With the Bondi COVID outbreak continuing to grow, states are closing their borders to Sydney.
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At the time of writing, shares in Australia’s largest airport are down almost 2%, trading for $5.81. In comparison, the S&P/ASX 200 Index (ASX: XJO) is currently down 0.51%.
Just last night, NSW Health announced a positive case had flown to Wellington, New Zealand on a Qantas Airways Limited (ASX: QAN) flight before returning 3 days later aboard an Air New Zealand Limited (ASX: AIZ) flight.
Throwing many travellers plans into chaos, Victoria, Queensland, and South Australia have responded by locking out anyone who has been to one of 7 Sydney council areas around the cluster.
Western Australia now requires anyone from NSW to isolate until they receive a negative test while the New Zealand government has suspended its travel bubble with Australia’s most populous state for at least 72 hours.
There is even speculation New Zealand may lock down Wellington because of the case that flew in. As we have seen before, Australian state governments are not hesitant when it comes to closing their borders. New Zealand could be the next place to be shut out by Australia’s states if it were to lockdown its capital.
States shutting their borders to the harbour city may be a factor contributing to today’s downturn in the Sydney Airport share price.
Domestic borders and travel companies
Qantas CEO, Alan Joyce has previously talked about the need for Australia’s domestic borders to remain open as much as possible.
In March, he told an Australian Senate inquiry it would be of benefit to his company to keep borders open.
“What we are looking for is an assurance that at a point in time, or at a point in the vaccine rollout, further border closures will be ruled out,” he said.
“Any chance of sustainable domestic recovery is contingent on state and territory borders remaining open.
“We know that people are keen to travel when they have confidence in borders.”
Flight Centre Travel Group Ltd (ASX: FLT) CEO Graham Turner has also said he sees “no reason” for state’s to continue shutting their border and has been vocal in the past about keeping Australia open as much as possible.
And Sydney Airport CEO Geoff Culbert has talked about how the state’s opening borders has led to increased revenue due to “pent-up demand” to travel.
Sydney Airport share price snapshot
After a tough 2020 disrupted by COVID-19, the Sydney Airport share price has clawed its way back into the green, up 1.18% over the past 12 months. However, the current share price of around $5.80 is well below the levels Sydney Airport shares were trading for at the start of 2020, when they were closing in on $9 apiece.
Sydney Airport has a market capitalisation of around $16 billion.
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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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.