NEWSLETTER

Airport Profiles Last modified on November 7, 2016

Australian firsts

Kerrie Mather, Sydney Airport’s managing director and CEO and new president of ACI Asia-Pacific, talks to Joe Bates about the growth and development of Australia’s busiest gateway.

Like most Australians, Kerrie Mather is used to travelling as, to use her words, “Australia is a big country at the bottom of the world” and to get anywhere invariably involves hopping on an aircraft. 

She has certainly done a lot of hopping over the last 20 years as prior to becoming managing director and CEO of Sydney Airport five years ago, Mather was CEO of Macquarie Airports (MAp), and its investment in airports across the globe would mean regular trips to Europe to attend board meetings in Brussels, Copenhagen, Rome, Birmingham and elsewhere.

The travelling continues today, of course, as in addition to meeting different shareholders and stakeholders in her capacity as boss of Sydney Airport, she is a member of the ACI World Governing Board, deputy chair of Australia’s Tourism and Transport Forum and a board member of the Committee for Sydney.

And the air miles are now going to soar even higher as her decision to become ACI Asia-Pacific’s first female president in April – succeeding fellow Aussie Dennis Chant in the role – will add a few more flights to the calendar. 

So does she like collecting air miles? “Travel is part and parcel of the job,” she says, noting that the chance to lead ACI Asia-Pacific for the next few years was an opportunity that she couldn’t turn down. 

“I am very honoured and proud to take on the role of leading the board of ACI Asia-Pacific, ACI’s largest and fastest growing region,” enthuses Mather.

“ACI plays a critical advocacy role for the industry. It has a vital role in shaping policies that support the growth of the aviation industry and help drive tourism, trade, and investment outcomes for the world.

“I am excited about the opportunities, and with those opportunities come challenges, but I look forward to them and can assure everyone that I will never lose sight of our key priorities of safety, security and the sustainability of airports for the benefit of all our members, business partners and passengers.

“I also look forward to working with airports across the region to help promote professional excellence in airport management and operations and gaining insight and knowledge from my colleagues about best practice and other issues.”

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Route development

Her day job, of course, remains overseeing the operation, growth and development of Australia’s busiest airport, which continues to impress, handling 39.7 million passengers in 2015 (+3%) and facilitating the export of A$14.6 billion worth of freight.

In the last 12 months the airport has welcomed seven new routes, attracted six new international airlines, witnessed “significant capacity growth” from its existing carriers and seen average 76% load factors despite the increase in capacity.

The latest new arrival is Hainan Airlines, which launched a twice-weekly, year-round service between Sydney and Changsha on September 13 that is expected to bring an extra 17,000 Chinese visitors a year to the region and generate upwards of A$62 million into the local economy.

And the trend will continue in November 2016 when China Eastern Airlines launches three-weekly services to Hangzhou and Air China launches three-weekly services to Chengdu.

The new services cement Sydney’s status as the No.1 destination for long-haul operations by Chinese airlines and means that 12 cities in Mainland China are now served direct by six airlines from the gateway.

Its extensive route network ensured that the airport handled the bulk of the estimated one million Chinese visitors to Australia in 2015, and the figure is expected to grow considerably over the next decade.

Indeed, the airport has implemented a range of China ready initiatives to welcome Chinese passengers, including using Mandarin speaking airport ambassadors, digital channels and wayfinding in simplified Chinese, support of events such as Lunar New Year, and tailored retail and F&B offerings.

“This direct Hangzhou service is expected to bring 22,000 Chinese visitors who will contribute an anticipated $88 million in additional visitor expenditure per year, which is fantastic news for the local economy,” says Mather.

“The new routes and extra capacity also reflect the attractiveness of Sydney and Australia as a destination from a tourism and business perspective. Australia is a unique market because of our geographic location and size. We are an island continent and our major population centres are a long way apart, so aviation is crucial to everything.”

She says that the airport works very closely with both the government of New South Wales (NSW), Tourism Australia and other stakeholders to attract new airlines to increase connectivity, tourism and trade for the economic benefit of Sydney, NSW
and Australia.

And this shouldn’t come as a surprise as adding new routes/services; improving the passenger experience; raising customer service standards; sustainable development: and greater collaboration with stakeholders are key business strategies of Sydney Airport.

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Business strategy

Mather, who celebrated five years in the hot seat this year, has been instrumental in driving a A$3 billion investment programme at Sydney Airport since 2002 which has delivered significant aviation capacity and customer service enhancements.

The investments have also led to a transformation of the retail/F&B offerings at the airport and the installation of new self-service technology, and more is to come with a further A$1.3 billion planned to be spent on upgrading the airport over the next five years.

So, how does she think that the first five years has gone? “It’s been a really exciting time and a period of significant but positive change,” she replies.

“A main area of focus has been developing a much stronger customer focus, which has meant listening to our customers and understanding their priorities and developing a new vision for the business to reflect these priorities. As a result we are in a period of significant investment and expansion. 

“There has also been a much greater focus on collaboration with a wide range of stakeholders. I’ve actually made it a high priority to meet with all of them over the last five years and continue to engage with them today so that we better understand their needs.

