Sydney Airport Update: Kerrie Mather

Transcript

Kerrie Mather:Well, thank you for inviting me to speak today. It's great to see so many airport and industry colleagues and also so many of our customers. I can see customers, airline customers here from Fiji, from KL, from New Zealand, from China. Fantastic to see you here. We've got a lineup of many interesting speakers today and tomorrow, so I'm really delighted to be part of this morning's session. Well, Jane talked about some really interesting things, and I've made a note of some factoids that I'll be using in our results presentation. But it's very clear the industry's experiencing rapid change, and so the theme of adaptive strategies today is particularly appropriate. The world we operate in, the technology we're using, the expectations of our customers are constantly evolving. I think, and we're all working hard to keep up, I think the changing global and geopolitical environment, it continues to bring new challenges. Just over the weekend, heightened security alerts and recent travel bans in the Middle East are just some of the examples of the very direct impact geopolitical factors are having on our operations at very short notice. But the industry's become very adept at actually dealing with these sort of disruptions, responding to health epidemics, political shocks, economic shocks. But conversely, as we've heard from Jane, we've got a very positive economic backdrop there at the moment relative to where we've been. Free trade and bilateral air services agreements are actually opening up the world. They're providing new opportunities for growth. Technology advances, changes in airline business models, new opportunities through open data, as you've heard, they're all driving collaborations and positively disrupting our industry. And that's delivering improved outcomes for our combined customers in the form of lower fares, new destinations to travel. When you look at, uh, when you look at the route map that we actually serve, you can see that next-generation aircraft are also changing airline business models and opening up markets and destinations. They're making it more economic to serve with longer range, more fuel-efficient aircraft. So we now serve 70% of the world's population, which provides airlines with a massive catchment area, and of course passengers with more choice and competitive fares. The diversity of destinations and markets is actually providing significant resilience for airline travel, but also tourism and trade for Australia. Australia, of course, remains one of the top 5 desirable destinations in the world. Apart from our tourism and destination appeal, our clean air, blue skies remain a natural attraction. Increasing education tourism and our very significant VFR markets are complementing our high-yielding business markets, and they are key drivers of inbound growth. At the same time, Sydneysiders have a very high propensity to fly, so we've got a strong leisure market and people are now travelling overseas more frequently and for shorter periods than they did historically. And you can see when you look at the diversity of markets that we serve on this slide, there's no single country that accounts for more than 9% of our inbound markets. Our traditional markets remain strong, but the Pan-Asian story is really quite exciting. India grew 22% in 2016, and yet we're still only serving a very small portion of their population and we're only serving a very small market— part of that market directly. South Korea and Japan are also growing strongly and we were delighted to welcome a new Qantas service to Osaka last week, which I'm sure will help build on the incredible 32% growth we've seen on the inbound market from Japan. So we've certainly seen fantastic growth from the region recently, but when you look at the passenger numbers that we're serving relative to the population sizes of each region, you can see there's still so much more potential for growth, one of the things that Jane highlighted. So as an industry, we've got to prepare ourselves for that growth. And technology is going to have a critical role to play in supporting that growth efficiently and cost-effectively, and providing a seamless and efficient customer experience. I talked about the growth across Asia. The China market is a case study. It's an interesting example of how the that market is transforming our passenger mix at Sydney Airport. Just 5 or so years ago, we were serving 3 Chinese mainland cities with 3 airlines. We now serve 14 mainland Chinese cities on 6 mainland airlines plus Qantas, and it's soon to be 15 on 7 airlines plus Qantas. So recognising that market change a few years ago, we developed a China-ready strategy. Chinese signage, language speakers in the airport, apps and communication channels, and actually making sure that our facilities and amenities were appropriate for that market. The market's been further boosted by the recent Open Skies and Free Trade Agreements, which really underlines the importance of tourism and trade as a key driver of growth. But what's really exciting is that we expect that trend to continue. Jane was actually just talking about even if we just hold our market share, the phenomenal growth in that market means that we will see a very significant growth in that market. But a recent CLSA study showed that Australia remains the 4th most popular destination for the Chinese to visit. We're also seeing an increasingly differentiated China