Diversify to survive
The Macau International Airport has experienced a growth in air traffic that it probably never expected to have to deal with. But challenges lie ahead and diversification is the key to its survival.
The atmosphere is a little chaotic as I enter the CAM building on the afternoon of May 16th. I’m here to meet with Macau International Airport Marketing Director, Dr. Samuel Tong, but he has had to postpone our appointment as he is tied up in meetings when I arrive.
Just days after the massive earthquake that brought destruction and devastation to large areas of Sichuan Province, the Macau International Airport (MIA) is busily doing everything it can to provide logistical support to international aid agencies desperate to get supplies to the victims.
When Dr Tong finally arrives, he is unnecessarily apologetic, explaining that the airport is coordinating with the Red Cross to provide storage space for their aid supplies, and facilitating transportation of goods directly to the capital, Chengdu. “Macau is a very effective platform for transporting things to the mainland” he comments.
This week might be particularly busy for staff at the airport given their support role in assisting the relief effort to Sichuan, but busy is not an unusual state of being for this little hub.
Last month the MIA hosted Routes Asia 2008, a MICE event bringing regional airline executives and representatives from airports and support service providers from throughout South-east Asia. The event was held at Macau Fisherman’s Wharf and saw the number of delegates in attendance increase by 35% over last year.
And even without these extra events, with around 25,000 arriving and departing flights last year, and an increase of more than half a million passengers from 2006 to 2007 and growing, the airport authorities seem to have their hands full.
Hosting events like Routes Asia as well as attending other industry events to promote the MIA to carriers in the region, is becoming a crucial part of the role of Dr. Tong’s team.
It was exactly because it is such an ‘effective platform’ to Mainland China, primarily for those travellers from Taiwan, that the MIA was brought online in 1995.
But as diplomatic relations between Taiwan and China begin to thaw, the prospect of regular direct flights between them is becoming a reality that the MIA has to face.
Fortunately the booming gaming and tourism industry is providing new opportunities for the airport, which Dr Tong is determined to capitalise on.
“The impact of the increased air traffic to Macau has all been positive”, comments Tong, in reply to observations that the current facilities may have been stretched to their limit recently.
“Not just as an airport, but as a company, we need to diversify our products”, he adds.
This diversification takes many forms, none the least of which has been the increased number of Low Cost Carriers (LCC’s) flying to the territory.
“In 2004 we invited LCC’s to come to Macau, and now we have 5 carriers operating routes here, accounting for 30% of the business”, he explains.
Dr Tong also observes that the arrival of the LCC’s has not only increased air traffic to Macau, but has actually changed passenger behaviour in the favour of the territory.
“Before, most tourist from South-east Asia would fly into Hong Kong and catch the ferry across to Macau”, he notes. “But now with the LCC’s, many people now fly into Macau and take the ferry to Hong Kong!” Another key aspect of the MIA’s diversification is the influx of private business jets to the territory. In 2007, there were around 750 private jet movements in Macau, representing a 25% growth on the previous year.
And while this figure only represents around 1.4% of the total airport movements, with the continuing development of the Cotai Strip expected to bring more and more high yield travellers, private jet traffic is likely to increase by a further 20% in the next year alone.
Catering for the private jet business can be problematic though. While the numbers may be small compared to the volume of the commercial traffic, private jets and their passengers have very specific needs.
“High yield clients are very concerned about their privacy and convenience”, observes Dr Tong, and this is where the Macau Business Aviation Centre (MBAC), is a valuable part of the airports facilities.
Built in 2000, the MBAC caters specifically for the arrivals and departures of private jet passengers, providing streamlined customs and immigration services as well as a private waiting lounge and bar.
High-rollers, prominent CEO’s, and big time international entertainers including the likes of Beyoncé and Celine Dion, all pass through the MBAC, completing all the formalities in just a few minutes.
“The Black-Eyed Peas came with an entourage of 70 people”, comments Vicky Chan, Operations Manager for the MBAC, “but we cleared them all through with no delays”.
Events like last years GSMA Mobile Asia Congress saw the CEO’s of four of the world’s biggest telecom companies all arriving on the same day.
On the day we visited the centre, they had received six private flights. “Nine is about the most we would clear on one day, and we average about 80 movements a month”, says Chan.
According to Chan, the MBAC was not really built to cope with the level of growth they have experienced recently, but they are managing, and with the current renovations of the centre due to be completed next month, they are well positioned to absorb the growth for the next few years to come. Dr Tong is also confident that the MIA as a whole can cope with the increasing private jet traffic, and the airport itself is set for some renovation work including an expansion of the existing terminal and the construction of a new multi-level car park.
The single runway will not be getting a partner however. According to Tong it is sufficient for handling current and future traffic levels, although it sometimes requires a bit of juggling.
“The peak hours for commercial flights are between 10am and 2pm, and 4pm and 8pm, so scheduling the private flights outside of these times makes it more manageable”.
So both the MBAC and the airport seem set to take on the increased traffic brought on by the current boom-times, and can even cope with an unexpected humanitarian crisis when needed.
There will no doubt be challenges however. When questioned as to what the greatest of these will be, the response echoes the mantra of most local businesses – lack of human capital.
This is at least a positive challenge, given that the prospect of eventual direct flights between Taiwan and China has led some observers to warn of the demise of the airport altogether.
“Before the deregulation of the gaming industry, I might have had my doubts”, admits Tong. “But now the facilities in Macau are world class, so I have confidence that we will have our place in the development of the greater China region”.
“The type of business in this region is changing very quickly”, he adds. “Some economic analyses of the situation have been very static, only looking at the number of existing passengers, and not taking into account the changing dynamics of the market”.
“If we can provide a more attractive and efficient service, to complement the growing industries, we will guarantee our share”, he concludes.
I know a lot of people (and pilots) who hope he’s right!