United World speaks with Simon Chan, CEO of the Civil Aviation Authority of Macau, about the region’s growing role as an air transport hub
By 2025, 32% of all global airline traffic is expected to originate from Asia. Additionally, over the past decade cargo traffic to the mainland grew at about 10% (compound annual growth). Considering the global recession, how do you view Macau’s exceptional economic growth and what are some of the main challenges in order to sustain this?
First of all, if we look at the market itself, one of the main reasons is because compared to the U.S. and European markets we are not that mature yet. The percentage of people traveling by air is still very small compared to other means of transport. That means that there is a lot of room to develop. Secondly, the population. As you know, most countries in Asia have huge populations, and that generates the market as well. Thirdly, we have a lot of small countries, so the demand for travel is high.
A number of statistics show that there is a lot of potential in the future. I think that creates a potential for Macau as well. A lot of visitors come to Macau as well, so that creates a potential market for us. Economic growth brings more revenue for people. The demand for buying luxury goods and travel, including travel abroad by air, has also increased dramatically.
What about Macau as a leisure and tourism hub? What are some of the challenges to positioning it as such?
There are a number of things that Macau needs to catch up with. For example, we need enough labor to serve all these tourists coming to Macau every year. Also, to be an entertainment and leisure hub, the quality of service is very important. For example when you want to host a conference or exhibition in the service sector, the quality of service is very important. The attitude to serve is very important, and in that respect I think that Macau has a lot to catch up on.
Most of the people coming in will be flying in, and when you look at the region, we have a couple of regional hubs around Macau. Macau is a newcomer to aviation when you look at our history – our airport only opened in 1995 officially, although of course we have a long history of aviation. We were idle for a long time, and we started to pick up again in 1995. That means that there are lots of challenges ahead when it comes to encouraging airlines to open new routes and come into Macau.
I always say that when you organize a conference in Hong Kong, you put your staff in the airport to welcome all the guests. When you organize a conference in Macau, you do not know where to put your staff to welcome your guests. We have the land border and the sea borders and the airports. On the one hand, I think we facilitate people coming into Macau; but on the other hand, they have many choices to come into Macau. So it is a challenge for us. Also, when you look at our tourism structure, most tourists are coming from mainland China. Most of them are coming from the Guangzhou area, which means that they do not have to fly to Macau. On the one hand, we have to become more international, but on the other hand, we need more air routes to match these directions.
Passenger traffic reached a record in January 2012 by 18% year-on-year. How do you think that regional integration will contribute to the overall growth of the industry and having a multi-airport system in terms of accessibility?
Firstly, the growth in January was mainly due to the Chinese New Year, which was in January. The Chinese tend to travel quite a bit in the Chinese New Year. We need to look at the population and the capacity of airports in the region. When you compare the region with New York or San Francisco or Tokyo, the ratio is not that small. That means that there is a huge potential. We have the cities next to Macau, which has a population of 10 million. If you look at the population and the number of runways and you compare it to the New York area, it is big enough for all these airports to cater to the markets. So the potential is there. We need to facilitate the movement of people. If you look at what Macau as a government is doing, we are trying to connect the roads, borders and railways to integrate them together. We have the idea of a one-hour traffic zone, so you can connect with all the cities in the area. Each airport will play its own role.
How are you keeping up with the high infrastructure demand?
Our airport was inaugurated in 1995, and at that time we mainly served the Taiwan market because there was no direct flight between mainland China and Taiwan. We played a very important role connecting the people. Macau’s role has changed. Last year we revised our airport master plans and the idea is to expand the apron area a little (not increasing the number of runways but increasing the parking area and the terminals) to cater for more traffic. Basically the whole idea is not just to serve Macau. The airport will serve the regions, not just Macau.
We have incorporated three main directions in the airport master plan – one of them is convenience. If people want to go from Macau to cities in China or vice versa, they will not have to go through immigration in Macau. So it is about convenience. We consider people coming to Macau as transit or transfer passengers. We are trying it out with the ferries right now. In the future we will have the rail coming from Guangzhou. We are thinking about combining land, sea and air. The new ferry terminal is under construction right now in a small corner of Macau.
In the future we will have the ferry with the light rail connected to there and the airport, all in one corner. The idea is to have a multi-modal means of transport.
What processes do you have in place to ensure you compliance with International Civil Aviation Organization (ICAO) standards?
Aviation is a very international industry. You need international credibility. Since day one when we started to operate, we have followed ICAO standards 100%. We follow their standards rigorously. ICAO sent in experts to Macau in 1995 to check everything and we certify the airport based on these standards. We have had a lot of cooperation with this organization. We actively participate in all events organized by ICAO in the region to make sure that we are up to international standards. We monitor our operators based on these international standards.
You have agreements with about 47 countries. Can you tell us about the status of your negotiations to open up further markets?
Before that I can give you a very brief explanation on Macau’s government and the central government. We are not a country – we are part of China and negotiating reflects the sovereignty rights. Under a very special one-country two-system concept, they allow us to have our own aviation policy with approval from the central government. We have autonomous powers (except for national defense and foreign affairs). We need to ask permission from the central government to negotiate with whatever country. The air service agreement text also needs to be approved by the central government. We do not control the number of frequencies, the number of airlines or the tariffs. The airlines therefore can start their services anytime, based on their commercial decisions.
