Korfiatis: Let my airline go!

Excerpts from a speech given at the Viva Macau annual Spring Dinner by Con Korfiatis, CEO, on February 26, 2008:

Macau SAR is currently burdened by the ghosts of the past. We have not seen any new markets served by Macau operators until the entrance of Viva Macau and even then, those additions are on a piece-meal basis and seem to be targeted more towards inhibiting Viva Macau’s growth, rather than growing the market alongside us.

The global aviation sector is growing, and most significantly in Asia, with record profits and record aircraft orders; but Macau SAR lags behind. Macau SAR has one of the fastest growing economies in the world and a global profile that is attracting international investment and attention, but the local aviation sector is badly under developed. Viva Macau is changing that; but we also need the support of the people and broader business groups in Macau who ask why is the aviation sector so under developed? What can be done to bring more high yielding and diversified visitors to Macau SAR in order to continue to grow and prosper? What can be done to give Macau an international airline with real pulling power and one that puts Macau on the global map and connects the people of Macau to the world, direct?

The transformation of Macau’s gaming industry over the past 4 years has been a remarkable achievement. This transformation has firmly put Macau in the world’s spotlight. The increased competition that has been permitted has grown the market significantly, transformed Macau itself, forced the incumbents to improve and raise the stakes themselves, improved all operators financial performance and contributed to the Macau economy and growth in a way very well documented. Visitor numbers are higher than ever before, gaming revenues continue to break records. The standard of services, restaurants, and facilities continues to improve. This is a firm example of the nature of competition and the benefits associated with global standard businesses developed in Macau. But the question remains, what is different in the Aviation sector?

Macau SAR has over 45 air services agreements with countries around the world. Today only a fraction of that is being utilized. Between the 2 Macau-based airlines only 7 of these are presently being used. Prior to Viva Macau commencing services only 4 of these agreements were being used. More could and should be used.

A substantial set of these very valuable traffic rights is being reserved for two airlines that do not exist. Viva Macau was required under its sub-concession agreement to commence operations within 12 months, whilst these airlines more than 12 months on are nowhere near coming to existence.

Let me illustrate the absurdity of this. Last year Viva Macau could see there was unsatisfied demand for Singapore to Macau flights. We applied for approval to fly to Singapore and were rejected on the basis that the traffic rights were reserved for an airline that does not exist. Accordingly almost one year later where no new Macau airline has materialized and Viva Macau was still prohibited from flying to Singapore, another Singapore based airline took advantage of the opportunity to fill the void in capacity and entered the route. This route is now being served by two Singapore based airlines and the opportunity for a Macau based airline to enter the route is all but gone.

These agreements are public property; they belong to the government and people of Macau SAR and should be used for the benefit of Macau SAR, not just the benefit of one airline who makes no use of them. We don’t force visitors who come to Macau into only one hotel, one restaurant, one casino, or one shopping mall; why do they only have a choice of one Macau airline?

The Future of Macau

The future of Macau is exciting. But without a significant improvement in the aviation sector performance and revision of current policy, the future is constrained. Without a strong aviation sector Macau could be faced with a situation of over-capacity of hotel rooms, shops, restaurants and casinos, with a constraint of limited and inconvenient access. It is critical to the future development of Macau SAR as a world-class destination to internationalize: to diversify its customer base to include visitors who stay longer, are willing to shop, to dine out, to take in a show and to enjoy the rich cultural history that Macau SAR has to offer; and to provide broader direct access for visitors and also for the people of Macau.

It is also an imperative for Macau SAR to develop direct links to more destinations to aid ease of access to the burgeoning conference and convention market (the MICE industry) that is critical to so many of our businesses. It is unacceptable for customers of Macau and the Macau brand to have at least 3 to 4 additional hours added to a customer’s journey by being forced to re-route through Hong Kong. That would be like forcing MICE visitors to Las Vegas to fly to LA and then take a bus; unacceptable and inefficient. First impressions are important and the benefits of direct connectivity to customers of Macau enhance their experience of Macau SAR rather than a poor image of the difficulty of getting in and out of Macau.

The Future of Viva Macau

Turning to the future for our airline, we believe and remain committed to the future of Macau SAR. The future of Macau, and the future of Viva Macau, is bright. We are presently securing additional aircraft to expand our fleet and our services for Macau. We are also looking at additional markets that correspond and complement Macau SAR’s other businesses and are looking to Japan, Korea, India, Russia and the Middle East, as well as increasing our frequencies to existing countries we operate to as well as flying to more points in those countries, as markets that can draw that diverse customer base that Macau needs.

But seriously, we believe it is time for a new approach to aviation in Macau, one that enables BOTH its home grown airlines to grow as they desire and to put Macau on the world map. We don’t want any preferential treatment…just fair and equal treatment.

The process to developing new routes in Macau SAR is not a simple one and we call on you, our trade partners, our colleagues in Macau business, our friends in the media, our trusted government officials who have lead Macau so well, and the people of Macau for your support and assistance in making Macau SAR’s aviation sector a world-class one and an equitable one, as this is essential to the future of Macau.

We will continue to break new ground in Macau SAR operationally and continue to maintain our operational excellence and our focus and commitment to safety.