“The other area which has been very exciting for us is the way that we have developed a very strong leadership role in tourism development. We are working very closely with the NSW Government, Destination NSW in particular, and also Tourism Australia, our airline partners and other industry groups like the Tourism and Transport Forum to drive tourism and aviation business development in Sydney.”

The period of greater collaboration coincided with the election of a new government in NSW five years ago, since then both it and Tourism Australia have unveiled 2020 strategies for increasing visitation to the state and the nation.

She notes that working more in tandem with the tourism bodies has allowed ’Team Sydney’ to identify key priority markets and how they can focus on them together.

In addition to the airport’s success with China, Mather points out that it has also become a major destination for low-cost, long-haul travel, with LCCs now accounting for 10% of all international passengers.

Jetstar, Scoot, AirAsia X, Tiger Airways and Cebu Pacific lead the way serving a host of destinations across Malaysia, Singapore, Thailand, Indonesia, Japan and New Zealand that include Bali, the top outbound destination for Australians.

As a listed company, traffic predictions are not disclosed by Sydney Airport, but Mather points out that the airport is on target to handle over 41 million passengers in 2016 after a record breaking first seven months of the year.

The airport actually handled 41.1 million passengers in the 12 months ending July 31, 2016, the upturn being driven by a 9.8% rise in international traffic and 4.9% increase in domestic passenger numbers.

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Retail/F&B revamp

Arguably the most highly visible change at the airport over the last five years has been the revamp of the retail/F&B facilities as part of the ongoing upgrades of both Terminal 1 and Terminal 2.

Indeed, the airport’s concessions offering has been “totally transformed”, according to Mather, who notes that almost every single concession outlet will have been “turned over” in the last 18 months.

This, incredibly, has amounted to the opening of 36 new shops and 34 F&B outlets in response to feedback from travellers, with more to come.

“Shopping and dining is a key part of the airport experience and our passengers told us what they wanted and we have listened and totally transformed our offerings,” she says.

“Our strategy is based on creating Australian and airport firsts and the ongoing improvement programme for Terminal 1, which is our international terminal, gave us the chance to reconsider the layout and design of the retail offering, and we opted to change everything.”

New duty free partner, Gebr Heinemann, has already opened 7,000sqm of retail space in T1 bringing over 400 new brands to the airport. When fully open it will cover 9,000sqm, making it Heinemann’s biggest standalone duty free store in the world.

Mather says that it will be joined by 13 new fashion stores, of which eight are already open, offering a combination of high-end brands to appeal to the big spending Asian customers, middle tier brands aimed at Asian travellers looking for value, and a number of Australian firsts.

She adds that the new concessions mix includes a host of extra F&B outlets, many of which form part of two new precincts – The Marketplace, offering street-food style fare in a light, bright atmosphere in T1 Departures, and the more upmarket City View.

The latter will be home to restaurants such as The Bistro by Wolfgang Puck, Benny Burger by Shannon Bennett and Kitchen by Mike, all of which are unique to Sydney Airport. It will also soon boast a Heineken House bar as part of the airport’s A$400 million investment programme in 2016.

Elsewhere, the casual dining precinct in the T1 check-in hall now showcases an expanded range of food outlets such as Roll’d, Mach2, Hokka Hokka, Soul Origin, Oliver Brown, Mad Mex, Nando’s and Grand Cru, which according to Mather provide more dining options for passengers and cater to all budgets and tastes.

“We have given our customers what they wanted – more variety and choice when it comes to food and beverage outlets. This includes the introduction of more unique dining experiences and a better sense of place,” she says.

And the airport isn’t finished yet, as in June it began the next phase of the revamp of the casual dining precinct in Terminal 2, which it claims will enhance the airport experience for passengers, visitors and staff. 

According to the gateway, the next stage of improvements include increasing value and choice by delivering six new food kiosks catering to all budgets and tastes; re-designing the casual seating area to increase capacity with upgraded flooring, columns, ceiling finishes, and contemporary furniture with textural finishes; and improving amenities and connectivity by providing smart device charging stations at communal tables.

The six new F&B kiosks will be positioned throughout the new casual dining precinct and include brands new to Australia such as Joe & The Juice. They will join Krispy Kreme, Soul Origin, and Mrs Fields to further enhance value and choice for passengers. 

Like at most airports, retail/F&B is an important source of revenue for Sydney Airport, currently accounting for around 22% of the airport’s income. The gateway can expect this figure to rise following all the new additions, although Mather prefers to concentrate on the impact the new outlets will have on customer satisfaction levels.

She says: “The income is, of course, important as is any source of revenue, but we believe it is more important to have the right offerings for passengers so that they can enjoy the airport experience, and I am confident that we have now achieved this.”

Mather points to “excellent feedback” from passengers and rising customer satisfaction scores as early indicators that people like what they have seen and experienced from the new concessions offerings.

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Key infrastructure investment

With three runways and three terminals there is no need for any brand new facilities for the foreseeable future, so the airport’s Master Plan 2033 is based on upgrade and expansion projects to enhance the efficiency and capacity of Sydney Airport’s existing infrastructure.

