Melbourne International Airport has reported ‘exceptional commercial performance’ for the 2017/2018 financial year ended 30 June 2018.

According to the Australia Pacific Airports Corporation 2017/2018 annual report, the launch of the 3,100sq m Melbourne Duty Free store by Dufry and overall Terminal 2 retail expansion propelled retail revenue by 16.6% from A$160.2m ($112m) to A$186.7m. Total revenue for the financial year increased +6.1% to A$1,011,831,000bn.

International passenger movements exceeded 10 million annual travellers (10.9 million) for the first time, reflecting year-on-year growth of over 9.4%. Total passenger numbers rose +4.4% to 36.7 million compared to the previous financial year.

EXCEPTIONAL PERFORMANCE

Speaking to TRBusiness in the second part of an exclusive interview, Andrew Gardiner, Chief of Aviation Melbourne Airport and Chief Executive Launceston Airport said: “We have enjoyed exceptional performance and are really pleased with what we have managed to achieve from commercial and customer satisfaction perspectives.

“Happy customers make sales and I think we have managed to achieve that.”

Increased duty free revenue and new speciality stores helped boost retail revenue during the 2017/2018 financial year. Both are believed to have had a similar impact in the 2018/2019 financial year ended 30 June 2019. (The 2018/2019 Australia Pacific Airports Corporation Annual report was unavailable at the time of writing).

“This financial year, we have experienced really good and continued growth from our duty free business and experiencing the same out of our luxury experience, with the exception of two unnamed retailers. We are in a really good position to continue growing the proposition.”

Regarding the relationship between landlord and retailer, Gardiner remarked: “We have a really good relationship with Dufry and the team and work together and meet every week. During these meetings, we go through the figures and talk freely about what both teams should be doing to make business better.”

“In general, we work with Dufry to enhance the business proposition and make as much sales as we possibly can. If we believe something is missing from the assortment we talk about it.”

Accommodating the needs of high spending Chinese consumers remains important, especially as China remained Melbourne’s largest international visitor market in the 2017/2018 financial year — 952,181 Chinese nationals flew through MEL during the period.

CHINESE DESTINATIONS

Currently, there are nine airlines operating out of Melbourne Airport flying to 12 destinations in mainland China.

“Chinese business is about 40% of our sales to Asian-based customers which include the Chinese. The Chinese are very high spenders, particularly in relation to luxury and watches. We have a Rolex store, for example, which cannot keep in stock. It is phenomenal,” Gardiner enthused.

He added: “We are fortunate in that we are a very short distance to China and have had a team working on the Chinese market for a number of years. It is a big business and continues to grow. It is very important for us.”

The ability of Chinese consumers to continuing spending high amounts, might well shape the future of the airport’s retail business. Gardiner explained: “Probably, our biggest potential challenge relates to what will happen in the China, because these travellers comprise such a large portion of sales.

“If they catch a cold, we all get the flu, so we need to be really aware of what is going on in that market and continue to be ahead of the curve. It is all about being proactive and not reactive.”

Sales staff and airport staff in general play a crucial role in driving sales and ensuring the optimum passenger experience at MEL and any airport for that matter. Gardiner commented: “We take the role of our staff very seriously.

MYSTERY SHOPPERS

“Every second month, we have a team of people pass through the airport and do mystery shopping. This ensures standards remain high. The mystery shopping is done independently and the results are reported back to he retailers.”

MEL also has an awards system in place which recognises best customer service. “Each year, we give an award to the retailer with the best customer service and the individual from that operator who provides the best customer service. The awards are handed out at an annual gala dinner,” he revealed.

Having stock on the shelf and staff confident enough to sell it is key to providing high customer service levels. “It is important to point out that we obviously provide training on elements like the responsible selling of alcohol as well,” he remarked.

Staff are an important part of the transaction and the best sales staff positively impact average transaction and passenger spend rate. “Good people are worth their weight in gold”, Gardiner concluded.