*From Kylie Minogue’s album “Fever” (2001)
On the eve of the 127th IATA Schedules Conference, Chris Woodruff, Melbourne Airport Managing Director and Chief Executive Officer, explains his passion for embracing the culture of his airline customers.
Melbourne Airport handled over 26 million passengers during its latest financial year, which ended in June. Overall passenger numbers were up 6% but demand for international flights rose an impressive 13%, aided by a range of new international services. In the last 15 years the airport has seen demand double from 13 million to 26 million passengers, with passenger numbers growing in each of the last eight years.
“We didn’t come out of recession because we didn’t go in,” a confessed “ecstatic” Woodruff told anna.aero.
“We had 3% growth in the worse times of 08/09 with no underperforming markets – even domestically Melbourne shadowed Australian GDP, growing 2% in the last financial year – still very healthy. And the very latest figures show we’re still very good, even in traditional core markets – UK traffic grew 8% in September, New Zealand by 5%, while the US leapt 11%.”
So, it’s a fact – Melbourne just keeps growing. So what’s the secret? To some extent Woodruff says it is simply still an “underserved market” – still partly a legacy of the increasingly-distant days when Sydney enjoyed overwhelming dominance, and he makes no attempt to hide his desire to stem some continuing “leakage” off to Sydney, an estimated 600,000 passengers per year, especially the US market, the largest at 136,000 passengers per year.
“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, so we should have 25% of Australia’s international passengers. We are making great progress in achieving our rightful market share of Australian international passengers, and are now closing in on 22%.”
But Woodruff still thinks there’s work to be done: “I still don’t think that enough airline executives understand our story – that Melbourne is Australia’s global events capital, that it has the fastest population growth and tourism, that we have a single terminal concept for transfers to the best domestic network and, vitally for long haul, no curfew – you can schedule a flight to depart Melbourne at midnight and get it to Europe in the next afternoon. Added to this our pricing structure is very attractive, and significantly below Sydney and Brisbane.”
Indeed, Woodruff makes much of the fact that Melbourne’s pedigree in the low cost community extends not just to the highly competitive and comprehensive range of domestic airlines, but now also to a lengthening service record for satisfying the market and logistical demands of long haul low-cost customers – of Air Asia X (to Kuala Lumpur) and Jetstar Airways (to Singapore and Honolulu). “We have a BIG competitive advantage – that’s why Air Asia X chose Melbourne as its Australia entry point for these services, a move which paid off when the Australian-Malaysian market leapt over 40% in the first year. Melbourne has owned the Australian-Malaysian market for some time, this has taken Melbourne’s position from strength to strength,” asserts Woodruff, who sees several markets where he believes this performance can be duplicated.
Beijing to add to Shanghai, Guangzhou in December
Of course, China is a centrepiece success story for Melbourne. Chinese carriers are already represented in Melbourne by Air China (to Shanghai), China Eastern (to Shanghai) and China Southern (to Guangzhou). During the last year passenger numbers to China have increased by 15% and will receive a considerable boost when China Southern and China Eastern increase to daily services in November, followed by Air China introducing twice-weekly Beijing services in December.
“For the first time three Chinese airlines will serve the Melbourne market with daily flights to China – three of the great Chinese ‘ports’ – but ultimately there’s 20-30 cities which could link here – the potential is almost unimaginable – and it is happening – we’re predicting average growth of at least 10% in the medium term which means that China will overtake New Zealand as the biggest market for inbound tourism. We won’t sustain that demand with current routes and frequencies.”
In this respect, Woodruff says Melbourne is very fortunate that the Australian government has taken a “very mature view” and is actively working on negotiating “bilateral headroom” in advance. “This will allow the new China capacity to come to the market in line with new aircraft acquisitions, so that both sides can line up their infrastructure – so that our route opportunities match up with their fleet planning.” So why are the Chinese so attracted to Melbourne? Woodruff recounts how the city’s big historical links go back to the gold rush and, fast-forwarding to the present, that the higher-yielding business segment of Melbourne’s Chinese traffic is a robust 20%, higher than competitors in Australia, which is key for Melbourne’s airline customers. Meanwhile, important new sectors have moved in to the modern traffic dynamic – education now also accounts for 20% of traffic, a vital market generating both VFR and lasting future benefit.
