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AIRPORT PROFILES Last modified on November 3, 2016

Leading the way

Sydney Airport’s managing director and CEO, Kerrie Mather, talks to Joe Bates about traffic growth, sustainability, IT innovation and a host of pioneering initiatives.

Sydney Airport continues to impress, handling a record 39.7 million passengers in 2015 (+3%), facilitating the export of A$14.6 billion worth of freight and being a pioneer in terms of the environment, customer service and IT innovation.

The rise in traffic is being driven by route development – the gateway has welcomed six new international airlines and seven new routes in the past 12 months – and existing carriers increasing capacity on existing services.

The new routes include Changsha, Hangzhou and Chengdu in China operated by Hainan Airlines, China Eastern Airlines and Air China respectively meaning that 12 cities in Mainland China are now served direct from Sydney by six Chinese airlines.

Sydney has also become a major destination for low-cost, long-haul travel, with Low-Cost Carriers (LCCs) now accounting for 10% of all international passengers.

Jetstar, Scoot, AirAsia X, Tiger Airways and Cebu Pacific lead the way serving a host of destinations across Malaysia, Singapore, Thailand, Indonesia, Japan and New Zealand that include Bali, the top outbound destination for Australians.

As the head of a public listed company, traffic predictions are not disclosed by Sydney Airport, but managing director and CEO, Kerrie Mather, points out that the gateway is on target to handle more than 41 million passengers in 2016 based on record breaking first seven months of the year.

The airport actually handled 41.1 million passengers in the 12 months ending July 31, 2016, the upturn being driven by a 9.8% rise in international traffic and 4.9% increase in domestic passenger numbers.

Decisions to take a strong leadership role in tourism development and place a greater focus on collaboration with a wide range of stakeholders certainly appear to have proved instrumental in Sydney’s route development success.

Sustainability

Mather is particularly proud of Sydney Airport’s environmental credentials, noting that it is the first Australian airport to publish a Sustainability Report in line with Global Reporting Initiative G4 guidelines; has achieved Level 2 ‘Reduction’ status in ACI’s Carbon Accreditation programme; and continues to innovate in terms of new facilities and initiatives, the latest being the introduction of the nation’s first fleet of electric airport buses.

“Sustainability is absolutely a key strategy for us and it’s an area where we have taken a leadership role as it is embedded in our business strategy,” she says, noting that the airport has reduced its carbon emissions per passenger by 18% over the last five years.

“We have developed our sustainability strategy in consultation with our stakeholders and as a result have implemented a range of initiatives to reduce our carbon footprint, maximise our energy efficiency, improve our air quality and generally enhance our local environment.

“In terms of our social licence to operate, community engagement is also vital as we have to recognise the impact the airport has on local communities and give something back to them.”

This philosophy led to the airport investing A$2.6 million in community initiatives in 2015 with a key focus on helping families in need; health, education and the environment.

Customer service

Mather says that a “very strong focus on the customer experience” is reflected in the vision for the airport, which includes the commitment to continuous improvement and responding to feedback.

“A main area of focus has been developing a much stronger customer focus, which has meant listening to our customers and understanding their priorities and developing a new vision for the business to reflect these priorities,” she says.

Examples of Sydney Airport’s customer service strategy include the fact that the gateway has its own customer service charter, which it requires all employees to follow. Similarly, all staff must undergo service standard training before they are issued with their Aviation Security Identification Card. 

The airport also has a dedicated Customer Experience Committee, which regularly reviews customer surveys and feedback from passengers. 

“This ensures that we know what the key drivers of customer satisfaction are at Sydney Airport and are able to prioritise our investments and initiatives in response to what passengers want,” remarks Mather. 

She cites last year’s independent International Customer Service Standard (ICSS) certification from the Customer Service Institute of Australia for its commitment to service excellence, customer centric culture and leading edge complaint handling framework as an example of the growing recognition of Sydney Airport’s customer service efforts. 

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IT innovation

As part of an ongoing A$1.3 billion investment programme over the next five years the airport plans to “transform” its check-in areas, enhance the airfield, expand the apron and add new roads and boarding gates.

The project to transform the check-in process includes the installation of more self-service check-in and self-bag drop kiosks to take into account changing passenger behaviours that are largely being driven by IT advancements.  

Indeed, IT surveys show that most passengers now check-in online and embrace self-service technology at airports, and Sydney Airport is actively looking to introduce more self-service options for travellers following the successful trial of different technologies with Qantas.

“We are looking to roll out more self-service check-in and self-bag drop kiosks across the airport to streamline both the passenger and baggage handling processing,” states Mather.

“We already have SmartGates at Immigration for both inbound and outbound passengers, which have reduced the average processing time for those that use them from eight minutes to 23 seconds.

“This initiative has allowed the Australian Border Force to reduce the number of Immigration desks required to handle passengers, so we’ve added more security process lanes to make it quicker, easier and more customer friendly.”

