Air Macau shifting business model

Zheng Yan (2nd left) accompained by guests of Air Macau’s new airplane inauguration

Local airline Air Macau is shifting its business focus from Chinese gaming visitors to the local market and nearby travellers.  It will therefore develop regional routes to some Asian destinations aside from mainland Chinese cities.
“Before we were basically expanding on the routes to the mainland. Since this year, because the economy is in an adjustment period not only in the mainland but also in Macau, our airline network is also adjusting,” explained the chairman of Air Macau’s board of directors, Zheng Yan, on the sidelienes of a new aircraft inauguration ceremony.
Zheng said the airline’s main focus is now on the local market and on customers coming from west Guangdong, facilitated by the 24-hour border crossings. “Under these circumstances, we may develop more regional and international routes,” he said.
Flights to Osaka, Tokyo, Seoul and Bangkok will be increased in frequency within the year.  Other destinations in Southeast Asia – such as Vietnam – will be added to its airline network, with the frequency of flights depending on the market demand.
Air Macau’s profits plummeted by 74.4 percent in the first half of 2014. According to Zheng, this was due to intense competition among five major airports in the Pearl River Delta region.
In order to improve connections to neighbouring airports in Zhuhai, Guangzhou, Shenzhen and Hong Kong, new means of transportation are being built, such as the Zhuhai-Guangzhou intercity light railway and the Zhuhai-HK-Macau Bridge.
“What this added convenience brings is competition amongst the five major airports and their airlines. And in our local market, we have competition from conventional airlines from the mainland and low-cost airlines from Southeast Asia,” explained the chairman.
He added that Air Macau’s airfares would also become competitive in the region. “For sure, the competition resulted in pressure on our airfares, that’s also why we need to adjust our entire business idea and provide our services from the perspective of the masses (…) The fare will definitely decline, but it will still be subject to the market rules,” he said, adding that improved accessibility should be considered a desirable feature of airports.
The chairman also acknowledged a decline in high-roller passengers using the airline, due to China’s economic reform as well as the anti-graft movement.
“The company’s operations have basically been following the city’s entertainment [gaming] market in the past several years. But I believe through exploring other types of markets and capturing leisure-oriented visitors, we won’t be affected much. (…) Macau’s economy and its aviation industry growing to what they are today is not simply because of the high-roller market, Macau also has a leisure market.”
Despite the profit plunge, Zheng said 2014 was still a satisfying year for the airline financially; it also recorded a significant rise in passenger loads.
“Each customer group has its different demands; in Macau, the demands can’t be met simply in the economy cabins. Therefore we will keep our path as a conventional airline to cater to different customer groups and introduce more aircraft models that are blended with business and economy cabins,” he said.
The company added a new A321 airbus to its fleet yesterday, as another step in its fleet expansion and renewal. Zheng said the Air Macau fleet will expand from the current 15 aircrafts to 17 within this year, and to 24 by 2018, with each plane costing over USD50 million. “Now basically every year we replace one or two old aircrafts; the replacement plan will be completed in 2020,” he added.

Airport increases capacity

Macau Airport is also expanding its terminal in order to increase its capacity, as the government anticipates a bigger tourist influx. “With all the infrastructure in place, more people will come to Macau because of easy access,” said the president of Macau’s Civil Aviation Authority, Chan Weng Hong. “We are adopting a very liberal aviation policy, laying down very flexible conditions for the airlines to make commercial decisions  (…) But so far, there’s no solid application filed to my office to apply for new route operations.”