04 May 2012
Auckland Airport outlines Tourism growth ambitions for decade
AMBITION 2020 aims to accelerate growth in value generated from international visitors
Auckland Airport has today outlined a decade of growth ambitions for New Zealand visitor arrivals and visitor spend, underpinned by a programme of strategic activity. The airport’s plans also offer a guide to potential tourism trends and the impact of changes in the industry, as well as aviation and development strategies needed to accelerate growth.
The new initiative, Ambition 2020, assesses the potential of the tourism sector in terms of both international visitor numbers and the value these visitors bring to the economy. The analysis extends out to 2020 – building on and extending four years past the current official forecasts.
Auckland Airport believes there is potential to grow international visitor arrivals to over 3.5 million by 2020, up from 2.6 million in 2011. More importantly, the value generated by these visitors could grow ahead of official estimates, to at least $8.5 billion ($5.76 billion in 2011).
Chief Executive Simon Moutter says Ambition 2020 is part of Auckland Airport’s wider contribution to industry planning, by improving visibility on ambitious but realistic longer term growth goals, and advocating how they can be achieved through a focused and determined collective effort involving industry players and government.
“At Auckland Airport, we have set ourselves some ambitious targets to grow international visitor volumes and capture more value. We intend to do this by working with our airline customers to attract more flights, preferably direct, on more routes from key source travel markets around the world, and by working with the industry to attract a more valuable mix of visitor segments,” Mr Moutter said.
“This accelerated growth in value is not only good for our business, it is crucial to the entire tourism and trade sector and the New Zealand economy. Ambition 2020 is our contribution to elevate the understanding of where growth in visitors will most likely come from, and what initiatives we need to put in place or have more of to maximise their value as tourists. We’ve got plenty of ‘skin in the game’ ourselves, because higher value visitors also mean more sustainable air-services. We are already getting started on a number of initiatives to increase the emphasis on visitor value and get onto this accelerated growth path, and will be introducing many more initiatives over the next few years. We want to work with more of the industry to help make these ambitions happen.”
Mr Moutter said it was strategically vital to build stronger air service links and distribution networks in the key markets from which New Zealand is only one direct flight away. As some of these hub airports already have strong direct connections with markets further afield (such as Europe), this approach also benefits visitation from longer-haul markets by building stronger ‘stepping stones’ to those markets.
“But opening up air-services is just the start,” said Mr Moutter, “New tourism markets and air services need support at both ends to help gain a foothold and thrive, and the mix of visitor segments attracted onto those air services will need to be optimised to gain better yields and make the services more viable.
“By the year 2020 the tourism world is destined to be a very different place, with Asia the biggest value market by far. The New Zealand industry will likely be very different by 2020 as well, reflecting the significant global market shifts. If New Zealand wants to realise the growth potential on offer, we believe we need to collectively target the key growth markets and in particular the higher value visitor segments in each of those key markets.”
Auckland Airport believes a number of factors need to be realised to achieve Ambition 2020 including; opening more direct and sustainable air-services, attracting higher-spending market segments, developing more counter seasonal visitors, creating more alliances and business networks in-market, increase industry readiness for new markets, having favourable policy conditions, gaining wider market distribution and ultimately, encouraging longer stays.
Glenn Wedlock, Auckland Airport General Manager Aeronautical Commercial, says that all these factors also need to be partnered with a market focus that will help make every valuable marketing dollar count and “will get the most growth for our buck”.
“Asia, especially China, will provide the largest growth potential both in visitor arrivals and in the amount they will spend when they’re here.
“China is a vital growth market for New Zealand and we see the market developing from 160,000 today to over 430,000 arrivals by 2020. More importantly, we need to target more direct flights, longer stay visitors and FIT/Semi FIT visitors.
