Thursday, January 29, 2015

Let's sell our airport and that darn passenger!
Image from
There has been a feather ruffling debate whether Samoa is selling its airport to China.  As I said to a friend earlier, for Samoa to sell its airport to the Chinese, one is willing to sell the door to her house! Imagine the consequences if we were to do that.   Is this the way forward? For the doors (airports) to be sold to the Chinese? Perhaps not, we must understand our air transport and airport system well before we make any rash decisions. This blog is not to discuss whether we sell or not, we are not (not now).  That thought should have been extinguished before it even developed into an inkling idea.  What with every Pacific government depending on tourism and air transport, we'd be silly to even entertain the idea.  The air transport system has been instrumental in pulling not just islands but economies together for decades and with the population numbers, cultural diversity such as ours, the region may not afford to sell their doors to anyone. Imagine Pacific airports changing their names to 'Tao' "Ching Mao" "Keng King do"! The gateways must remain in the hands of government or entities willing to facilitate the best interest of the people if we are to call our gateway our own.  If it's not due to national pride then it should be about retaining complete sovereignty of a state over its own airspace, airport and legal obligations to its people.

We have already opened our doors to the Chinese so why not sell our gateway too?  But before we do that, let’s sell the road to our houses too (runway).  Many aviation studies depict that  valuable assets for an airport is either human resources or airport facilities.  I believe there is one asset that might surpass the value of all these in Samoa’s case.  Let’s determine the most important factor in a thriving airport.  Our aeronautical revenue is still the biggest earner for our airport with 70% of our revenue collected from landing fees and departure tax.  The trend for most successful airports is 50/50 aeronautical and non aeronautical. This means that without airlines flying to our airport, our airport will forever remain a liability.  The accumulated losses for the airport will still pile up until the second coming.  For a small airport, we need airlines to pay the bills.  We need passengers to use our facilities.  So I say, sell our airport and if you are smart investor you will not invest your money in a sinking boat.  It might be a good looking boat but if it has holes, it will still sink to the bottom of the ocean like Titanic.  If we must sell our airport, let’s sell Samoa as a destination first and do it well.  We’ve been rolling about with destination marketing and tourism as our biggest GDP contributor so instead of jump starting drama about selling off our gateway, let’s sell Samoa first.  This will result to more people wanting to reach our shores and more flights which will have catalytic effect, making our airport some money.  Lets not forget that the airport is a second home to 250+ employees.  You might not know that because you rarely see the firefighters, air traffic controllers, works and maintenance staff, all aviation security, corporate service, cleaners and gardeners.  Are we ready to sell our most valuable asset? First the runway, then the gateway (terminal).  Perhaps not.

The pacific air transport like most Pacific islands, is but a dot in the the aviation industry. Our total traffic numbers barely make a dent with some of the village airports in Asia.  It consists mainly of small to medium sized fleets and its future might lie with more small to medium regional airlines.  These airlines can be utilized to feed the thicker traffic routes from the major markets such as New Zealand, Australia and U.S.   Instead of trying to fly outdated high maintenance cost aircraft, the smaller islands can do with more energy efficient and newer aircraft.  For major players flying bigger aircraft into our airports, maintaining the right standard for a B777 or fully loaded B747-800 puts substantial amount of  pressure on the meager existing facilities.  The maintenance costs to small airports is rather high.  The operational costs alone to a small airport can cripple and bankrupt any medium sized business.  It runs in the millions and there are only a few millions that our airport generates a year which is why it’s been in the red zone for well over 30 years.  Have you considered the cost of one rescue  fire truck? The cost of navigational aids and specialized training of air traffic controllers to manage it? Have you considered the security requirements and costs? How about the electrical and technical side of things? Also don’t forget the cost of electricity that it takes to keep our runway lights running! That’s already 80% of our total revenue per annum flowing towards expenses already.  So when someone claims that we are selling our airport, they’d better be well informed with accompanying costs of not only selling but running an airport for 24 hours, 7 days a week.  In saying that, we must still encourage bigger players to fly to our airports so we get the best deal for our people.