market, ranging from the free independent travellers from the cities that we've actually served for a number of years now, to travellers from China's emerging middle class and regional cities, and that's providing new opportunities for the visitor economy as we target a larger and far more diverse China market than we have historically. So we've got to continue to meet the differing needs of these travellers to capture the ongoing growth potential from that market. We have a unique location advantage for serving that high-growth Asian market. Most destinations are 11 flying hours from Sydney. So that means with— that they could actually serve Sydney daily with only one aircraft, giving us a unique competitive advantage relative to the European and North American markets. Low-cost carriers, as you've heard, have actually changed the dynamics of the airline industry. And Jane's team at Jetstar have certainly been leaders in this field. They recognise the strength of the local leisure market and they serve popular outbound destinations such as Fiji, Bali, Vietnam, Phuket, Hawaii and others. Sydney Airport now hosts 2 domestic and 4 international low-cost carriers, making us the largest long-haul low-cost carrier airport in the world. And what's interesting is these low-cost carriers actually sit alongside network carriers serving the same market, but they're actually growing markets because they're stimulating new demand to travel. The other key change has been airline partnerships. They've strengthened airlines but opened up destinations and connections for passengers. For example, Qantas's partnership with Emirates has created 36 one-stop destinations within Europe from Sydney, reducing travel times, giving passengers more choice and creating seamless networks. Similarly, Virgin has a strong international virtual network through its partnerships with Etihad, Singapore Airlines, Air New Zealand, and others. So new markets, next-generation aircraft, new airline business models are changing the economics of aviation for the better. They're lowering average fares, creating new destinations and competition, and providing exciting opportunities for traffic growth. And we're uniquely positioned to capture the growth potential from those trends. But it's important that we continue to deliver flexible infrastructure that can respond to the advancement in technology and new aircraft types and to meet the changing needs of our customers. So hand in hand with infrastructure, technology has a critical role to play in delivering airline operational efficiencies and providing a better customer experience. And I'm very excited by the step change technology is and will continue to deliver at the airport. We've aligned our technology strategy to our business and customer objectives to ensure that it's embedded across every aspect of our operations. Ultimately, it's all focused on improving the efficiency for our airline customers and also making the customer— the end customer experience easier, faster, and more seamless. Oh, I see Sean in the room. Welcome from Dallas. By mapping a passenger's journey and identifying each touchpoint that we control and using technology to drive improvements, we can enhance service levels at the most efficient cost. And that approach is actually delivering real and tangible benefits, including increased asset utilisation, which benefits both the airport but also the airlines. More efficient passenger processing, and an improved ability to offer new and value— better value products and services, as you just heard from Jane. And as passengers are choosing to manage their own journey, and with the increased use of smartphones, we're using shared data to streamline the passenger experience. The thought leadership in the innovation and technology space is very exciting, and we're already delivering significant improvements, but there's more to come. And these are just a few of the examples of how we're empowering customers to take charge of their airport experience. Our open data strategy is allowing us to share data with our airline and on-airport partners so passengers can access information from their platforms of choice. So at home, a passenger can register their flight with our FlySyd Twitter account to get the latest flight updates from our BizTweet service, and they can do so in 41 languages. They can also book parking online, securing significant discounts or guaranteeing a space right next to the terminal, depending on their preferences. And of course, once they've arrived, Google Maps— we've actually Google Mapped the entire terminal, a platform many of us actually use on a daily basis— can help guide where they need to go, which check-in kiosk they need to go to, where the amenities are in the airport, and which gate they need to go to. And they can register for updates through their airline app of choice as well. So all these options give the customer the chance to more easily move through the airport where they want to be. And in the future, we see a great deal more potential to use open data to drive an improved customer experience. Technology is also changing how we approach safety and security of airport operations, both in ways that are visible to the customer and behind the scenes in our work with our airport partners. Technology is enabling closer collaboration with our partners and ensuring more effective real-time decision-making. In today's environment, the ability to quickly identify, share, and act