She notes that the Arrivals SmartGates – which use information in ePassports and facial recognition technology to conduct checks usually carried out by an Australian Border Force officer – were first introduced four years ago.

“However, usage further expanded when we introduced it for Departures. People got used to it and penetration rates soared,” says Mather. About IT in general, she adds: “Today’s travellers are looking for more choice, control and connectivity, so we are using technology across the whole airport experience. 

“We are doing this to improve the operational efficiency of the airport, improve productivity for our airline partners and improve the passenger experience. 

“Passengers are embracing technology because it is creating a more efficient journey and a better experience for them. So, what we are doing is reaching our customers at a number of touchpoints throughout their journey and giving them the information they need when and where they need it.”

One of the ways the airport does this is the use of beacon technology, but Mather points out that it also uses its website, Sydney Airport app, Bluetooth, free Wi-Fi, “dynamic wayfinding”, multi-language directories and FIDS screens in 13 different languages to communicate with passengers.

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Retail/F&B offerings

Arguably the most highly visible change at the airport in the last 18 months has been the revamp of the retail/F&B facilities as part of the ongoing upgrades of both Terminal 1 and Terminal 2.

Indeed, the airport’s concessions offering has been “totally transformed”, according to Mather, who notes that almost every single concession outlet will have been “turned over” in the last 18 months.

This, incredibly, has amounted to the opening of 36 new shops and 34 F&B outlets in response to feedback from travellers, with more to come.

“Shopping and dining is a key part of the airport experience and our passengers told us what they wanted and we have listened and totally transformed our offerings,” she says.

“Our strategy is based on creating Australian and airport firsts and the ongoing improvement programme for Terminal 1, which is our international terminal, gave us the chance to reconsider the layout and design of the retail offering, and we opted to change everything.”

New duty free operator, Gebr Heinemann, has already opened 7,000sqm of retail space in T1 bringing over 400 new brands to the airport. When fully open it will cover 10,000sqm, making it its biggest single duty free outlet in the world.

Mather says that it will be joined by 13 new fashion stores, of which eight are already open, offering a combination of high-end brands to appeal to the big spending Asian customers, middle tier brands aimed at Asian travellers looking for value, and a number of Australian firsts.

She adds that the new concessions mix includes a host of extra F&B outlets, many of which form part of two new precincts – The Marketplace, offering street-food style fare in a light, bright atmosphere in T1 Departures, and the more upmarket City View.

Elsewhere the casual dining precinct in the T1 check-in hall now showcases an expanded range of healthy and tasty food outlets such as Roll’d, Mach2, Hokka Hokka, Soul Origin, Oliver Brown, Mad Mex, Nando’s and Grand Cru, which according to Mather provide more dining options for passengers and cater to all budgets and tastes.

“We have given our customers what they wanted – more variety and choice when it comes to food and beverage outlets. This includes the introduction of more unique dining experiences and a better sense of place,” enthuses Mather.

And there’s more to come as in June the gateway began the next phase of the revamp of the casual dining precinct in Terminal 2, which it claims will enhance the airport experience for passengers, visitors and staff. 

Like at most airports, retail/F&B is an important source of revenue for Sydney Airport, currently accounting for around 22% of the airport’s income. The gateway can expect this figure to rise following all the new additions, although Mather prefers to concentrate on the impact the new outlets will have on customer satisfaction levels.

She says: “The income is, of course, important as is any source of revenue, but we believe it is more important to have the right offerings for passengers so that they can enjoy the airport experience, and I am confident that we have now achieved this.”

Mather points to “excellent feedback” from passengers and rising customer satisfaction scores as early indicators that people like what they seen and experienced from the new concessions offerings.

Western Sydney Airport

The Australian government’s decision to build a second Sydney gateway, now known as Western Sydney Airport, means that Mather and her board will soon have to make a big decision of their own – do they want to operate it!

Set to be located in Badgerys Creek to serve western Sydney, the new airport will be a full service gateway and is initially expected to boast a single runway and terminal building and the capacity to handle around 10 million passengers per annum.

As part of its sale agreement with the government in 2002, Sydney Airport has the right of first refusal to develop and operate the new airport, which is being built to complement the existing airport to best serve the needs of the entire Sydney basin.

Mather says that Sydney Airport is currently in a consultation phase with the Australian government and is expecting to be issued with a Notice of Intention before the end of 2016.

When that happens, Sydney Airport will have either four or nine months to issue its response to the government, so not unsurprisingly, she was reluctant to go into much more detail about things for now.

“What I can tell you is that Sydney will need another airport as independent traffic forecasts predict that we will be serving 74.3 million passengers by 2033 and government forecasts suggest that demand in the Sydney market will reach 120 million passengers by 2050,” muses Mather.

“We have the right to develop the new airport and it is a very valuable right and an opportunity and an option that we take very seriously.”

With the Australian government already talking about a mid-2020s opening date for Western Sydney Airport, decisions certainly need to be made soon. Watch this space for further developments.

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