The question remains :  If our traffic numbers is not exponentially growing, do we really need a bigger airport? The simple answer is - yes, definitely we do..
The survival of the fittest remains true to this day.  Faleolo International Airport has been in the headlines for failing to make profit, scrambling to be at a standard acceptable to the darn passenger and for accumulating huge financial losses since its establishment.  Simply put, the airport needs to survive and make money just like any other Business body.  A bigger terminal would mean more spaces for businesses to come to the airport.  This will hopefully result to more tenants and some money for the airport to invest in other developments or spare change for maintenance/ operational costs as it is not a cheap task.  A bigger terminal  means a higher chance for the airport to bank in more non-aeronautical revenues rather than relying solely on landing fees and departure taxes.  These two charges cannot keep on rising to infinity.  So the airport can be a place where people come to shop and spend quality time instead of throwing their rubbish and scratching the advertisements. Some may argue that people do not go to the airports for recreational activities but this is the trend that is becoming more and more popular with other airports.

Do we need a more expensive airport? Perhaps not as we need one that functions like a well oiled machine.  Any refurbishment or new terminal will still mean spending huge sums of money.  This cannot be avoided.  Airports are not regular businesses where if one fails then another can rise up and be more successful in a short period of time.  The airport machine does not work like that.  As an International Civil Aviation Organization (ICAO) member state, our international obligations are no less easier or lighter than the developed countries.  When we became a party to the Convention,  we are audited against the same obligations and standards. This is what we do not understand most, the underlying costs of safety and security measurements.  The passenger experience has become so dynamic and rather demanding that people are expecting more and more from airports.  Behind the scenes are rescue fire, security, air traffic control, environmental and social costs that add up.  Airports that were previously used as bus stops are now expected to cater to every need of the passenger.  For instance, more if not most passengers expect free wifi/internet at any airport, there are also high expectations regarding amazing shopping experience, top notch facilities, eateries to cater to more people, duty free to offer luxury brands and car park facilities to look after their vehicles.  

Have I missed anything? This is the steak  of the passenger experience so to speak.  Updating Fretbook (Facebook) status at every airport is a must these days, otherwise your 2000+ friends will not know if you've made it on time or if your husband finally bought that Louis Vuitton bag.  You get the idea.   Not only do passengers expect to be provided and cared for by airports, their travel experience should be seamless and effortless.  The passenger travels in a bubble until a suitcase is lost or connecting flight missed, then all hell will break lose.  Losing a luggage is not just that, the passenger sees this as a failure of the airport system even though there are several agencies responsible for getting the luggage from A to B.  In most cases this does not even involve the airport.  First and foremost, the passenger is responsible for check in and uplifting luggage, the airlines ensure the bag is actually on board with the passenger and when the destination is reached, the ground handler should bring the bag to the conveyor belt, customs, quarantine and so forth.  To successfully reunite the passenger with his/her luggage means the end of this transaction.  Sometimes the only role that an airport plays in this exchange is to provide the necessary facilities.

This kerfuffle about two airlines marrying is not a new phenomena.  Monopolies have existed since the beginning of time, which is why governments need to monitor ventures and partnerships to ensure that it is in the best interest of the people rather than filling up already overflowing pockets.  Times are changing and perhaps government might one day consider selling our airport but for now, we must first understand how an airport runs before claiming otherwise.  No businessman in their right mind will invest millions on just infrastructure alone unless they see profit falling from the sky.  Airport is big business if you have 10-20 airlines flying in and out daily, if you have the numbers and bums on plane seats but if you have only two or three airline servicing a consistent traffic route, it doesn’t hold much coins. Most airlines will tell you that.  

Finally, let's be kinder to our airport facilities and if all else fails, there is nothing new under the sun! Sell or not sell, make use of the time while the airport remains ours.

Some useful reading:

All about ICAONotes on aeronautical vs non-aeronautical revenue 

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