ON THE RADAR

Sunshine Coast Airport’s general manager, Peter Pallot, talks to Joe Bates about his gateway’s expansion plans, route development, green credentials and new investors.

There is a saying that good things come to all those who wait, and after waiting nearly half a century to make an impression in the market, Australia’s Sunshine Coast Airport certainly appears to be making up for lost time with traffic on the rise, a new operator on-board and a ‘game-changing’ new runway set to open in 2020.

Indeed, it is making such a favourable impression these days that Australian national flag carrier, Qantas, recently decided to resume services to the Queensland gateway after a 10 year absence.

Its return, and the launch of three weekly Jetstar services to Adelaide, helped the airport set a new traffic record in 2016, handling over one million passengers in a calendar year for the first time in its 56-year history.

The airport recently won the Routes Asia 2017 Marketing Award for its marketing campaigns and route development achievements, and last October officially became Australia’s newest ‘international’ airport, meaning that it no longer needs to seek annual approvals for Trans-Tasman services between Auckland and the Sunshine Coast.

It is also an environmental leader after becoming Australia’s first carbon neutral airport in ACI’s Airport Carbon Accreditation programme.

There’s no doubting that these are heady days for the airport, and the good news is that things can only get better for it going forward, as its new operators, Palisade Investment Partners, have the financial muscle to fund the development of new infrastructure.

While the opening of its new 2,450m long runway – being paid for by the former council owners of the airport as part of the lease agreement with Palisade – will finally allow the gateway to handle wide-body aircraft.

The latter point alone opens up a whole new world of possibilities for the airport in terms of route development to other cities in Australia, New Zealand and beyond.

To an outsider it might seem that Sunshine Coast Airport has suddenly become an overnight success story. The reality is actually very different, as it has taken the airport years of hard work to get where it is today.

None know this better than general manager, Peter Pallot, who has dedicated the last 11 years of his life to helping make the airport more appealing to Sunshine Coast residents and the airlines.

“It’s been a long time coming, but this is only the beginning,” admits Pallot, who is the first to note that his airport still remains relatively small despite serving Australia’s ninth largest city region.

A brief history lesson

Located on Queensland’s sunny, sub-tropical Sunshine Coast about a 90 minute drive north of Brisbane, the gateway started life as the North Coast Airport back in 1961, and from day one, until fairly recently, essentially served the inbound tourism market.

Queensland is basically the number one place Australians go when they want to holiday at home, and the popularity of two UNESCO Biospheres and the world heritage listed Fraser Island on its doorstep, draws international tourists from all over the world.

This is still the case, of course, but a steadily growing population and a small but expanding route network that has finally given locals convenient connections to Sydney, and subsequently onward destinations across the world, has seen outbound traffic soar in recent years.

Pallot points out that the Sunshine Coast’s population is bigger than the cities of Cairns, Darwin and Gladstone put together, and is expected to grow from 350,000 today to around half a million by 2031.

Diversification of the regional economy – health and education are now important sectors alongside tourism, retail and construction – has created a solid base of around 600,000 people living within the airport’s catchment area that increasingly want to start their journeys abroad from their local airport.

“We were predominantly a domestic airport for a number of years, which is why we may have slipped under the radar of some of your readers, but we have grown as an international inbound destination over the last 10 to 15 years, and our next aim is to develop our international outbound traffic,” says Pallot.

“People want to start their outbound journeys from their local airport rather than being forced to drive all the way to Brisbane to catch a flight, as it is easier and less hassle. I’m glad to say that the significant increase in frequencies to Sydney, now allows most passengers to do this.”

Traffic growth and route development

Despite the obvious appeal of the Sunshine Coast, passenger traffic at the airport remained relatively static at around 700,000 passengers a year between 2008 and 2014.

However, this was a significant upturn on the 200,000 passengers that passed through the gateway in 2001, the increase between then and 2008 primarily being driven by the entrance into the market of the low-cost carriers, which saw passenger numbers peak at 850,000 in 2007.

Pallot explains that the dip in passenger numbers after 2007 was almost entirely down to the mining boom in north Queensland and western Australia that led to most airlines either reducing frequencies to the Sunshine Coast or ceasing services altogether.

He admits that it was tough to take, but is quick to point out that the airport has bounced back and that traffic is now at an all-time high. And he expects 2017 to be another record year based on first quarter growth of 13% followed by a 23% rise in throughput in April.

Today five airlines (Jetstar Airways, Virgin Australia, Qantas, Air New Zealand and Alliance Airlines) serve Sunshine Coast Airport operating 75 weekly flights between them to four destinations – Sydney, Melbourne, Adelaide and Auckland.

Pallot says that the mix of airlines ensures that both the low cost and premium market are being served at his gateway.

He believes that a lot of the airport’s recent successes in expanding its airline services has been down to the hard work of his route development and  marketing teams.

“We understand our market and we know what it needs to better serve our customers. As a result, we spend a lot of time looking for products that best match our market,” says Pallot.

“Our research certainly tells us that there is an unmet market in terms of our outbound traffic, and we can do better on inbound as well, so we are focused on route development full-stop.

“When I first got here in 2006, we were 80% inbound and 20% outbound in terms of our overall traffic. Now the figure is about 60/40, so there has been quite a change, and a lot of that is down to our route development and marketing teams.”