India is a good market for Macau, but the agreement we signed with them in the 1990s is very limited. So we would like to liberalize the agreement with the Indian Government and we hope that airlines will be interested in serving cities in India and Macau. In 2004 we liberalized the market with Thailand and in 2006 with Malaysia. The low cost airlines then came in and now we have very frequent services between Macau and Bangkok, Macau and Kuala Lumpur, and Macau and Singapore. These will bring more people into Macau.
How will the bridge between Macau and Hong Kong affect air traffic?
You could say that you would lose the traffic because the bridge is there, but you could also say that it will bring benefits to Macau. You have to look at the structure of our tourist base – last year 28 million visitors came to Macau. Every year it is growing. Out of this 28 million, 12% were international travelers, so our base is very small. We handled 4 million passengers last year, among them 97% were really using Macau International Airport as a destination or they used Macau International Airport to fly out. That amounts to around 3.7 million, but if you divide it by two, it is only 1.5 or 1.6 million visitors. So when you compare this to the number of visitors coming to Macau, this is a very small number.
I think that Macau will become more international, so more and more international visitors will come into Macau. The whole idea of the bridge is to facilitate the flow of people. In my opinion, we will benefit more, and all the airports in the region will benefit. As I said, the population is big enough to support all of these airports, but because of the inconvenience of traveling around the different cities in the regions, that stops people from using the services. But in the future if you take away all of these barriers, with the infrastructure coming in and the ease of visas and border crossing, people will be freer to travel around and all the airports in the region will benefit.
How are you working with the Air Traffic Management Planning and Implementation Group in the region?
We formed this group in 1994, I think because Macau and Hong Kong needed a new airport and airspace management was an issue. That is why we came together and we talked and negotiated. I remember in the first couple of years it was very difficult, just like three countries sitting down there and negotiating. At that time, the military was participating. Our airport was inaugurated in 1995 and I think the Hong Kong Airport came in 1998. We knew that we needed to do something for the future because the airspace management needed to improve to cope with the growth. So we formed a technical group in 2004 to look at this specific issue. We came up with some ideas and solutions in 2006 if I’m not wrong.
We gradually implemented this plan, but of course, there were a lot of issues in the plan and it was subject to a lot of factors. But the idea is there and the technology is there. We need to do it step-by-step. We have to ensure that the traffic is handled smoothly and so that it copes with the demand.
Macau is a gateway and a bridge between China and the world. Is it also a gateway to China in terms of cargo?
MR. CHAN: We play this role as well and we did very well in this area from 2004 to 2007. There was not enough capacity direct from mainland China to Europe and the U.S. at that time. The demand in Europe and the U.S. is high, so a lot of products, especially seasonal products like Christmas products need to come out of the factories before the key seasons and they need to travel by air to reach the other side. That is why Macau played a very important role at that time. The crisis came in 2008 however. Also there is a lot more capacity allowing us to access mainland China directly all the way to Europe and U.S. So the role of Macau has shifted as well. We do not play such a significant role nowadays.
Our cargo statistics dropped dramatically from 2008 until now. However, Macau has been developing. Our hotel rooms are going to increase to 50,000 and there will be more MICE (Meetings, Incentives, Conferences and Exhibitions) activities here. There is probably a domestic market for cargo as well. As long as you have people living in a place, then you need to have cargo and raw materials, fresh fish, flowers etc. So you will generate certain volumes of cargo into Macau as well.
What is your long-term vision for the aviation industry?
We are the regulator. We do inspections and we train staff and set regulations. All of these ensure the safety of the organization. In order to do that, we lay down the foundations for the growth of the industry. We will support the growth of the industry – we want to see it grow. This generation is very lucky because Macau is very small, we are not a country, but we need to do everything as a country. Who knows what will happen in the future. We are very lucky to have this one-country two-system approach, and we should take this opportunity to develop the industry in Macau, despite the fact that we face a lot of difficulties, like we are small, there is a lack of land and a workforce and many well-established hubs around us. But we still have lots of opportunities for other sectors in the industry. All these airports are good enough, as long as they find their own role.
Macau is a city for leisure, so we will probably have high frequency serving cities with 3 to 4 hour flights. People need the convenience to travel. We also have casinos, which are high rollers. In the future there will probably be a lot of private jets coming into Macau. We have Jet Asia, Macau Jet and another one on the way, which is applying for a license. There are around 16 or 17 jets in Macau right now. Private jets are slightly different from airlines, where you need a base. It is like the difference between a bus service and a limousine service. These kinds of services will be very much in demand in Macau in the future. Look at the 737 private jets coming into Macau to the casinos right now.
I want to see this industry grow because there are opportunities. Aviation is a very high-tech international job. If we have this industry in Macau and if the locals and people from outside come here and if we have the industry, then people will stay here. You will have different jobs to offer people in addition to the casino jobs. If you have got a pilot or engineering license for aviation, no matter where you go, you will get a job. Aviation is a global language, so the requirements are more or less the same. You just convert the licenses. I want the industry to grow and create more jobs for the locals, so that they have more choices, and so that they can become more international and professional. That is my vision as well.
In the old days you used to say that if you grew up in Macau there were not that many opportunities and you did not explore that much, but when you have aviation, it does not matter about the size of the country or the population. Once you know it, you can apply to everywhere in the world. That is the beauty of aviation.
What final message would you like to send to the readers of USA Today?
People in other places do not know Macau or where it is. But if they come and have a look they will be surprised what is happening in this 28 square kilometer spot. You will be really amazed. You have everything – the world heritage, the modern hotels and the people. Everything is so unique. To be fair I grew up here, studied here and traveled a bit with my job, and I have found that Macau is very unique.
[Civil Aviation Authority of Macau]
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