Air Macau to lose monopoly this year, liberalization moving forward

The only Macau flag carrier, Air Macau, is about to lose its monopoly on air travel, as the Macau government is finally moving forward with the new air transport law that will liberalize the business and allow other players to operate air routes from Macau.

Although such a move had already been slated for November this year, confirmation that the government had finalized the bill was reported yesterday by TDM Radio. Without citing sources, the media outlet stated that discussions on the bill have already concluded, with the bill to be referred to the Legislative Assembly in the upcoming weeks.

The original agreement granted sole control to Air Macau over the transport of passengers, luggage, cargo, mail, and postal parcels to and from Macau via air. The contract was initially signed in 1995, with an expiration date set to 25 years and due to take place in 2020.

Amidst the pandemic crisis, in September 2020, the government granted Air Macau a three-year extension of the contract, which now has a deadline of November 9 this year.

The government mentioned the possibility of the contract being terminated earlier than the scheduled date in the contract extension, if the new legislation was completed and approved earlier.

The end of this exclusive arrangement is viewed as beneficial for the market’s development and the competitiveness of Macau International Airport.

Gaming industry expert, Ben Lee, said to the Times that such a move is “essential to diversifying our economic base,” adding that, “Monopolies are driven to maximize their profits and this usually conflicts with the interests of the wider community they exist in.”

Lee, who is a managing partner of IGamiX Management & Consulting, also noted the example of the liberalization of the gaming industry in Macau to highlight the positive impacts perceived by the liberalization of air transport.

“We saw what happened when Macau’s gaming monopoly by STDM [Sociedade de Turismo e Diversões de Macau] was broken up. Imagine the same for our international air access if we had many competing airlines fighting each other to maximize their passenger loads.”

Former Air Macau captain, Vicente Serafim, said to TDM Radio that with the liberalization, it is certain that the prices of airfares will drop as a consequence of more offers and direct competition.

“From the moment there are two or three airliners based in Macau, the offerings go up significantly in both destinations and routes as well as in the number of seats available,” he remarked.

For Serafim, the loss of the monopoly in operations from Air Macau will force the company to adopt a “change in strategy,” which can also result in benefits for travelers.

Back in 2019, when the contract of Air Macau was originally due to expire, Asia’s largest low-cost air carrier – AirAsia – was said to be considering establishing an operations base in Macau to expand its services into mainland China, company’s founder and CEO Tony Fernandes said on the sidelines of Credit Suisse’s Asia Investment Conference in Hong Kong.

According to Fernandes, the possibility was being seriously evaluated at that time, taking into account the end of Air Macau’s contract.

“Entering China could be done via Macau,” Fernandes said, adding, “We do not have to be in mainland China, but being in Macau is like being in China.”

Fernandes added that if such an opportunity arose, AirAsia would be ready to take it, orienting its Macau base to serve mainly Chinese costumers.

Fernandes said that Macau has always been a goal as a “home base” for the company noting, “Macau is very close to my heart. They believed in us when we were nothing.”

At the same opportunity back in March 2019, Asian Business Aviation Association chairperson Jenny Lau said that AirAsia should not be alone in this idea to compete for the Macau market.

“Several players like AirAsia or Cebu Pacific may consider expanding their services from Macau, or new players like HK Express,” Lau said, adding that included among the new players could also be names such as Shun Tak Holdings as well as companies traditionally related to business aviation.