Coronavirus grounds airport spend

Airport spending dropped steeply in February, reflecting coronavirus-related travel bans and lower appetite for international travel, according to internal ANZ data. Spending in small airports with mostly domestic flights did not fall. 

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Spending in major airports (Brisbane, Melbourne, Perth, Sydney) dropped 27 per cent from the week ending 21 January to the week ending 8 February. Travel bans from China began on the 27 January. The data suggest travel between Australia and China started falling before the ban. 

"Chinese residents account for over a quarter of international tourism spend in Australia.”

Chinese residents made up 15 per cent of short-term arrivals in 2019. A drop in their arrivals accounts for most but not all of the drop in airport sales from the week ending 21 January to week ending 8 February in 2020 (27 per cent) versus the same weeks in 2018 and 2019 (0-3 per cent).

The fall in arrivals from China is likely to have reduced tourism activity substantially. Chinese residents account for 8 per cent of total tourism spend and more than a quarter of international tourism spend. 

Small airports spending drop

Spending figures from smaller airports reinforce the evidence the change in travel patterns is limited to international travel.

Small airports with limited or no international flights (such as Canberra, Gold Coast and Hobart) did not see a decrease in spending between late January and February.

Mid-sized airports (such as Adelaide, Darwin and Cairns), which also have fewer international flights compared with major airports, had higher spending in February 2020 compared with February 2019 and 2018.

The effect of this fall in international tourism could be concerning for Australia’s economic activity. ANZ Research recently estimated gross domestic product (GDP) for the March 2020 quarter could go backwards as a result of the coronavirus-related drop in travel.

ANZ Research expects airport arrivals and tourism spending to remain low while the travel bans continue and some local residents elect not to travel.

Adelaide Timbrell is an Economist and David Plank is Head of Australian Economics at ANZ

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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