Travel retail ‘missing out’ on A$1.2 billion life raft for tourism and aviation

By Luke Barras-hill |

Sydney Airport renewed Gebr. Heinemann’s tax and duty free concession last year for a further eight years, effective 2022.

The Australian Retailers Association (ARA) has welcomed a A$1.2 billion/US$930,000 funding tranche from Australia’s Federal Government to support tourism and aviation, but has warned that the lack of support for travel retail will mean ‘inevitable’ job losses.

Airlines, hospitality sectors, travel agents and tourism operators are set to benefit from the fiscal injection announced by Prime Minister Scott Morrison’s government this week.

Half-price airline tickets, an assistance package to help international airlines retain more than 8,000 aviation jobs and ground-handling companies meet training, certification and employment levels, are among the measures, the government confirmed in a statement yesterday (11 March).

The existing ‘SME Loan Guarantee Scheme’ has also been expanded and extended in the next steps of Australia’s National Economic Recovery Plan.

RETAILERS ‘CAN’T HANG ON MUCH LONGER’

However, the ARA says the A$1.2bn will only boost those in the domestic sector in a decision that leaves out travel retailers at international airport terminals and duty free shops.

ARA CEO Paul Zahra said: “It’s good to see focused support for the tourism and aviation industry locally, and the flow on effects that will have for some retailers – but this overlooks support for businesses severely impacted by international border closures.

“Retailers like duty free shops in international airport terminals are in crisis – some have lost 90% of their revenue since the pandemic started and they can’t afford to hang on for much longer.

“While the Federal Government has hinted at additional support measures in the May Budget, that’s just too far away for these companies who are making decisions about job shedding this month. These businesses need additional support now. Thousands of jobs will go between now and then.”

TRBusiness has reached out to Heinemann Australia and Lagardère Travel Retail for comment.

Currently, more than 35,000 SME loans worth more than A$3 billion have been administered.

The next phase will result in loans being targeted at businesses that have been relying on the JobKeeper scheme. This is due to end on 28 March.

Eligible loans will increase from A$1 million to A$5 million, the government has announced, with the maximum eligible turnover ceiling for businesses lifted from A$50 million to A$250 million.

The AUS$1.2 billion funding wave features support for 800,000 half-price air fares to destinations including the Gold Coast (pictured).

“Cheap loans will be offered to small and medium businesses, however for those with no income, this just adds to their mounting debt burden,” said Zahra.

“While it might cover wages and business costs in the short term, it doesn’t address the long-term challenges, income shortfalls or the mental health challenges that accompany business owners and their specialist teams.

“There are sections of retail which contribute billions of dollars to our economy that are still struggling and desperately need targeted support. Travel retailers and CBD retailers, most of which are SMBs, face an uncertain future when JobKeeper ends in a couple of weeks.

“This really is a case where a stitch in time saves nine. We cannot afford to leave people and businesses behind in Australia’s economic recovery.”

More than 350,000 current JobKeeper recipients are expected to be eligible under the expanded scheme. Loans will be available from 1 April 2021 and must be approved prior to 31 December 2021.

In a post shared on business networking platform LinkedIn, Max Heinemann, CEO at Gebr. Heinemann said: “We urge the Australian government to support the travel industry with the Jobkeeper Program as well as unified testing and rapid progress on vaccinations.

“Stopping the governmental support measures such as JobKeeper now, while border closures at minimum remain until October this year, means putting a blind eye to the faith of those people that have proudly and heartwarmingly represented the country and city for every departing and arriving citizen and tourist.

“It means accepting huge lay-offs and massively underestimating the huge reliance of every airport on the commercial income coming from the travel retail industry – retailers, brands, suppliers and contractors. The repercussions of such [a] decision are devastating and highly unnecessary.”

In an announcement this week, Treasurer Josh Frydenberg said: “Our support for the aviation sector will not just keep planes in the air but will also provide a boost to domestic tourism while our international borders remain closed.

“This SME Recovery Scheme is part of the next step in our plan to help small businesses stand on their own two feet as the economy recovers from Covid-19.

“The expansion and extension of the loans will back businesses that back themselves and will help businesses who continue to do it tough build a bridge to the other side of the crisis and keep their staff employed.”

 

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