upon new information is becoming more important than ever. Our new state-of-the-art operations centre is helping us to do just this, giving us complete visibility of the entire airport environment from the roads around the airport to landside and terminal operations to the airfield, and with access to the air services feed and social media feeds, all while working alongside major government agencies. The increasing use of data to better inform airport operations in that centre means more information like weather, ground handling, CCTV feeds, live traffic, and car parking data can be integrated into our real-time operational and decision-making. decision-making. And that makes us more effective at actually managing day-to-day operational issues, but also managing risk. And of course, there are customer benefits to that approach as well. And on the right side of the slide, you can see the example of our queue management data. We've invested in the capability to measure and predict the time taken to get through security queuing and outbound passport control to both assist in rostering for our border agencies, but also to actually provide customers with information in real time so that they can— it helps them manage their expectations and plan their time. Collaboration with our airline partners is also driving improvements and more targeted investment. Our new industry-leading agreements that we entered into with airlines in 2015, feature a KPI framework with a suite of 28 measures that are reported quarterly to airlines. And these hold the airport to account to agreed levels of service and provide an objective and comprehensive data source to inform business decision-making. And that's provided objective and reliable data sources to guide our investment in infrastructure, resource allocation across key areas of baggage check-in, security and border facilitation, and busing. That focus on outcomes is leading to a more collaborative approach and has enabled us to develop shared solutions to issues that arise across the airport. For example, following a drop in our customer satisfaction KPI for the comfort and quality of our gate lounges, we undertook a deep dive into our qualitative feedback to ensure we understood the issues that were negatively impacting people's views of the gate lounges. So we shared this feedback direct with the airlines and consulted with them to ensure that the designs for our new gate lounges at T1 addressed the known concerns of both airline staff and also passengers. And the designs now directly respond to that feedback and are currently being trialled before they're being rolled out across the terminal. We've also stepped up our cleaning and maintenance standards and have worked closely with suppliers to improve the the standards across the categories of bathrooms, air bridges, and check-in counters. The process incorporated solutions that are best practice, automated, and drive increased productivity, and are aligned with new and increased market innovations. As a result, we've achieved gold standards in airport terminal and bathroom cleanliness and overall presentation and ambience. We're now registering our highest ever customer satisfaction scores for all aviation-related categories and receive feedback from Barra about the positive impacts of the agreement. In addition to investing in landside terminal and airfield infrastructure, it's also been important to ensure our facilities and amenities keep pace with our changing customer mix. And I gave the example of our China Red for the China market. We're also ensuring our wayfinding is responsive to the large number of nationalities and markets that we now serve. We were the first in the world to have our FIDS screens translate into the language of the destination that we're serving, so they translate into 13 different languages for the range of destinations we serve. Recent research into travel behaviour of millennials is another good example of the need to plan for changing customer trends. Millennials will make up 25% of Australian tourism spend by 2020 and 30% of inbound tourism spend, and by 2030 they'll account for 54% of the Australian population. They prioritise leisure and travel and are more likely to engage online with the airport ahead of their visit as they plan their journey. So we need to ensure we're providing for this important market with appropriate information and in advance to ensure we're maximising their gate to— their couch-to-gate experience, so to speak. And when they arrive at the airport, we know they're looking for experiences, and that includes great food and beverage choices and great retail experiences. So the retail transformation that we've got underway at the moment is designed to actually address that trend. But beyond terminals and infrastructure, it's also vital to ensure ease of access to the airport. Peter talked about that when he was talking about Western Sydney Airport. Our Ground Transport Improvement Plan is actually one way we're addressing this need at the moment. The roadwork program that we have underway in conjunction with the New South Wales Government, pleasingly our works are 1 year ahead of program. And the New South Wales Government is undertaking significant complementary works on all surrounding roads. Thank you. But in the medium term, WestConnex will actually have a fundamental role to play in taking traffic that's not bound for the airport off our access roads. But modal choice is increasingly