Pallot reveals that his airport’s only non-stop international route to date, Auckland in New Zealand, has been a huge success since being introduced by Air New Zealand six years ago, and is currently growing by around 20% per annum.

“It’s been going gangbusters,” he enthuses. “Admittedly these figures are off of a small-base, but we are a small airport. They said we couldn’t do it as our market couldn’t support the route, but we’ve proved everybody wrong and I believe that there is more to come.”

In terms of the inbound market, he doesn’t see a potential clash with the nearby Gold Coast Airport for passengers, as he says it caters to a different market than the more family, nature focused, and relaxed atmosphere of the Sunshine Coast.

Airline load factors across the board are in the high 80s, which pleases Pallot, and are arguably representative of more competitive fare levels being offered today than a few years ago.

New runway

Pallot notes that it hasn’t been easy building up the airport’s route network as its existing 1,800m long runway means that it cannot handle wide-body aircraft, and the B737s and A320s serving the Sunshine Coast today operate under payload constraints.

The situation means that Air New Zealand, for example, can fly in from Auckland with full loads but are weight constrained for the return journey. Also, cities like Darwin and Perth are too far away to be reached by a non-stop service.

These problems will, of course, disappear when the airport’s new 2,450m runway costing A$319 million opens in 2020, and Sunshine Coast Airport is capable of handing wide-body aircraft up to the size of the B777, B787 and A330.

“This is one of several game changing projects across the region and it is important that the airport provides the connectivity to this fast developing area,” says Pallot, adding that a A$1 billion hospital (Sunshine Coast University Hospital) recently opened in Birtinya and a new a Central Business District is currently being built on a 54 hectare site in Maroochydore.

“The new runway will allow us to reach the rest of Australia from the Sunshine Coast as well as all of New Zealand, a number of popular destinations in Asia, such as Indonesia, Singapore and Hong Kong, as well as Hawaii, which could serve as a gateway to the US mainland.

“People already come and go to the Sunshine Coast from these places, but they go via somewhere else. From 2020 they will be able to fly direct to us.”

New operators

The airport is still officially in transition from being operated by Sunshine Coast Council to Palisade Investment Partners, an Australian superannuation management fund, which has signed a 99-year lease for the gateway.

As well as bringing money to invest on future expansion projects, Palisade also brings airport experience as it has a stake in Airport Development Group, which owns Darwin, Alice Springs and Tennant Creek airports.

It will be expected to fund “substantial” future upgrades and improvements to the 5,000sqm terminal building to equip it to handle wide-body aircraft as well as the construction of additional car parks and utility buildings.

The airport doesn’t currently have any airbridge gates, relying at the moment on four A320 parking bays, although they will be joined by two Code E bays and five Code C bays by the completion of the current development programme in 2020.

Pallot reveals that a new master plan for the airport is due to drawn up in the next 18 months and says that he looks forward to working on it with the new board, when it is selected.

Sunshine Coast Council is expected to earn around A$605 million from the deal with Palisade set to officially take over the airport lease in September. It has stated that it has no intention of changing the management team already in place at the airport.

Green strategy

Sunshine Coast Airport’s green credentials are indeed impressive, and it is not just down to its carbon neutral status in the Airport Carbon Accreditation programme, for it is almost self-sufficient in terms of water use in the terminal due to the harvesting and recycling of rainwater.

And it feeds all of its food waste into OSCA – the acronym of the ‘Onsite, Composting Apparatus’ it has developed in collaboration with a local think-tank – and then uses the mulch it creates to propopgate endangered plant species on the airport site.

Pallot says that the airport’s environmental efforts are being driven by the passion of its staff who recognise that they live in a spectacular part of the world and are keen to do all they can to protect Planet Earth.

“In 2006 we set ourselves the vision of becoming carbon neutral by 2018, and we achieved that this year, so our commitment to the environment is long standing and never ending as we are determined to be Australia’s most sustainable airport,” he comments.

To achieve carbon neutral status, the airport has delivered a 24% reduction in Scope 1 and 2 carbon emissions, a 9% reduction in electricity consumption per passenger and an 11% reduction in waste to landfill per passenger.

Customer service

Pallot believes that good customer service is key to everything and this is reflected in the airport’s approach to the airlines, passengers, its business partners and surrounding communities.

He genuinely wants to give local residents the airport they want and for it to be the catalyst for economic and social growth for the entire region.

His philosophy means that he has set the customer service bar high, and with just 30 staff working for him at the airport, this effectively means that everyone has to be flexible and accommodating when it comes to doing their jobs.

“We are a small team and that means that we all have to do a bit of everything, and that’s what I love about small airports and why I have spent my entire career in them,” enthuses Pallot.

“We can be negotiating an airline deal or talking with the government about a customs agreement one minute and the next we have a baggage issue and we’re out moving bags around or doing a runway inspection.

“It’s great, and so much fun. I can’t imagine being in a job where you were only involved in a tiny part of the business. You talk to any of our team and everyone knows exactly what is going on in any part of the business because they’ve all been up to there and done it.

“When I say that I’ve got a marketing team of one, I really mean that I’ve got a marketing team of 30 because we are all out there, talking about who we are as a business and promoting the airport. So without doubt, our best ambassadors
are our own people.”

I wonder how many bosses at the region’s bigger and better known airports wish they could say the same about their staff?