Indeed, to build and keep this Chinese business Woodruff explains: “We have to be respectful of Chinese culture” – and he’s serious about this. Staff are trained in understanding Chinese culture, service expectations, and tastes – and there’s plenty of physical evidence of an instititionalised programme to embrace Chinese customers with both signage and announcements made in Mandarin. Woodruff is now focusing the same successful formula on the development of Indian services. Right now Australia has no direct services to India, but new daily non-stop Air India Delhi services are set to start later this year. With the success of existing indirect Indian traffic, transferring via Singapore and Kuala Lumpur, there’s every indication that the Delhi services will perform very well. Woodruff is also determined to capitalise on the new lead: “We want to be the Australian hub for India, after this service starts there will be tremendous growth because of India’s fantastic economic development. After Delhi we are have our eyes on Mumbai, Bengaluru and of course we have interest from a number of Indian airlines.”
As with China, Woodruff again praises the Australian government for its efforts to build good future bilateral conditions with both India and the very wide range of Asian markets Melbourne has interest in, noting: “Vietnam and Australia where talking only last week – Australia relies heavily on air travel, and we have great support from the whole political spectrum for getting the liberal regimes we need if we are going to have new services from these and other Asian markets.” Of its targets Woodruff concedes that the big gaps in Asia remain Japan and Taiwan: “That’s not going to last – we have clearly identifiable leakage markets – we are quite hopeful.” Woodruff would also welcome the opportunity to serve the US and Canada better, taking back Melbourne-headed travellers who instead pass through Sydney and Auckland. “We’d love to have had Delta come here, we can’t understand why they preferred Sydney, but currently we’re watching the United-Continental merger closely as it offers great possibilities.”
Will European carriers ever fly to Melbourne? “Only Virgin and British Airways still fly to Australia, but we still talk to the European carriers – we think they would be better coming here than wholly relying on partner hubs,” says Woodruff, with an eye on the technology potential airline partners are selecting. “Longer range 777s and the Dreamliner could produce viable new Melbourne routes from Southern Europe, South America, America itself, and Eastern Europe and Russia… there’s also South Africa – V Australia may be closing Jo’burg, but it has done much market preparation which has produced a lasting demand.”
After the China experience and the hope of India, it’s not surprising that Woodruff has long-distance designs on a “very interesting list” of booming or fast-developing economies which may come in range due to technology including Brazil, Russia and Turkey. Woodruff believes he has a very structured offer to make to newcomers: “We fully acknowledge the investment and commitment it takes to fly here. We have to be a great supplier – to offer a product new airlines will like, and can afford. A cooperative partnership focused on aviation exists in Melbourne – we call it ‘Team Melbourne’ – a coalition consisting of Melbourne Airport working closely with the State Government of Victoria, and the City of Melbourne. We work together on airline business development, with the aim of delivering strong and innovative initiatives to grow airline operations out of Melbourne.” Meanwhile, on the ground at the airport, Woodruff is proud of efforts to continue to support growing markets and ensure these passengers feel welcome when they arrive in Melbourne. Important cultural events such as the Chinese New Year are celebrated in the International Terminal – and, just last week Diwali (the Indian Festival of Light). And, besides important festivals, the airport works closely with the City of Melbourne, assisting in its important events business as well as the facilitation of international students who are welcomed to a dedicated desk each January and July.
“Equally, we’ve got to be smart and quick in supporting the new outbound markets and that’s why we have the Fly Melbourne direct marketing scheme for our airline partners’ services, a programme that has proven to be a very effective and strategic tool which really pays the dividends. We’d never expect new carriers to come to Melbourne and do all their development in our community all on their own.”