CEO, Simon Moutter, talks to Peta Tomlinson about his future development plans for Auckland International Airport.

It was hardly a baptism of fire, but when Simon Moutter took the helm at Auckland International Airport in August 2008, global traffic figures were already beginning to be impacted by the worldwide recession.

Many long-time industry players expected the climb back up would be long and slow.

To newcomer Moutter, however, the downturn was an almost welcome pause in the airport’s growth momentum and offered him the space and time to fine-tune the business he’d just inherited.

Like most airports worldwide, Auckland was challenged by the macro-economic conditions of 2008, but investor confidence was never a concern.

Even during that period of extreme financial uncertainty, for example, its bond offer was fully subscribed.

A measure, Moutter believes, is down to its perceived status as “a relatively safe port in an economic storm.”

By year’s end, the lucrative international seat capacity had halted its downward trend, and 2009 brought better news for New Zealand’s aviation gateway.

Continued growth in revenue and earnings featured in the annual report, and with a new management team in place and a slew of prestigious international awards in the bag, the way forward looked promising.

Moutter’s appointment at the airport marked a change of direction for the 49-year-old Aucklander and married father of four, whose previous positions included chief operating officer (business) at Telecom New Zealand, and before that chief executive at Powerco, the country’s fourth largest electricity and gas distribution business.

He now reveals, though, that Auckland International Airport had long been on his radar.

“I’m an engineer in my distant background, and so have a natural interest in businesses that deal with physical assets. I’ve run gas, electricity, telco and IT companies, and airports are similarly positioned infrastructure businesses but with three dimensions: property, retail and aeronautical.

“Most of all, aviation had for a number of decades been a growing sector, which makes it a very positive, vibrant, buzzing environment to be in. Auckland International Airport enjoys a high profile as an important international business. I’d always had an interest in it and thought that if ever an opportunity arose, I’d have a look.”

Moutter was appointed after an international search, but he admits that his new company was “a very different business” from when he signed the contract in May 2008, to starting work in August, due to the impact of the global economic downturn on the aviation industry.

At Auckland International Airport passenger numbers had fallen, profits were hit, and the share price dropped – by as much as 30% at the lowest point.

“It wasn’t the ideal starting point,” he concedes.

The pause in the airport’s growth trend, however, gave Moutter time to rebuild his management team, and the space to refocus the business away from a building emphasis towards a yield management emphasis.

When he began dialogue with investors and stakeholders, Moutter found a lot of mixed views around what was happening, and how the airport should grow going forward.

He drilled down, wanting to know more.

“We spent a lot of time with government, tourism agencies and airlines seeking to better understand their business drivers, objectives and their brands.

From that, we worked on how we could support each of their ambitions differently,” he remembers.

Moutter believes this move away from a “one size fits all” approach has become Auckland’s market differentiator, particularly when it comes to airlines.

“We don’t want to force all airlines to take the one solution.

We say, if any airline wants to innovate, we’ll support that,” Moutter enthuses.

It was a big shift, and not the most cost effective to begin with.

Says Moutter: “I could have reduced my cost base by having one version and telling everyone they had to use it, but that is not healthy, and it’s not the way to grow travel markets.

” To this end, “choice is essential,” admits Moutter.

“If a passenger’s journey is slow, frustrating or boring, it adds an unwelcome overhead to the business,” says Moutter.

“On the flip side, an airport experience that is fast, efficient, fun and enjoyable will encourage people to travel more often, and this has strong economic benefits.

“Our objective at Auckland International Airport is that whatever you want, whether that be a car park, somewhere to eat, a place to sit or choice of airline, you have three options (at three different pricing levels): good, better and best.

Offering customers choices subsequently improves their service experience.

” Ensuring everyone pulls together is no mean feat for a business district that employs 12,000 people, only 300 of whom actually work for the airport company.

Moutter says his job is to make it all work.

“I see the role of an airport CEO rather like that of the conductor of an orchestra,” he reveals.

“The end result is the net effect of having all the instruments in tune, and combining them to deliver the symphony.”

That also means accepting accountability.

Airports are one of the business sectors most likely to receive customer feedback, which Moutter views as a cherished gift among CEOs.

He comments: “This is fantastic. Feedback enables us to take the right steps to lift our game, and recognise great outcomes too.”

Ideas for improvement are especially well received, he says.

“We listen intently, and will always take accountability. It is a conductor’s role to keep the orchestra on song.”

Patently obvious from the feedback was that old chestnut: a frustration with delays.

In a pilot programme to test the Lean Six Sigma business efficiency tool in an airport setting, Moutter’s management team applied its methodologies across all aspects of border processing.

They started with the trans-Tasman market, aiming to get the immigration processing time for passengers travelling between New Zealand and Australia “as close as possible to a domestic experience.”

The system was taught to everyone involved in cross-border business, from ground handlers to airline staff.

Within one year of rollout, the peak time wait in international Arrivals went down from 55 minutes in 2008, to 26.5 minutes in 2009.

“This is a significant service improvement, especially for arriving passengers who are invariably tired and just want to get to their destination quickly,” says Moutter. Another strategy is to move the airport environment towards “a uniquely Kiwi look and feel”, so visitors can have an authentic experience from the moment they arrive.

These outcomes of measures, he believes, have been reflected in the most recent Skytrax passenger satisfaction awards, which ranked Auckland as one of the top 10 airports in the world in 2009 and best gateway in the Australia Pacific region.

The improvements made in the past 18 months have been “an incredibly uplifting process” for all involved, Moutter says.

“Some staff members have been here for 20 years, and they say this is the first time they’ve had a genuine opportunity to make a difference to the business in a positive way.”

As the aviation industry began climbing out of the doldrums – mercifully sooner than many had predicted – it seemed Auckland International Airport’s new direction was on track.

The 2009 calendar year saw a return to positive growth and “a clear revival from airlines in view of their future plans,” notes Moutter.

The recent announcement of a 450% increase in its half-yearly profits – Auckland International Airport Limited (AIAL) registering a net profit of NZ$54 million in the six months to December 31, 2009 – will certainly have pleased shareholders.

Time, then, to review its horizons.

In January 2010, the airport authority expanded offshore by announcing its purchase of a quarter-share stake in North Queensland Airports, the operator of Cairns and Mackay airports in Australia.

With Cairns being Australia’s seventh busiest airport and its closest on the eastern seaboard to Asia’s lucrative tourism market, Moutter says the acquisition opens up exciting opportunities to grow AIAL beyond its core business.

Noting that a strategy since March 2009 has been to pursue opportunistic but carefully selected step-outs, the Cairns/Mackay deal offered the right synergies.

“We believe that Asian tourism markets offer the greatest opportunity for volume growth, and that one of the keys to growing Asian traffic is improved air services connections,” says Moutter.

“Driving more travel demand out of Asia will be crucial to the future growth of both Auckland International Airport and the New Zealand tourism sector.”

The move to purchase a stake in the Australian airport operator followed last July’s decision by AIAL to enter the hospitality arena by opening an airport hotel in time for the 2011 Rugby World Cup.

It recently announced that the budget 125-room hotel will be branded Formule 1 and operated by French hotel group Accor Hospitality, which also operates the gateway’s Novotel.

Moutter says that the Australia deals will be the last such transaction for a while.

“Our objective from here is to really hold ourselves accountable for that investment, and to be incredibly supportive in furthering its development on a significant growth trajectory.”

Judging by its recent performance, Auckland International Airport will be both in tune, and on song, to achieve that goal.

Asia-Pacific Airports 2010 Issue 1