Planned future or ongoing investments therefore include projects to “transform” the airport’s check-in areas, enhance the airfield, expand the apron and add new roads and boarding gates.

The project to transform the check-in process includes the installation of more self-service check-in and self-bag drop kiosks to take into account changing passenger behaviours that are largely being driven by IT advancements.  

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IT innovation

Indeed, IT surveys show that most passengers now check-in online and embrace self-service technology at airports, and Sydney Airport is actively looking to introduce more self-service options for travellers following the successful trial of different technologies with Qantas.

“We are looking to roll out more self-service check-in and self-bag drop kiosks across the airport to streamline both the passenger and baggage handling processes,” enthuses Mather.

“We already have SmartGates at Immigration for both inbound and outbound passengers, which have reduced the average processing time for those that use them from eight minutes to 23 seconds.

“This initiative has allowed Australian Border Force to reduce the number of immigration desks required to handle passengers, and we’ve added more security processing lanes to make it quicker, easier and more customer friendly.”

She notes that the Arrivals SmartGates – which use information in ePassports and facial recognition technology to conduct checks usually carried out by an Australian Border Force officer – were first introduced four years ago and are now very popular after a slow start.

“Initial take-up was quite slow and we think that this was because we still had the manual process in Departures, so people were unfamiliar with the technology and only tended to use it when they had time on their side,” reveals Mather.

“However, usage expanded when we introduced it for Departures. People got used to it and penetration rates soared.”

About IT in general, she adds: “Today’s travellers are looking for more choice, control and connectivity, so we are using technology across the whole airport experience. 

“We are doing this to improve the operational efficiency of the airport, improve the productivity for our airline partners and improve the passenger experience. 

“Passengers are embracing technology because it is creating a more efficient journey and a better experience for them. So, what we are doing is reaching our customers at a number of touch points throughout their journey and giving them the information they need when and where they need it.”

One of the ways the airport does this is through the use of beacon technology, but Mather points out that it also uses its website, Sydney Airport app, Bluetooth, free Wi-Fi, “dynamic wayfinding”, multi-language directories and FIDS screens in 13 different languages to communicate with passengers.

Customer service

Mather says that a “very strong focus on the customer experience” is reflected in the vision for the airport, which includes the commitment to continuous improvement and responding to feedback.

Examples of Sydney Airport’s customer service strategy include the fact that the gateway has its own customer service charter, which it requires all employees to follow. Similarly, all staff must undergo service standards training before they are issued with their Aviation Security Identification Card. 

The airport also has a dedicated Customer Experience Committee, which regularly reviews customer surveys and feedback from passengers. “This ensures that we know what the key drivers of customer satisfaction are at Sydney Airport and are able to prioritise our investments and initiatives in response to what passengers want,” notes Mather. 

Mather cites last year’s independent International Customer Service Standard (ICSS) certification from the Customer Service Institute of Australia for its commitment to service excellence, customer centric culture and leading edge complaint handling framework as an example of the growing recognition of Sydney Airport’s customer service efforts. 

Employer of Choice

Sydney Airport is also proud to be the recent recipient of another honour – being named as an Employer of Choice at The Australian Business Awards.

Mather comments: “The Employer of Choice award is testament to our dedicated and diverse people, who together make Sydney Airport a collaborative and progressive place to work.

“We continue to invest in learning and development, engagement, diversity, and health and wellbeing initiatives to make the airport an even better place to work.”

She is particularly pleased with the success the airport operator has had in increasing the number of women in its workforce over the last year, noting that in 2015 the number of female employees grew by 8.5% and the number of women in leadership roles by 29%.

Her ethnically diverse workforce also represent 28 different nationalities and speak more than 20 languages, which probably comes in handy as around a third of the passengers to pass through Sydney Airport today are foreign nationals visiting friends and family.

Western Sydney Airport

The Australian government’s decision to build a second Sydney gateway, known as Western Sydney Airport, means that Mather and her board will soon have to make a big decision of their own – do they want to operate it!

Set to be located in Badgerys Creek to serve western Sydney, the new airport will be a full service gateway and is initially expected to boast a single runway and terminal building and the capacity to handle around 10 million passengers per annum.

As part of its sale agreement with the government in 2002, Sydney Airport has the right of first refusal to develop and operate the new airport, which is being built to complement the existing airport to service the significant needs of the entire Sydney basin.

Mather says that Sydney Airport is currently in a consultation phase with the Australian government and is expecting to be issued with a Notice of Intention by the end of 2016.

When that happens, Sydney Airport will have either four or nine months to issue its response to the government, so not unsurprisingly, she was reluctant to go into much more detail about things for now.

“What I can tell you is that Sydney will need another airport as independent traffic forecasts predict that we will be serving 74.3 million passengers by 2033 and government forecasts suggest the demand in the Sydney market will reach 120 million passengers by 2050,” muses Mather.

“We have the right to develop the new airport, it is a very valuable right and an opportunity and an option that we take very seriously.”

With the Australian government already talking about a mid-2020s opening date for Western Sydney Airport, decisions certainly need to be made soon. Watch this space for further developments.