How is passenger traffic holding up at Australia’s regional airports? Peta Tomlinson investigates.
Its remoteness is one, and its vastness another.
Although both can be viewed as a positive or a negative, depending on one’s perspective, it’s reassuring to know that when problems occur elsewhere in the world, Australia is far enough away not to be too bothered.
This certainly seems to be the case in regard to the global aviation industry.
With airlines facing an unprecedented crisis due to weak demand and fluctuating fuel prices, airports worldwide are feeling the pinch – most everywhere, it seems, except Australia.
While passenger numbers are down elsewhere, the major hubs of Melbourne and Sydney have recorded ‘best ever’ months.
And the regional gateways are travelling well, too.
Why? There is no doubt that Australia’s regional destinations have benefited from cut-price or even ‘free’ airfares offered by the likes of nofrills international carriers Tiger and AirAsia.
A strong Australian dollar also helps when value for money is sought.
But as Cam Macphee, aviation business development manager at Brisbane Airport Corporation, points out, what counts for much in these uncertain times is that Australia is still seen as a safe destination.
“Australia is insulated from many of the world’s problems, and this is a critical consideration for all airlines or potential airlines that are going to be flying here,” Macphee says.
The lure of a ‘remote’ travel experience is a further drawcard for Australia’s regional airports, particularly for Perth in Western Australia, the closest gateway to outback destinations and the vast Indian Ocean coastline.
International volume at Perth grew 8.
5% in June, with domestic up 3.3%.
Many visitors say they choose Perth for an “authentic Australian experience”, noting in particular the pristine environment and laid back lifestyle.
From an international perspective, explains Brian Krause, Perth Airport’s aviation business development manager, Perth has benefited from capacity increases from a number of new carriers entering the market, with many of the new services from low-cost carriers (LCCs).
Targeting low-cost carriers was a key strategy to help Perth Airport through the current climate, and it seems to have worked.
In May 2008 Perth had a 15% share of Australia’s LCC capacity – now it enjoys 25%.
Another strategy was engagement with existing carriers to ensure they are well informed about the opportunities in the Perth market, including economic and demographic information, Krause says.
“We are constantly reviewing available information to better understand our markets.
Using that information, we consider which airlines are best positioned to potentially serve underserved markets.
Apart from targeting LCCs for the past couple of years, we also look to make sure that our existing and target airlines are updated with enough information to build the business case for serving Perth, and that their aircraft allocation decisions are made on a fully informed basis.
” New or expanded services launched from Perth in the past year include a daily Jetstar service to Singapore, a Perth–Denpasar route from Pacific Blue, and daily AirAsia X flights to Kuala Lumpur.
Indonesia AirAsia commenced daily Denpasar services in July 2009, adding further to Perth’s LCC capacity.
“A number of carriers also increased capacity by changing aircraft types or adding frequency,” adds Krause.
“While not adding as much capacity as a new route, these capacity increases have still been taken up to a large extent.”
Most significant have been the decisions by Cathay Pacific and South African Airways to introduce daily services on their respective Perth–Hong Kong and Perth–Johannesburg routes.
“The net result of these changes is that there is continued growth in outbound resident travel, taking advantage of Perth’s close proximity to South East Asia and the new low-cost carrier services.
There has also been strong growth in some inbound markets, with visitors from Malaysia up over 80% in recent months.
Perth has also benefited from growth in visitors from South Africa and New Zealand, up 13% and 10% respectively in the 11 months to the end of May 2009.”
The attractions of South Australia’s world famous wine regions, including the Barossa and Clare Valleys, the Adelaide Hills, Southern Vales and Fleurieu Peninsula, have also held Adelaide Airport in good stead.
Buoyed by a strong domestic market, Adelaide in May had the second best growth of the top five Australian gateways – and even though the rise was “only 2%” according managing director Phil Baker, he notes that it was an increase that many industries might envy.
Malcolm Andrews, Adelaide Airport’s general manager, business development, believes that the gateway is “faring well”, considering the global scenario.
“March was our record month for domestic passengers, and overall for the 12 months ending May we were 3% up for domestic traffic, 1.2% for international and 2.6% overall.
Domestic-wise, April and May were again the best figures ever for both months,” he enthuses.
ompetitive international arena.
