Caution to reign amid Singapore-Australia air travel bubble talks: analysts

TALKS between Singapore and Australia over an air travel bubble are underway, and analysts expect both countries to proceed with caution.

What hangs in the air is that Singapore's highly anticipated travel bubble with Hong Kong was suspended last year, following a spike of Covid-19 cases in Hong Kong.

Singapore's Ministry of Foreign Affairs (MFA) on Sunday confirmed that this travel bubble arrangement with Australia is being discussed.

An air travel bubble will allow their respective residents to travel between both countries without having to be quarantined, the ministry's spokesperson said, in response to Australian media's reports early Sunday morning on the same arrangement.

Greg Waldron, Asia Managing Editor of FlightGlobal, a website covering aviation and aerospace industries, told The Business Times: "Authorities might well decide to increase capacity cautiously, which means that bubble flights won't do a great deal to alleviate the severe pressure airlines are facing.

"Nonetheless, things may start to look up for the industry, with vaccinations underway and Covid-19 under control in key markets."

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CIMB Private Banking economist Song Seng Wun said: "This news with Australia is obviously because both sides have enough confidence in each other's government's efforts to keep the pandemic under control, and how we deal with arrivals. But we must also be mindful of reports on new variants and surges in other parts of Asia."

Chua Hak Bin, regional co-head of macro research at Maybank Kim Eng, said a Singapore-Australia air travel bubble could also improve the outlook for the battered hospitality sector.

"Hotels might benefit if travellers use Singapore as a quarantine stop before their eventual entry to Australia," Dr Chua said.

"The idea of an easier entry can be expanded, if more countries are willing to recognise and trust Singapore's quarantine and testing system," he added.

Last week, Singapore's Transport Minister Ong Ye Kung sounded the possibility that bilateral travel corridors for vaccinated passengers, from places with low to moderate infection rates, could open up as early as in the second half of 2021.

Plans for a much-anticipated air travel bubble between Singapore and Hong Kong were deferred last November, and these plans remain on ice. Mr Ong has said as well that the air travel bubble between the two key Asian financial hubs can be launched "when conditions are right".

Singapore is currently also in talks with Australia on the mutual recognition of vaccination certificates and resumption of travel with priority for students and business travellers.

An MFA spokesperson said: "Australia is a key partner of Singapore in the region. We are in discussions on how to cooperate in opening our economies safely, taking into consideration the Covid-19 situation in both countries. Thus far, Singapore and Australia have been able to control the Covid-19 pandemic."

The Sydney Morning Herald also reported that this travel bubble could include New Zealand, and cited unnamed federal sources "hopeful (that it) will be up and running by July or August". MFA did not respond to these points on the timeline and the possibility of a three-country travel bubble.

SMH's report also alluded to plans for a "quarantine hub". But on this, MFA has refuted the point.

"We are not in discussion on the concept of a quarantine centre or vaccination hub. Australian nationals can transit via Singapore without quarantining to return home if they travel on approved transit routes and if they comply with our public health protocols while in transit," said the ministry's spokesperson.