There is no doubt that the downturn in overseas travel has been devastating to our local travel industry. Many of our leading ASX travel shares have seen their share prices plummet in recent months as bans on international travel have kicked in.
Data just released by the Australian Bureau of Statistics (ABS) indicates that overseas arrivals in Australia in April 2020 were down by 99% compared with April 2019.
Devastating impact on ASX travel shares
Since 20 February, Australia’s major airline Qantas Airways Limited (ASX: QAN) has seen its shares decline by a massive 47%. Qantas recently secured a further $550 million in funding against 3 of its aircraft, following a $1.05 billion raising in March.
The COVID-19 impact on its major competitor Virgin Australia Holdings Ltd (ASX: VAH) has been even more devastating, with Virgin shares falling heavily in the months before the company entered voluntary administration in April.
The travel booking sector also has been hit savagely, as both international and domestic flight bookings have dried up. Corporate Travel Management Ltd (ASX: CTD) has seen a partial rebound in its share price since mid-March to now be down around 30% since 20 February.
Unfortunately, the same can’t be said for Webjet Limited (ASX: WEB), which is down 67%, and Flight Centre Travel Group Ltd (ASX: FLT), which is down by 71%, in the same period. Both Webjet and Flight Centre were forced to undergo capital raisings to boost liquidity and try to ensure they come out of the crisis in a sound financial position.
Sharp decline in April part of a downward trend
The ABS revealed that over two-thirds of the 22,000 arrivals in April were citizens returning from overseas, while just under 7,000 arrivals were non-Australian citizens.
The ABS further noted that the decreases in arrivals and departures during April were part of a continuing downward trend that has been evident in the past few months since travel restrictions were first put in place by the Australian government at the beginning of February.
When will international travel pick up again?
It is quite possible that domestic travel could gradually start to pick up in the months ahead as the government begins to ease lockdown restrictions. However, the chances of international travel getting back to normal to any significant degree before the end of this year are highly unlikely.
While the Australian government hasn’t made any official comments, the most likely first step for international travel will be for flights to resume between Australia and New Zealand, with travel between Australia and other countries introduced further down the track when the outbreak of the pandemic globally is more under control.