Even so, route development is continuing, with Adelaide still bagging new airlines and new destinations.
“Pacific Blue, for example, launched two Bali flights last December – our first since September 2006 – and added a third in June,” adds Andrews.
“Also, for the first time we have introduced two non-stop flights to Nadi (Fiji) with Pacific Blue.
Take-up has been a little slow but we remain convinced that in the long-term this will be a winner.”
From an international perspective, the ace up Adelaide’s sleeve is that it remains relatively underserved.
With over 47% of outbound passengers going via other gateways, this leaves large chunks of the market untapped.
Adelaide is seeking to overcome this by growing its suite of non-stop destinations.
Adelaide Airport Limited is targeting a number of airlines servicing destinations it views as ‘realistic’.
These include Bangkok, Christchurch, Los Angeles, the Middle East and Mainland China in the relatively near-term, followed by Jakarta, Ho Chi Minh City, Seoul and Japan.
While many will come to visit South Australia’s world-class wineries, gourmet food, unspoiled beaches and outback, they won’t all be tourists.
In one market segment alone, 50,000 Philippine guest workers can potentially come to work in South Australia.
And with three major Australian universities and plans for two British universities, Adelaide is set to grow as a hub for students from all over Asia.
Nonetheless, Adelaide is being cautious.
While still planning for expansion, it will not move into the construction phase until “the traffic situation improves and the financial markets return to normal”.
“Once that happens, and taking into account South Australia’s rapidly expanding mining and defense industries, there would appear to be a strong upside for several years to come,” says Andrews.
More sunshine in the economic gloom can be found in Queensland, thanks largely to the various airlines’ discount pricing.
Brisbane’s recent results have included an “off the scale” month in April, when international arrivals jumped 6.9%, with domestic up 3%.
This prompted Gert-Jan de Graaff, Brisbane Airport Corporation Pty Limited (BAC) general manager of commercial services to note that, with lower airfares and more choices, “air travel now rates very much as a discretionary purchase alongside concert tickets, a new TV or a big night out”.
While Brisbane’s financial growth for 2009 is lower than originally forecast, it is still ahead of last year.
BAC is now forecasting modest international and domestic growth for the next financial year or so, then returning to a long-term growth trend of 4%–6%.
Brisbane’s Macphee says international route development work is continuing with established network carriers over key hubs to either improve timings for connections, increasing frequency to at least daily when demand picks up and up-gauging aircraft where necessary.
“We are also talking to several other long-haul network carriers not currently operating to Brisbane with a three to five year time horizon.”
In one example, BAC is in discussions with Chinese airlines China Eastern, China Southern and Air China to fill the gap, as there are no non-stop Brisbane to Mainland China air services, despite annual passenger flows to China growing to nearly 130,000 in the past 12 months.
Further north, the combined effects of Swine Flu and the global financial crisis have hit Cairns Airport.
“These factors have further exacerbated an existing downturn in our key international market of Japan,” explains Stephen Gregg, CEO at Cairns, Australia’s largest regional airport.
What to do? Apart from partnering with tourism authorities to consolidate existing markets, the airport has prioritised working with its airline partners to ensure their existing routes into Cairns are sustainable, admits Gregg.
“We also continue to build new partnerships and look forward to working with all our airline partners to develop new routes to link with key emerging markets once conditions are again conducive to such expansion,” he says.
But there is good news for Cairns on the route development front.
Jetstar has announced plans to reintroduce a direct Cairns–Osaka service in December this year with four flights per week, complementing the Cairns–Gold Coast route launched by the airline earlier this year.
Other new services this year include Cairns–Townsville, operated by Virgin Blue, and Cairns to the mining centre of Mt Isa, operated by Regional Pacific.
A key reason for continued optimism in Australia’s regional gateways, observes Brisbane’s Macphee, is the country’s strong economic fundamentals.
Unlike most other developed economies, he points out, Australia has not yet fallen into recession.
“As a result, consumer confidence is higher than in other regions of the world, making Australia a safer destination for airlines.
Furthermore, Australians are still eager to travel overseas with a relatively strong dollar, ensuring a continual attraction for foreign airlines in the Australian outbound market,” says Macphee.
Asia-Pacific Airports 2009 Issue 4