“While this is a smaller part of our market today it is important we grow that end of the market at a faster rate to deliver more value to the airlines and the industry. We believe the direct flight visitors can grow from 50,000 today to 170,000 by 2020, greatly increasing our longer stay and FIT visitors. To do it, we must ensure we develop markets that will drive direct flights to New Zealand and establish a profitable and valued market structure for development. To achieve these results, and to achieve other ambitious trade targets outlined by the Government, we will need to see air services between New Zealand and China reach around 3 times the number of direct flights today. So it was fantastic to see the recent air services arrangement between the two countries expanded to enable that level of development.
“The ASEAN markets such as Indonesia, Malaysia, Thailand and Singapore are also vitally important as they are growing rapidly and could easily each develop into $100 million plus visitor spend markets. We also see larger traditional but high wealth Asian markets such as Japan and Korea rebounding and developing new value segments. We are also actively looking to deepen New Zealand’s connections with Australia and the Americas and find more ways to attract their premium travellers,” he said.
The main contributing markets to the Auckland Airport Ambition 2020 value target of $8.5b are; Asia (potentially worth $2.9b with China providing the lion’s share at $1.5b+, followed by Korea at $330m and Japan $300m), Australia ($2.35b), North America ($800m), U.K. ($690m) and Germany ($290m).
Asia will likely provide the largest growth in traveller arrivals with that region increasing by about 460,000 visitors to a potential 900,000 arrivals into New Zealand by 2020. A number of emerging markets within Asia are interesting opportunities as well; with the likes of Indonesia having the potential to at least triple in arrivals to New Zealand by 2020.Other key markets will be Australia (1.5 million), North America (300,000), United Kingdom (250,000) and Germany (80,000).
“If we take China as an example, their outbound traveller numbers are forecast to increase from 70 million in 2011 to 80 million by next year. If we want to gain our share of that, and other fast-growing markets, we must be more competitive and differentiate ourselves from other similar markets with the same or shorter flying times. We are prepared to invest and to develop proper plans to give ourselves the edge,” adds Mr Wedlock.
Mr Wedlock says that growing and sustaining more direct air services is absolutely crucial to realising increased value.
“We have to make these links work, especially given our proximity to Australia. For example more than 85 per cent of holiday visitors to New Zealand from China in 2011 still visited as part of a longer stay in Australasia partly due to the lack of direct air capacity. For many of our visitors who arrive on dual destination holidays, or via another country, it usually means shorter stays and a significant dilution of their potential value to New Zealand. More direct connections will mean more tourism value for New Zealand, and higher value visitors will also be pivotal in delivering the value to airlines that ensures direct air-services can be sustained.”
As well, Auckland Airport believes there are many more opportunities to deepen existing country markets through connections to relatively untapped regions, for example the Sunshine Coast, Perth and Adelaide in Australia, or Shenzhen, Qingdao, Shenyang and Chengdu in China.
Auckland Airport has a wide range of programmes and initiatives already underway to go some way to achieving Ambition 2020, and the airport will be letting the industry know more about these at TRENZ next week. Some of the initiatives Auckland Airport is already investing in include:
- Running Asia-specific training workshops for the industry
- Developing Luxury New Zealand programmes, trade development and bespoke websites
- Spearheading social media programmes in-market connected to the trade and saleable NZ premium products and itineraries.
- Celebrity ambassadors such as Dong Xuan from China who recently toured and promoted New Zealand and, from this weekend, Indonesian television personality, Farah Quinn. Both women have huge popularity and influence in their home markets
- Organising the Auckland Airport International Speaker Series at TRENZ
- Bringing additional buyers to TRENZ
- Establishing joint venture promotions with tourism partners
- Developing increased air-services such as the Garuda Airlines MOU signed by Auckland Airport as part of the recent Prime Ministerial delegation to Indonesia, the securing of China Southern Airline’s daily service between Guangzhou and Auckland, the expansion of Air New Zealand in Japan and their opening of new services to Bali and the Sunshine Coast, the expansion of China Airlines on the Taipei service, Emirates additional A380 services to name just some.
The visitor volume and value projections contained in Ambition 2020 were calculated independently by Tourism Futures International (TFI).
For more information, media only, please contact:
Will Seal, on behalf of Auckland Airport
P: 09 632 0536