Distinction in travel journalism
Is independent travel journalism important to you?
Click here to keep it independent

4 Jun, 2001

Australian Tourism Mulls Life After Sydney Olympics 2000

BRISBANE: Australia has joined the growing club of countries with devalued currencies and its travel industry now faces major ‘restructuring’ in the post-Olympics era.

The Australian Tourist Commission (ATC) as well as its hotels and airlines are all facing shifts in their management, ownership and strategic directions as a result of the new realities that have set in following the end of the euphoric Olympics Games and the roughly 20% decline in the value of the A$ in the last few months.

Though the ATC rode the Olympics wave to raise the country’s popularity as a tourism destination to new heights, there is growing concern about the impact of the global economic slowdown following the bursting of the dot-com bubble, the slack in the US economy and volatile oil prices. The country is facing intense competition from other destinations who have long enviously watched the Australian marketing prowess and are now trying to match it.

Like in Thailand, the A$’s slide has affected budgets, shaving almost A$20 million off the ATC’s marketing money this year. While visitor numbers are on the rise because of the higher ‘value-for-money’ factor, yields are down, also a situation similar to that of Thailand.

In the midst of this, the ATC has just undergone a major leadership shake-up. The former managing director Mr John Morse, a 19-year veteran of the agency, resigned in glory after the Olympics. Succeeding him is Ken Boundy, 49, whose background is in agricultural science and business but who the ATC board feels will help the ATC make a fresh start with fresh ideas and a fresh perspective.

He is also going to be in charge of many structural changes that are expected to be made in the ATC, including job-cuts, as a result of the reduced budgets. The Australian tourism industry has greeted him warmly but is reserving judgement until he’s had more time in his job. “Time will tell,” is the general reaction.

Also facing much change is Australia’s incestuous airline industry.

The two major carrier groups, Qantas and the Ansett Australia Air New Zealand group (so named because Ansett Australia is wholly owned by Air New Zealand, which in turn is 25% owned by Singapore Airlines), are set to battle it out for domestic market share to maintain productivity and growth.

Qantas has just completed a de facto take-over – known as a long-term commercial agreement – with Impulse, another domestic airline that collapsed in the wake of a bitter price-war. That has left only one other smaller domestic airline, Virgin Blue, owned by Sir Richard Branson of Virgin Atlantic fame, but it too is facing serious losses as a result of charging ‘unsustainable’ air-fares.

At a press conference at the Australian Tourism Exchange last week, Mr John Borghetti, Qantas’ Executive General Manager for Sales & Distribution, said while the Australia’s tourism popularity has lifted the volume of visitors, costs are under pressure due to fuel prices rising to unprecedented levels and Australian airports, being gradually privatised, seeking substantial increases in charges.

Qantas has already begun to respond to this by cutting unprofitable routes like Shanghai and Vancouver and redeploying the aircraft to meet new competition on key domestic routes. Ansett, too, is looking at ways to improve fleet utilisation and is soon going to be selling its entire fleet of Boeing 767 aircraft.

Just as the situation had begun to settle down financially for the two airlines, news leaked last week the Qantas had made an offer to buy into Air New Zealand, with the caveat that Singapore Airlines sell its shares in Air New Zealand to buy into Ansett Australia. The boards of the respective airlines confirmed the discussions but declined further comment.

Comments are closed.