Lockdown risk dampens demand for AU-NZ air travel bubble

The creation of a travel bubble between Australia and New Zealand represents a major milestone for Air New Zealand and Qantas, and the wider airline industry. However, setbacks in the early stages of the arrangement also illustrate the challenges airlines face in rebuilding demand.

The bubble, which was launched on 19-Apr-2021, is the Asia-Pacific region's first two-way quarantine-free international travel corridor to open since the start of the COVID-19 pandemic. It has allowed Air New Zealand and the Qantas group to restore many of their flights in this market, providing their first solid international passenger revenue streams in more than a year.

There was an initial rush of passengers, as expected, and they were primarily those who wanted to reunite with family members or had other urgent travel needs.

But demand has eased since then, as discretionary travel has been dampened by the prospect of the bubble being closed at short notice when new COVID-19 cases occur. Governments have been clear about the disruption risk, and a couple of snap closures resulting from lockdowns in Australian cities have served to reinforce this message. New cases in Sydney and Perth prompted New Zealand to exclude those cities from the bubble temporarily.