How is Melbourne and Victoria state coping with the changing face of Australian tourism? Peta Tomlinson reports. 

Australian tourism of late has experienced both the best of times, and the worst of times. For while the nation’s strong currency has been riding high as the envy of troubled economies globally, domestic tourism – once the industry’s backbone – has suffered as a result. It’s meant that Australians who once loved to holiday at home now prefer to skip overseas, where their dollar goes further.

On the flip side of this domestic tourist downturn, international tourists are arriving in droves. And increasingly, Melbourne in Victoria, long the ‘bridesmaid’ to New South Wales’ capital Sydney – at least as far as foreign visitor arrivals is concerned – is becoming their default gateway. 

All of Australia’s airports have fared well in terms of overseas arrivals over the past decade, but Melbourne is the standout. Tracking data by Tourism Futures International shows that from 2000 to 2010, a 5.3% annual growth rate of international arrivals in Melbourne far outpaced the national average of 1.8%, eclipsing second-placed Perth, which grew 2.5%, and Sydney and Brisbane, with 0.7% growth each.

Indeed, in its 2010/11 financial year ending June 30, international passenger arrivals at Melbourne International Airport – known locally as Tullamarine – grew by 18.5%, and since then the gateway has recorded monthly rises of 12%, 11.5% and 9.3% respectively.

Some might say it’s about time. Home of premier horse race the Melbourne Cup, the Australian F1 Grand Prix, the Australian Tennis Open and the hallowed Melbourne Cricket Ground, Australia’s second-largest city is the events capital of the nation, and its cultural vanguard.

Melbourne consistently places among the top three in the ‘world’s most liveable cities’ rankings, and boasts both remarkable urban architecture and spectacular coastal and mountain scenery, in equal measure.

But people don’t come unless the packages are attractive, and to that end, a concerted effort by industry players bundled together as ‘Team Victoria’ is credited with Melbourne’s ascension.

Surmises Chris Woodruff, Melbourne Airport CEO: “In a nutshell, we’ve worked really hard, and we are now seeing the results.”

The strategy has involved a holistic approach looking at what a passenger wants from a total travel experience. Woodruff continues: “So we are not just selling Melbourne Airport, but Melbourne as a city, and Victoria as a state. To do this, we work

closely with the government as well as peak tourist bodies to offer a total package to our airline customers, and ultimately, to their passengers.

“We have a great city and a fabulous state with a sensational major events calendar, and working together as Team Victoria has proven to be a successful formula.”

Being the perennial number two airport in Australia is also fuelling Melbourne Airport’s drive to shoehorn Sydney out of the top spot, Woodruff concedes.

“We have worked hard to ensure that we offer our airlines great service and lower fees,” he says. “In terms of lower fees, we have decreased our overall security costs and passed these through to airlines. We also have a number of operational advantages that make us very attractive in terms of flexibility and scheduling.”

Woodruff believes Melbourne is well placed to be the national aviation gateway “as we are the only major Australian airport with a single terminal precinct and with curfew-free operations.”

That curfew is Melbourne’s trump card. Sydney has one – prohibiting passenger planes from taking off or landing between 11pm and 6am. Melbourne does not. Woodruff says Melbourne’s curfew-free operation enables the airport to offer airlines flexibility of scheduling – particularly sought by long-haul carriers – and increased flight options from the key growth markets in Asia.

Asian markets are lucrative, and growing – led by China, which seems on track to overtake the UK as the biggest source of overseas visitors to Australia.

In the first quarter of its 2011/12 financial year ending September 30, the number of international passengers using the gateway jumped 10% to 1.6 million, with growth led by a 26% rise in both Chinese and Philippine visitors.

In September alone, the number of Chinese visitors soared 29% and other countries with strong growth in passport holders included Vietnam (17.5%), Taiwan (16.3%), Singapore (8%), Philippines (9.4%) and Sri Lanka (9%).

In comparison, the so-called traditional markets of New Zealand, Canada and the UK grew by 7.9%, 5.6% and 5.1% respectively during September.

This influx from the East is reflected in route expansion by nearly every large Chinese carrier. In June 2011, China Eastern increased its Melbourne to Shanghai service from four times a week to daily. In August 2011, China Southern announced plans to double its Melbourne services by introducing twice-daily flights between Guangzhou and Melbourne from October 2011.

Last December, Air China was the first carrier to introduce a direct route between Beijing and Melbourne. The new route was announced as part of the airline’s greater plan to operate daily flights between China and Melbourne. Capacity has also been boosted at Cathay Pacific, which operates thrice-daily services from Melbourne via its Hong Kong hub.

Jetstar has announced a new Melbourne–Singapore–Beijing service, operating daily, which will carry up to 4,000 passengers per week. Elsewhere in Asian markets, Vietnam Airlines has begun a daily service from Melbourne to Ho Chi Minh City.

Woodruff indicated that these expanded airline offerings could only be the beginning as Melbourne Airport aggressively targets the Asian market.

“We see China and Asia as a whole continuing to be growth markets for us for the next 10-15 years,” he says.

Hence, the China factor features in the current A$330 million expansion of Melbourne Airport’s international departures area. The strategy incorporates a vastly enhanced passenger experience specifically tailored to Chinese passengers.

“To become the busiest airport in Australia, we need to do something different and we believe that our passion for our customers is that,” admits Woodruff.

“Through our Chinese Visitor Program, we’ve introduced Mandarin signage and Mandarin public announcements, and trained frontline staff to provide the best service we can for our Chinese passengers.”

He added that all international visitors will benefit from these improvements.

“For the first time in 40 years, we have purposely built retail offerings that are tailored to our passengers and reflect the culture of Melbourne.

“Many are trading now; the remaining new stores will open at the end of this year. Also a part of the international terminal expansion is the largest overhaul of our baggage systems, which we have also just completed.”

And to appeal to airlines, he notes that “we are upgrading our aerobridges to create greater flexibility for airlines, and allow a wider range of aircraft to utilise the gates”.

To further accommodate the growth at Melbourne Airport, over A$1 billion in infrastructure will be invested over the next five years – works aimed at improving the surrounding road network and terminal facilities.

Todd Blake, CEO of the Victoria Tourism Industry Council (VTIC), believes these efforts will further Melbourne Airport’s efforts to be the preeminent Australian aviation gateway.

He particularly applauds the airlines’ route expansion, saying that direct international aviation access is of critical importance to the Victorian tourism sector.

“With future growth expected from markets that traditionally stay in Australia for a shorter period of time, direct aviation access is vital,” comments Blake.

“Melbourne has some strategic advantages over other destinations with two curfew-free airports (Tullamarine and Avalon) within close proximity of Melbourne, and a substantial land bank around both airports that will allow for increased capacity over time.”

With the way Australian tourism is shaping up, this represents a welcome revenue stream. Blake noted that VTIC’s Tourism Forecasting Committee, among others organisations, expects growth in domestic leisure travel to Victoria will be modest over the coming decade.

“Assuming this is the case, then international visitation to Victoria will become a key driver of economic growth,” insists Blake.

Melbourne Airport has pledged to build on its successful formula to help ensure this is so. “We have worked hard over the last few years and are now seeing the success of that effort,” adds CEO Chris Woodruff. “But we must not be complacent, and will continue to deliver benefits over other airports so that our passengers and airline customers will want to fly to Melbourne.”

Asia-Pacific Airports 2011 Issue 2