important, and we're fortunate the East Hills train line actually stops at the 2 airport stations. So we've continued to advocate for more and affordable public transport services, and the government's responded with an additional 200 services services a week that will commence by the end of this year. The arrival of ridesharing services has also been really positive for customers, and we've responded to the opportunity with dedicated facilities. But as technology advances, we're planning for the potential for autonomous cars, and that has the potential to greatly change how people access the airport, and we need to be ready for that changing demand. So it's important that we keep airport design planning flexible to ensure we respond to those changing markets and changing customer demands. Sydney and New South Wales are a major driver of the Australian economy, and as you heard earlier, Sydney Airport has a key role to play to support that. Recognising there's an arms race for international tourism, we collaborate with airlines, Destination New South Wales, and Tourism Australia to ensure we have a coordinated and focused approach to marketing Sydney in Australia, and this has delivered the strongest inbound growth we've seen in nearly 15 years. The collaborations have also been important to ensuring policy settings are responding to those opportunities in everything from bilaterals to visas to transport to tourism infrastructure planning, and as the Minister said, to regulatory impediments. Let me now turn to our work on sustainability and our community activities. Demonstrating our positive impact and contribution to society, the environment, our communities, and the economies is fundamental to the sustainability of our business. So we've taken a leadership role in the airport industry. Our sustainability strategy ensures our business strategy is delivered responsibly while continuing to build on our positive reputation with our stakeholders. And we're already seeing the benefits with improved stakeholder relationships, a stronger focus on sustainable growth, and a deeply embedded commitment to deliver value to the Sydney and New South Wales communities. For example, we committed to reducing carbon emissions by participating in an internationally accredited voluntary carbon management program. And it has 4 levels that progress from mapping your carbon emissions, reducing emissions, and engaging with your stakeholders through to carbon neutrality. In 2016, we achieved Level 3 accreditation. As part of that programme, we established a target to reduce our emissions per passenger by 25% by 2020 from 2010 levels. Since that time, we've reduced our emissions already by over 25%, achieving our target well ahead of schedule. We also achieved an absolute reduction of almost 8% since 2010. despite significant increases in passenger volume and activity since that time, and we're focused on sustainability initiatives to continue to drive positive stakeholder outcomes in the future. As I mentioned, Sydney Airport plays a significant role in the Sydney and New South Wales communities. With around 30,000 people working across 800 businesses at the airport alone, we are a busy and thriving community that's an engine of growth for the economy. In recent years, we've strengthened our engagement with and contribution to the community, and we're committed to deepening that engagement across 3 key areas. We want to keep communities connected, healthy, vibrant, and thriving. And to support this goal, we've been a major sponsor of Surf Life Saving Sydney for over 15 years. And this is in addition to a wide range of other organisations and charities that we support, including sporting organisations, community, and environmental initiatives. We also understand the value of leadership and learning to achieving growth and success. And we're very proud of a few of our major sponsorships, including the gold medal-winning women's rugby sevens team, the Greater Western Sydney Giants women's AFL team, where we're a foundation sponsor, and we support the Sydney Swans. But throughout the year, we also celebrate the unique character of our city through participation in the Sydney Festival, the Fringe Festival, Parramasala, Chinese New Year, and we sponsor the Sydney Symphony Orchestra, which regularly performs at the Sydney— at Sydney Airport, so allowing us to welcome visitors in distinctive style. We also recently supported Vivid Sydney, with stunning lighting installations across the airport. So it's been an absolute privilege for me personally working and spending time with the many people who we've supported who do so much for the community. And I've had experiences you could only imagine. But I've always really been incredibly energised by working in this industry and can honestly say we couldn't be working in a more exciting time. So I'm really looking forward to seeing how we continue to actually, through our natural collaborations, continue to harness the opportunity associated with the growth potential. Thank you. Thank you, Kerrie.

Copyright policy: All transcripts on this site are the copyright of CAPA - Centre for Aviation. Our reproduction policy is as follows: you may quote up to 400 words of any transcript on the condition that you attribute the transcript to CAPA - Centre for Aviation and link to the original video page. All other use is prohibited. While we aim for 100% accuracy in the transcript, there may be some minor transcribing errors.