Though most Australian states have allowed quarantine-free visits from New Zealanders for months, New Zealand has continued mandatory quarantine from its neighbour, citing concern about small COVID-19 outbreaks there.
The move to allow cross-border travel without mandatory COVID-19 testing is one of the first such agreements since the pandemic prompted countries to block foreign arrivals to stop the virus from spreading.
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"The Trans-Tasman travel bubble represents a start of a new chapter in our COVID response and recovery, one that people have worked so hard at," Ardern told reporters in the New Zealand capital Wellington.
Australian Prime Minister Scott Morrison called the agreement "the first of many more steps to come ... as we get back to a more normal position, not only over the course of this year but beyond".
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"I very much appreciate the arrangement the New Zealand government has come to today," Morrison told a press conference.
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"We welcome them back as indeed Kiwis will be welcoming Aussies."
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The virus has effectively been eradicated in both countries, with minor outbreaks a result of leakage from quarantined returned travellers.
Australia has recorded about 29,400 virus cases and 909 deaths since the pandemic began, while New Zealand has had just over 2,100 confirmed cases and 26 deaths.
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About 568,000 New Zealand-born people live in Australia, according to 2018 figures, equivalent to 2.3 per cent of Australia's population and Australia's fourth-largest migrant community.
Australians made up 1.5 million, or 40 per cent, of arrivals to New Zealand in 2019, the year before the pandemic shut borders, contributing NZ$2.7 billion (US$1.9 billion) to its economy, according to New Zealand figures. Arrivals were forecast to reach 80 per cent of that level by early 2022, Ardern said.
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Some other neighbouring countries have outlined plans for special travel zones, but the New Zealand-Australia arrangement is among the first that does not involve COVID-19 testing.
About 568,000 New Zealand-born people live in Australia, according to 2018 figures, equivalent to 2.3 per cent of the Australian population and Australia's fourth-largest migrant community.
"Tourism operators can now take bookings with confidence and scale up their staffing," said Chris Roberts, CEO of New Zealand travel industry body Tourism Industry Aotearoa.
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"FLYER BEWARE"
Flights to and from some Australian states could still be suspended if there were local outbreaks, Ardern warned. She added that travellers must wear masks on flights and undertake New Zealand contact tracing, while the travel bubble did not apply to people transiting via Australia from other countries.
The bubble would operate under a "flyer beware" system, with no new support from the New Zealand government for people stuck in Australia by cancellations at short notice, Ardern said.
Ardern urged Australians to take advantage of the bubble, with New Zealand's ski season on the horizon.
"We are a safe place to bring your family to come and visit," she said during a press conference.
Air New Zealand and Qantas Airways said they would ramp up flights between Australia and New Zealand to more than 70 per cent of pre-pandemic levels, reducing the airlines' cash burn when they are almost wholly reliant on domestic markets for revenue.
However, Virgin Australia said while the travel bubble was a step in the right direction it would only be offering a limited schedule for flights to the ski resort town of Queenstown over the next five months.
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One of the hurdles in setting up the two-way corridor has been sporadic outbreaks of community transmission in both countries, with Australia repeatedly suspending quarantine-free travel from New Zealand due to virus outbreaks in Auckland.
The flare-ups have been successfully contained with snap lockdowns and Ardern said travellers needed to be aware that further outbreaks in either country could impact travel plans.
"People will need to plan for the possibility of having travel disrupted," she said.
"Just as we had alert-level settings for managing cases in New Zealand, we will have a framework for managing an outbreak in Australia," she said.
"In many ways we will treat Australia as a region of our own when we're making decisions on restrictions."
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The bubble will allow the Trans-Tasman Super Rugby competition involving five teams from each country to proceed over five weeks from May 14.
The Wellington Phoenix soccer team and New Zealand Warriors rugby league side, which both participate in predominantly Australian leagues, might also be able to host home matches after more than a year of playing their matches in Australia.
The bubble offered an upbeat development for Morrison who faces criticism domestically after falling short of plans to have one-sixth of the population vaccinated by the end of March. The government has blamed the shipping delays on export curbs by the European Union.