Avalon Airport, a low-cost commercial airport serving the Melbourne and Geelong metropolitan areas in Victoria, Australia, has announced a major upgrade as it prepares for the biggest growth phase in its history. Flush with a AUD2 million grant from the State Government, privately-owned Avalon Airport is bouncing back from a difficult year. In 2009, its sole customer, Jetstar, ramped up capacity at nearby Melbourne Tullamarine Airport to allow the Qantas Group to better compete with Tiger Airways' new operations on the main Sydney trunk route.
CEO, Justin Giddings talks exclusively to CAPA on the outlook for low cost operations at Avalon Airport.
CAPA: The recent AUD2 million grant from the Victorian Government to Avalon Airport could not have come at a better time as the airport prepares for the biggest growth phase in its history. How difficult was it to obtain the funding and how will they be used?
Avalon Airport is fortunate in that it receives enormous support from the Victorian Government. I estimate that I would speak with our local member The Hon. John Eren MP almost every week on numerous issues. The discussions regarding the financial assistance has been going for many months, and required a rigorous assessment process. The fund was established to create jobs for the local economy, and obviously with our expansions many more jobs will be generated.
The funding will be used mainly for upgrades to the airport’s taxi way and extending the apron to allow for greater aircraft movements.
CAPA: Tiger Airways is launching seven new routes at the airport from November 2010. Why did Tiger choose Avalon when it has its main base at nearby Melbourne Tullamarine? Is Tiger shifting any routes to Avalon from Tullamarine?
You will need to ask Tiger whether they are planning to move flights from Tullamarine to Avalon. However the reason for commencing flights from Avalon comes from three main areas. The first is cost. I believe we have the lowest cost base of any airport in Australia, and possibly the world. This transfers to lower operating costs for airlines and subsequently lower airfares for the travelling public.
The second area is convenience. Avalon is around just 15 minutes further out from Melbourne's CBD than Tullamarine. However most of this time is recovered by the convenient parking. There are no buses at Avalon, the car park is immediately out the front. And of course the parking is much cheaper and there are no tolls.
The third area is the expansion opportunities. The site has enormous spare capacity. The runway does not require slot management, and most operations are located over either water or farmland areas. And the terminal is easily able to be expanded at low cost. Therefore, airlines can come to Avalon knowing they will not outgrow the airport.
CAPA: Will Tiger be overlapping with Jetstar in certain markets - and are you expecting a competitive response from Jetstar?
At this stage the only overlapping will be on the Sydney route. Jetstar is currently operating up to 4 flights a day and Tiger will be flying 2 times per day. Sydney is a very robust market, and I am confident both airlines will achieve great success. The Sydney route allows for Avalon to be used as a hub, with Sydney passengers flying to Avalon and then on-flying to other destinations.
CAPA: Avalon suffered last year as Jetstar built up its presence at Tullamarine to fight Tiger. How is 2010 performing and what sort of volume increases are you expecting in 2011 over 2010?
2010 has been a difficult time, with all of the flights taken from Avalon by Jetstar not returning. We have had great success for 5 years as a single airline airport, but with the removal of the flights we needed to expand. Currently we're undertaking just 6 flights per day, but this will increase to 13 from 10 November this year. As for next year, we'll just have to wait and see.
CAPA: Which routes do you see as being underserved even after Tiger's expansion?
Avalon has significant advantages for the VFR and Leisure passengers due to our lower ticket prices, and lower parking prices. There are many routes are Australia where I believe these types of passenger shave a great proportion. Some of the obvious destinations are Cairns, Darwin and Hobart. However, I also believe flights to Canberra are too expensive and could benefit from some low cost competition.
CAPA: When will we see international services to/from Avalon? What's your tip for the first foreign destination(s)?
I am hopeful that we could commence a few international operations from 2012. However, of course that very much depends on the attitude of the Australian Government. As for the first destination, I am not sure. A link to either New Zealand, Fiji, or anywhere in Asia would be nice.
CAPA: Are Linfox long-term investors in the airport? Have there been any expressions of interest from would-be buyers of Avalon Airport?
I understand the family have a keen interest in aviation, and it is their intention to retain the airport. However if you are interested in purchasing it then perhaps you should speak to Lindsay [Fox].