interest or low interest loans,” he said. “I can’t see a struggling tourism operator taking on more debt. The appetite for more loans is very low.”

The head of Accor Group Australia told ABC Radio National the proposal wouldn’t “deliver in a material way for the industry as a whole.”

We’ve asked the head of Australia’s biggest hotel group @Accor whether the Government’s cut-price flights will save the tourism sector? “Sadly I don’t think it will. It won’t deliver in a material way for the industry as a whole.” @RNBreakfast #auspol

— Julia Holman (@JulesHolman) March 10, 2021

Others are predicting up to 100,000 jobs may disappear when the $1,200 a fortnight wage subsidy ends.

Australia’s slow vaccine rollout

The Sydney Morning Herald (SMH)’s COVID vaccine tracker says around 86,000 vaccines have been administered in Australia as of writing. This is way down on Scott Morrison’s target of having 4 million arms jabbed by the end of this month.

Professor Holden says the economy cannot recover, and therefore JobKeeper cannot be withdrawn until we have a critical mass of vaccinations.

As we’ve seen many times over the past year, states and territories are ready to close borders on a moment’s notice.

“I worry about [another Melbourne/Northern Beaches like outbreak] a lot. We need to build confidence. “Every lockdown shatters business and consumer confidence.” “It’s incredibly shaky as it is now.”

“We can’t have [federal Health Minister] Greg Hunt saying we need to wait and see if the vaccine is killing people. That doesn’t build confidence.”

Share price snapshots

Qantas shares reached a 52-week low of $2.03 in March last year. Since then, the Qantas share price has rocketed 163%. Flight Centre shares reached a 12-month low at the same time – $8.56. While it’s more than doubled since then, it is still lower than its pre-pandemic price of $21.59.

The Experience Co share price one-year low was 3.3 cents. At their current valuation, Experience Co shares have gained more than 650% since then.

The respective market capitalisations of these companies are around $9.8 billion, $3.6 billion, and $141.7 million.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of EXPERNCECO FPO. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Qantas (ASX:QAN) share price rises despite fears tourism will struggle after JobKeeper appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!