Sydney Airport’s route development strategy appears to be working as airlines will offer an extra 1.6 million seats out of Australia’s leading gateway this year.
The expansion is part of a collaborative strategy to position Sydney as Australia’s tourism gateway and one of the most competitive, secure and accessible business locations in the Asia-Pacific region.
Key airport infrastructure development projects include an €60 million investment to handle the next generation of new large aircraft, and an €300 million upgrade of passenger facilities at the T1 International Terminal.
The extra seating announced for this year will give business and leisure travellers more choice, more options and more competition when they fly, says Russell Balding, the CEO of Sydney Airport Corporation Limited (SACL).
“It is an important competitive principle that airlines be free to decide, on a commercial basis, which airports they want to fly to,” he comments. “It obviously makes commercial sense for airlines to fly to Sydney Airport.”
International carriers boosting their routes ex-Sydney include Air Canada with 44,000 more seats, Transaero starting a new service to Moscow, Cathay Pacific adding four more weekly services to Hong Kong, Singapore Airlines with a new daily service to Singapore and Etihad adding four weekly services to Abu Dhabi. Qantas is also launching various new services to destinations including Los Angeles, Honolulu, Queenstown and Johannesburg.
Recent additions mean that 39 international airlines operate scheduled services from Sydney Airport to 52 destinations across the globe.
Sydney’s route development strategy involves showing airlines how they can succeed in Australia, with SACL, Tourism New South Wales (NSW) and the NSW Government as key players.
Information provided to airlines includes route analysis, business case development, forecasts and market research. Support is given to obtain air rights, assistance with obtaining regulatory approval and tourism promotion.
The marketing campaign promotes Sydney as a ‘business magnet’ – half of the top 500 companies with a regional presence base themselves in Sydney – and as an aviation hub of Australasia.
Some 60% of Australians live within 75 minutes’ flight time of Sydney. Six domestic airlines ensure that Sydney drives domestic travel in Australia, with Sydney-Melbourne being the third busiest airline route in the world.
“Sydney actively markets itself to prospective new carriers,” says the airport’s manager for traffic and route development, Hans Mitterlechner.
“We do this by undertaking a comprehensive analysis of all available data on an ongoing basis. This analysis looks at passenger demand and seat supply on a regional basis, the country-to-country bilateral environment, as well as specific carrier fleet composition and fleet orders.
“Our analysis identifies opportunities that either exist or are emerging. Once the analysis has been done, material collected and the case for Sydney developed, the task is to present the information to the relevant decision makers.”
An important focus is working with existing carriers and assisting them to increase their services, says Mitterlechner.
“Key elements of our strategy are the international Routes’ conferences where I present general background on Sydney Airport, market data, country specific traffic facts and figures, data time series, scheduling options and how a Sydney service would fit into a carrier's network structure.
“The idea is to generate interest in Sydney and the Australian market and I follow up with telephone calls and email exchanges and the provision of more specific data.”
Mitterlechner also undertakes four marketing trips a year to make more detailed presentations to interested carriers, visiting Asia, the Indian subcontinent, Middle East and North America and other areas as opportunities are identified.
“Overall, we try to co-operate with carriers in the construction of a Sydney route business case. We help with the generation and analysis of data, and provide contacts and introductions to local tourism authorities and governmental agencies.”
Part of the pitch is that Australia’s busiest airport can now handle the world’s largest passenger aircraft. Indeed Sydney made global aviation history in October 2007 when the first A380 operated by Singapore Airlines touched down on a revamped 4km-long runway, marking the start of a regular A380 service between Singapore and Sydney.
In preparation for the super jumbo, SACL had already strengthened and widened its main runway, realigned taxiways and built new aerobridges.
It marked the A380’s arrival by announcing a further upgrade to the arrivals baggage system to meet extra peak passenger flows associated with the progressive introduction of the A380 into airline fleets.
This new generation super-jumbo is important to Sydney’s ongoing development as it can carry more passengers than other aircraft and does so with significantly reduced noise and emissions levels.
Anticipating growth in this area, Balding believes that the long-haul trunk routes linking Sydney to the global aviation network are well suited to the A380. “Many of the airlines that fly out of Sydney are committed A380 customers, which means Sydney will be seeing many more A380 flights in the years ahead,” he enthuses.
The €300 million upgrade of Sydney’s T1 International Terminal is another progressive initiative. The facelift, currently under way, is designed to provide a ‘world-class’ food, beverage and shopping experience for those 75% of passengers who do not have access to airline lounges.
The expansion will help manage the airport’s increasing number of international passengers. In fiscal year 2001-02, eight million international travellers passed through Sydney. By 2006-07 the figure had reached 10 million – a five-year increase of 25%. By 2023-24, the gateway expects to be handling more than 20 million international passengers, double the number today.
Sydney Airport’s development initiatives have been hailed by the business community. “The T1 upgrade will result in a better tourist experience,” says Patricia Forsythe, the executive director of the Sydney Chamber of Commerce.
While TTF Australia (Tourism & Transport Forum) claims that the new-look is crucial for a gateway handling half of Australia’s international passenger traffic.
“The airport plays a vital role for the country,” says TTF’s managing director, Christopher Brown. “That role varies from creating a positive first impression of Australia for international visitors, to ensuring a smooth connection for onward passengers and providing duty free retail opportunities.
“This strategic development will keep Sydney Airport at the forefront of economic activity in Australia’s tourism and aviation industries.”
Brown adds that a TTF forum last year nominated passenger facilitation and airport investment and growth as two of the most important issues facing the aviation industry. “It is clear that Sydney Airport is taking a leadership role on both fronts,” he notes.
Airlines have also had to ‘buy-in’ to ensure Sydney’s development meets their needs, according to Balding. He insists that international airlines are committed to the current expansion, and the Board of Airline Representatives of Australia (BARA), an industry association representing most of the international carriers using Australian Airports, concurs.
“Airports and airlines have to work together to take advantage of emerging opportunities for sustained growth,” says BARA executive director, Warren Bennett.
Indeed he insists that “extensive consultation between BARA and Sydney Airport produced an outcome that meets the ongoing operational requirements of our airlines”.
Adds Bennett: “The aviation industry is vital to Australia. Having a world-class airport equipped with modern infrastructure is an essential requirement for airlines to continue to grow their business to and from Sydney.”
Macquarie Airports (MAp), owner of Sydney Airport, also works with the gateway’s management team to identify underserved routes.
MAp CEO, Kerrie Mather, agrees that the current redevelopment will prove a catalyst for growth, ensuring Sydney retains its position as a leading hub providing high quality service for both passengers and airlines.
“Sydney Airport is a very significant investment for Macquarie. As well as being one of our first investments and MAp's home city airport, it makes up approximately 50% of our airport portfolio,” she says.
“We are investing in the airport to prepare it to accommodate future growth and expansion. Airlines have announced new routes and services for 2008 and have ambitious fleet expansion plans. Additionally, the Australian Government has announced ‘Open Skies’ agreements with the United Arab Emirates and the USA. All of these factors combine to indicate an exciting future for Sydney Airport.”
Mather is also acutely aware of the importance of the gateway’s success to both the local and national economy.
“The airport is a major employment generator and wealth creator in New South Wales,” enthuses Mather. “It is directly and indirectly responsible for nearly 170,000 jobs or 8.1% of Sydney's labour force and its economic impact is equivalent to 6% of the NSW economy. Its future success is very important to a lot of people.”
In terms of aviation and the role it plays in boosting the Australian economy, there is no denying the fact that Sydney Airport is a national treasure.
This article features in Routes News 2008 Issue 1