Air travel is back, but not as we knew it

Quarantine-free travel between Australia and New Zealand is providing an insight into how air travel will evolve during the next five years.

Analysts say this is how long it may take to fully recover to 2019 levels and, given the previous rate of growth has been lost, it may never recover the flight path it would have been on if Covid-19 didn’t happen.

Come the 2026 financial year, international travel to and from New Zealand may be 22 per cent lower than the historic growth trend, according to Forsyth Barr.

Domestic travel has rebounded strongly in New Zealand but with fewer overseas visitors to fill planes flying around the country, the number of passengers may be 18 per cent lower than if the pandemic had not struck.

The two-way bubble with Australia offers a glimpse of the future for a post-pandemic world.

It’s been lumpy. It operates on a traffic light system that has already flicked to amber twice in the past three weeks after Covid cases in Perth and Sydney.

Travellers are well-advised to get used to the disruption but pauses may be less likely in the future. The Cook Islands is next for two-way quarantine-free travel.

The New Zealand Government should now look at how a traffic light system could apply to the rest of the world. High-risk countries can be easily identified and face a red light; those with the pandemic under control or on the elimination path can be classified orange and green.

This, combined with new airport and aircraft health measures, universally accepted vaccination passports, rapid testing and more powerful contact tracking and tracing, should give further assurance to the Government on how to reconnect New Zealand to the wider world, which is opening up quickly in places.

Just on 30 airlines flew to New Zealand before the pandemic, several of these won’t return – not good news for consumers who enjoyed what was dubbed the “Golden Age of Travel” in the neardecade of rapid growth and cheap fares leading up to 2020.

But the lack of competition should be good for the recapitalised, restructured and revitalised incumbents.

A leaner Air New Zealand could well thrive post-Covid.

A McKinsey & Company report estimates corporate travel – the big money-spinner for airlines – will be just 80 per cent of 2019 levels in 2024. Leisure travel will fuel the recovery. But the report predicts that with fewer planes, less revenue from the business class cabin and the need to repay debt of $250b amassed last year, airfares may rise about 3 per cent.

The fast-paced Covid collapse of commercial aviation was awful to watch last year; the path to recovery will be fascinating. Fasten your seatbelts.