Feb 25 2020
Both the Scenic and Sightseeing Transport and Rail Passenger Transport industries have performed well over the past five years, largely due to increased travel to and around Australia. The depreciation of the Australian dollar over the period has made travelling to Australia comparatively cheaper for overseas tourists, while making international travel more expensive for Australians. In addition, the prevalence of cheap flights by airlines such as Jetstar has encouraged people to visit and travel around Australia. As a result, both domestic and international tourism have increased, boosting the performance of these industries.
Revenue for the Scenic and Sightseeing Transport industry is expected to increase at an annualised 1.8% over the five years through 2019-20, to total $1.6 billion. This industry depends more heavily on tourism activity compared with rail transport. These operators provide services that are exclusively for entertainment, and therefore not used by commuters. Consequently, these firms are more exposed to potential falls in tourism.
Unlike scenic transport, the Rail Passenger Transport industry depends on a variety of factors other than tourism. Rising trends of urbanisation, environmental consciousness and student numbers have all boosted the use of rail transport. Consequently, revenue for the Rail Passenger Transport industry is expected to rise at an annualised 2.0% over the five years through 2019-20, to total $10.1 billion.
Challenges to these industries resulting from the 2019-20 bushfire season and coronavirus (COVID-19) outbreak include:
- Reduced rail service to bushfire-affected areas,
- Reduced demand for scenic transport due to lower volumes of tourists from China,
- Reduced demand for scenic transport in bushfire-affected areas,
- Reduced use of public transport due to the quarantine of students and workers coming from China.
Despite the risks associated with the bushfires and COVID-19 outbreak, strong opportunities exist for these industries to expand over the next five years. For example, the completion of projects such as the Melbourne Metro Tunnel is anticipated to make rail services more competitive with other forms of transport. In addition, the secondary school retention rate and the number of employees in the full-time workforce are anticipated to increase over the next five years. Both students and workers represent key markets for rail passenger transport operators. Revenue for the Rail Passenger Transport industry is therefore projected to increase at an annualised 1.7% over the five years through 2024-25, to total $11.0 billion.
The effects of the bushfires and COVID-19 are anticipated to more strongly affect operators in the Scenic and Sightseeing Transport industry in the short-term. However, tourism campaigns, such as those by Visit Victoria, have increasingly focused on encouraging Australians to holiday in bushfire-affected areas to help support the relief effort. This rising focus on domestic tourism is also anticipated to help offset the short-term decline in Chinese tourists as a result of the travel ban from China. Consequently, revenue for the Scenic and Sightseeing Transport industry is forecast to increase at an annualised 2.0% over the five years through 2024-25, to total $1.8 billion.
Although the bushfires and COVID-19 travel ban may cause temporary struggles for some operators, the Rail Passenger Transport and Scenic and Sightseeing Transport industries are anticipated to continue performing well. Strong government funding for rail and campaigns focusing on boosting domestic tourism are anticipated to help these industries recover from any negative effects resulting from exposure to these events.
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