Jacinda has done the right thing for the health of five million Kiwi's and I am very pleased for all Kiwi's that this is likely to significantly slow down the spread of the virus here such that hopefully our healthcare system can cope.
Unfortunately there will be dramatic effects on the economy as 20% of overseas earnings come from Tourism and almost no tourist will be prepared to come here and self isolate for 14 days before beginning their holiday.
This will place enormous pressure on tourism operators right across the country including listed operators AIA, AIR, THL, SKC and Skyline enterprises as well as thousands of privately owned companies. The downstream effect of this will almost certainly throw the N.Z. economy into a very deep recession but the main thing is it greatly enhances the chances of vulnerable people to get through this and that has to be the Govt's first consideration and I for one am very grateful the Govt have done the right thing by all Kiwi's.
Some serious bailouts will be required down the track. Fortunately the Govt books are in very good shape and their debt to GDP is one of the lowest in the developed world.
Financial Year to date according to the latest available statistics for the 7 months to the end of January 2020 AIR flew a total of 23.493m revenue passenger kilometres. Of this 3,393m or 14.4% were for domestic passenger services. (Source January 2020 year to date Operating statistics) Some pacific island services will remain. AIR do not provide separate operating statistics for the pacific islands but under the heading Tasman / Pacific YTD RPK's were 6,756m. I would think its likely the vast majority of those are on the Tasman given the relative population there compared to the pacific islands. I would think at a best guess they might have something like 3393 domestic + 25% of 6756 Tasman Pacific + perhaps 15% of other capacity remaining = 7083 / 23,493 = about 30% of their business left in terms of RPK's. We know domestic RPK's generate a lot of revenue but are also higher cost and I for one think domestic travel is going to also take a massive hit with almost no tourists, many business's banning non essential business travel and a lot of Kiwi's figuring its safer to travel in their own car.
Jacinda has done the right thing by all New Zealanders but I am sorry that this is simply not (in my opinion anyway), a survivable event for AIR in its current form without massive Government support. What form that support takes is anyone's guess but if its a no interest loan to see them through then if the loan is big enough that's fine but all operational losses for the foreseeable future will sheet home to shareholders. Covid 19 is only going to spread much further overseas as the world-wide pandemic runs its course until a vaccine is finally widely available, (sometime in 2021 ?), so the chances of these restrictions being lifted anytime soon seem extremely remote. Greg Foran has got the job of his life to right size the airline to get through this as best as they can. I can see them walking away from many of their future aircraft orders, (don't see any choice) and losing the progress payments and deposits.
https://www.stuff.co.nz/national/hea...ions-ramped-up