Sky-high airfares and lack of Chinese tourists hit Australian economy hard
- China used to be the biggest source of tourists for Australia, but its Covid Zero approach means Chinese aren’t travelling internationally
- Australia has raised its permanent immigration ceiling to allow up to 195,000 workers into the country every year, but expensive airfares are a deterrent
The high cost of global travel right now is fuelling Australia’s worker shortage, the country’s trade minister said, with the jobs market the tightest it’s been in almost 50 years as the coronavirus crisis eases.
Pre-pandemic, foreign students and young travellers filled a key role in the Australian labour force, working in restaurants and other service-sector jobs, Trade and Tourism Minister Don Farrell said on the sidelines of a meeting of Indo-Pacific trade ministers.
Since the country dismantled its strict pandemic border regime earlier this year, demand for these sorts of visas has been high, but would-be workers are being deterred by “capacity and cost,” he said.
Expensive airfares are “an impediment to getting things back to normal in terms of staffing,” said Farrell. A lack of flights, with airline capacity not yet back to pre-pandemic levels, is also deterring workers, he said. “We’ve got to somehow address that.”
The cost of airfare from the US to Australia had roughly tripled from pre-pandemic times. Tickets out of the UK over the northern hemisphere this summer were up by almost a third, according to online travel agency Kayak, while flights from Australia were roughly 20 per cent more in April than they were in 2019, a Mastercard Economics Institute study found.
After closing its borders during the pandemic, Australia is now targeting migrants, raising its permanent immigration ceiling this month to allow as many as 35,000 more workers into the country every year, up from 16,000 previously. The jobless rate currently sits 3.4 per cent, the lowest in almost five decades, and is expected to fall further even as the central bank keeps raising interest rates to cool demand and slow inflation.
“There are labour shortages in just about every part of the economy,” Farrell said. “We can’t actually get enough people to open, for instance, restaurants.”
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Before the border shutdown in 2020, almost 400,000 international students and 250,000 working holidaymakers were employed each year in Australia, many in hotels and restaurants.
Farrell said he expects the airfare squeeze to improve as airlines put on more planes, but that it will take time.
Australia’s tourism industry is also yet to bounce back, he said, with the lack of flight capacity just one of the issues. China used to be the biggest source of tourists, but its Covid Zero approach means borders remain effectively shut and Chinese aren’t travelling internationally.
Farrell said this is also impacting Australia’s education sector, which relied heavily on students from China, particularly colleges.
“I don’t believe that we’re going to see a return to top Chinese tourism or education any time soon,” he said. “We just have to accept the proposition that we’re not going to see a return to what occurred pre-pandemic. What that means is we’ve got to ramp up travel from other parts of the world.”
