Melbourne Airport Q&As with Carl Jones and Jennifer Dean

In the context of the global environment, how would you describe the performance of Melbourne Airport recently?

The last few years have been, without doubt, challenging for aviation.  The past year, it is fair to say, has been better. 

While the challenges still remain, we are seeing a return to discretionary travel.  Very competitive air fares are continuing to stimulate the leisure market and additional services and aircraft upgrades are opening up new routes.

It has, however, been a record year and last month continued passenger growth at Melbourne Airport has seen the airport exceed 2.5 million passengers in a calendar month and 27 million annual passengers for the first time.

While last year our domestic passengers were up 4 per cent to approximately 20 million, it was our international passengers that were the key drivers of this positive growth, up 13 per cent for the year to 5.5 million.   

This is a fantastic achievement and to be able to say that we now have 25 international (soon to be 26 and 27 with Air India and Royal Brunei) and 6 domestic airlines makes me very proud.

The strength of the economy, the market and the confidence of our airlines to invest in it are testament to Victoria and Melbourne’s growing global standing as a key tourism destination, education and business hub.

Melbourne’s international passenger growth fared well against our key competitors last year.

When we compare international passenger growth in the last financial year, Melbourne is up 13 per cent, outperforming growth of 8 per cent in Sydney and 1 per cent in Brisbane, in the same period.

Melbourne Airport continues to perform strongly with 532,000 international passengers in October, an increase of 14.3 per cent over October 2009 and a record for the month of October.

Travel by Australian passport holders through Melbourne airport continues to increase, up by 16.0% over the same time last year, as Australians continue to take advantage of low fares, a strong Australian dollar and solid economic conditions.

The growth for October 2010 is the continuation of sustained trends that point towards significant shifts in the international passenger market within Australia.

It is no secret I have strongly held views that the Victorian market is underserved.  Victoria has 25% of Australia’s population and contributes 25% of GDP.

 We are making progress in achieving our rightful market share of Australian international passengers, now closing in on 22%, but there is still work to be done.

What have been the key growth airlines and markets?

 The Asian market has been a key driver of Melbourne’s international growth, not surprisingly, including China and India.

Australia’s Tourism Forecasting Committee predicts that Asia will continue to be the major source of growth over the next eight years.

Reflecting these predictions, in the past year we had strong growth in the following markets:

• Indonesia  up 36%
• Malaysia 26%
• China 14%
• and India  up 10%.

From an airline perspective, it has come from a wider base.

Airlines have recognised the opportunities in Melbourne and have been voting with their feet, with Qatar Airways and V Australia entering the Melbourne market in 2009/10. In 2010/11 Air India and Royal Brunei Airlines have both announced their plans to commence Melbourne operations.

Airbus A380 services have increased, with the launch of daily Singapore Airlines A380 services and the progressive expansion of Qantas’s A380 services to daily London services and six services a week to Los Angeles by March 2011.

The Virgin Blue Group has added an additional weekly frequency to Los Angeles and increasing services to Bali and Fiji.

Emirates is significantly boosting capacity through aircraft upgrades on the popular Melbourne - Dubai and Melbourne – Auckland routes.

Airlines that expanded Melbourne services in 2009/10 included AirAsia X, Air Mauritius, Air Vanuatu, Garuda Airways, Pacific Blue, Philippine Airlines, Vietnam Airlines and Jetstar.

Looking forward:

Jetstar will be introducing daily flights from Melbourne to Singapore, twice weekly Melbourne – Queenstown services and daily Melbourne – Auckland services all from December this year.

For the first time three Chinese airlines will serve the Melbourne market with daily flights to China from later this year.

Melbourne will have more capacity to China than ever before and that for the first time Victorians would be able to fly direct from Melbourne to Beijing. In November, China Eastern will be increasing to daily Shanghai services from four flights per week and in December Air China will be increasing its services from Beijing and Shanghai.

This follows an earlier announcement by China Southern that its flights from Guangzhou are increasing to daily services from November.

We also look forward to welcoming Air India and Royal Brunei services to Melbourne in the coming months.

Melbourne Airport has a lot of low-cost long-haul airlines.  How has this changed the Melbourne market?

There is no doubt low cost airlines have a significant impact on market development. 

Case in point: AirAsia X introduced three services a week in November 2008, quickly increasing to operate 14 times a week to Kuala Lumpur.

Prior to AirAsia X commencing operations the average growth in the Malaysian market was 1%.  Since then, AirAsia X have significantly shifted the Malaysian market - average growth post introduction of AirAsia X is 43%.

So, this is a brilliant example of what can happen when a low cost carrier enters a mature market and when price and capacity stimulates demand.

What is it about Melbourne that has driven the strong growth in recent years to attract airlines? What is Melbourne’s biggest competitive advantage?

A cooperative partnership focused on aviation exists in Melbourne.  Melbourne Airport’s team works closely with the State Government of Victoria and City of Melbourne on airline business development, with the aim of delivering strong and innovative initiatives to grow airline operations out of Melbourne.

We at the airport strive to make Melbourne as attractive as possible to airlines by working hard to keep costs low, in fact Sydney and Brisbane are 46 per cent and 61 per cent respectively more expensive. The Centre for Asia Pacific Aviation recognized this last October when we were named the “Low Cost Airport of the Year”.

We maximize key advantages such as our single terminal precinct and curfew free operations and are committed to our approach of working closely with our airlines for better results – for business and of course for passengers flying in and out of Melbourne. 

Melbourne presents airlines significant market opportunities, with many of our key markets underserved.

Almost 600,000 of Melbourne’s international passengers still fly domestic connections to/from Sydney for international flights each year. Despite having comparable population bases, almost 44% of international passengers from Australia fly via Sydney.

This presents a ready-made market for airlines to target a number of Melbourne’s key international markets, including China, Japan, North America and European markets.

And of course, we are based in a premium location.  Victoria, and Melbourne, is now a key Australian destination with a strong global standing for business, education, tourism and major events.

We have worked hard with our airline customers to achieve recent  performance, and we thank them for their ongoing commitment and support of the Melbourne market.

Melbourne Airport has invested in a number marketing and service projects to support our airline partners’ Melbourne operation.

What else do you to support your airline and airport customers?

At the airport we have continued to deploy new strategies and tools to support our growing markets and ensure these passengers feel welcome when they arrive in Melbourne.

We have continued to rollout our Chinese Visitor Program. In addition to welcome and way finding signage, public announcements in Mandarin, our program now includes a Chinese section on our website, increased signage, location specific information and access to the Destination Melbourne Chinese Visitors Guide. 

We work with the City of Melbourne assisting the facilitation of the international students welcome desk held on airport each January and July.   

We also celebrate important cultural events such as Chinese New Year and Diwali – the Indian Festival of Light in our international terminal.  If you happen to be travelling through our airport this week, you will see just how we celebrate Diwali at Melbourne airport – including colourful performances of traditional Indian dancing and drumming and decorations around our international terminal.

Most recently we have developed our “Fly Melbourne Outbound Marketing campaign” – the ultimate aim of the campaign is to facilitate increased outbound passenger traffic. By working collaboratively with all our airline partners on this integrated marketing campaign we all reap the benefits of reduced-cost advertising and co-operative marketing opportunities.

Benefits to participating airlines include:

• Ease of participation – minimal investment of airline time and resources
• Excellent brand awareness
• Promotion of Melbourne’s airlines’ specific destinations, flight deals and airline benefits
• Exceptional value advertising opportunities