Latest news and insights from Australia’s airports

Resilience the focus as Melbourne Airport plans for the rebound

Melbourne Airport chief strategy and development officer Simon Gandy looks out at what just weeks ago was a thriving mecca of arriving and departing flights and sees a giant parking lot.

The airport is now home to more than 50 parked aircraft and the circa 540 domestic aircraft movements for which it normally caters have been reduced to a similar number of flights.

Passenger numbers are down from about 100,000 a day to around 2000 per day.

“International movements are down from about 140 to about 25 a day and of that only six of them are carrying passengers,” he laments. “The rest of them are freight.”

While much of the focus has been on airlines and the dramatic decision to place Virgin Australia in voluntary administration, airports large and small have been also been hit hard by the travel bans stemming from COVID-19.

For Melbourne, this has meant helping customers even as revenues plummet while juggling more than 200 projects and attempting to draw a bead on an uncertain future.

Nobody yet knows what the future holds for Australian aviation but the conventional wisdom is that domestic travel will recover much more quickly than international.

Whether that will include a second major Australian airline remains uncertain but Virgin Australia administrators Deloitte report interest in the troubled airline from a number of parties and there is optimism it will emerge in some form from the process.

The Victorian government would like to see a restructured Virgin set up its headquarters in Victoria and Gandy strongly supports the push.

Like many, he finds life without Virgin difficult to imagine.

“I’d love to see Virgin base itself in Melbourne,” he says, noting it would see a major airline at both ends of one of the world’s busiest routes and build on Victoria’s successful pre-COVID push to boost international flying to Australia’s second biggest city.

“It’s where they can get the best access, the best growth and the right price. Melbourne’s in a really good position to be able to support the rebirth of that carrier better than anybody else.”

For now, however, there are immediate issues to address as Melbourne moves from a “drop-off” phase, where it was coping with the dramatic fall in traffic, to one of resilience involving safe, secure and sustainable operations.

This includes providing support to customers and stakeholders ranging from airlines wanting to park planes to businesses such as freight operators, logistics companies and retailers.

It also means looking after its own business.

“We’ve gone through a process of right-sizing our business and the way that we approach that business,’’ Gandy says. “Obviously with limited revenue coming in, you have to tune your cost base.

“And I have to say all of our suppliers have come to the table on that because we’re a predominantly outsourced business.”

The airport has a skeleton crew that keeps critical 24/7 maintenance and operational activities going but many of its staff are working from home.

Gandy says an important aspect for those working from home is keeping an eye on the future.

“I’m very keen that we do that,” says Gandy. “In a crisis response, you’re in a command and control situation so you need to put your resources into the right things at the right time.

“As we’re in the resilience phase now, we’re starting to look at what a continuous operation like this looks like for the period of time and what does the start of rebound look like?

“How do we think through some of those things?”

This includes keeping the momentum going with design work.

Gandy says the airport has the capability to do that in-house and wants to be “shovel ready” with as many approvals completed as possible for when demand starts to return.

Until then, it’s a question of “right-sizing” not just the business but the capital management.

“We still have over 200 projects, it’s just that we’ve been really clear on how we look at that plan now through a couple of lenses,’’ he adds.

“One is what do we need to continue to drive our critical projects —  those that are safety or regulatory in nature and that we simply can’t change — and also those projects that are already in construction that are critical to our recovery.”

One of those critical projects is the Taxiway Zulu project, a significant three-year undertaking aimed at giving Melbourne much better taxiway optimisation and improved efficiency.

The new taxiway network encompasses 270,000 square metres of paving and is part of a wider Northern Precinct project that also prepares for the airport’s third runway.

Work began about nine months ago and Gandy says the project was hitting its straps when the coronavirus hit and is one where the airport can work flexibly with the contractor to “tune up and tune down”.

“We’re just looking at the pace of that program of work but we’re not stopping it,’’ he says.

“And guess what, with not many aircraft moving you get the option of saying great I don’t have to do this as night work now.

“I can actually do this in a cheaper way and probably get the same scope of work down, which is beneficial for everyone.

“It’s good for us and it’s good for customer airlines at the end of the day if we’re able to deliver the same scope for lower costs.”

Another project still underway is the project to improve the customer arrivals experience in the airport’s T2 terminal.

The airport was a good way through the demolition process and saw it as better to continue the disruptive work in the quieter passenger environment.

But with cash management a key issue, it is also looking at pausing some projects and is in discussions with contractors.

“We’ve worked hard at getting ourselves a plan for the future for this airport which is based on triggers,” he says.

“You look at forecast demand and then you work out what your capabilities are and your capacities and then you work out what are those trigger points for triggering a new investment.

“What this has effectively done is say those triggers are going to be moved because we’re not really sure when the passengers are going to start coming back or how they’re going to start coming back.

“Our working assumption is that it will be a domestic led return for our industry which we think is probably appropriate.

“We see the international borders probably coming in waves as governments get comfortable that there are the right controls in place between member states and that they can start to open up in a more controlled way.”

How this will affect Melbourne’s plans for a third runway remains to be seen.

Management took what Gandy describes as a courageous and “absolutely appropriate” decision to change the runway’s orientation to north-south rather east-west after new information about the impact on operational efficiency of prevailing winds.

Before COVID-19, the airport was already hitting capacity in peak periods and when the wind forces single runway operations but that may not now be the case for some time.

“I guess the runway is different from all the other projects. We think about the third runway as a 50-year asset so coronavirus is a short-term disruption in that context,” Gandy says.

The airport executive says the focus is now prioritising planning for the runway and working with the Federal government on approvals.

This is about making sure the Major Development Plan and Master Plan are done in an appropriate time frame while “recognising that we’re going to need a bit of time to stare into the pax reforecasting”.

One area in which Gandy sees the wider airport community playing a critical role is helping governments get future settings right in the wake of the pandemic.

A veteran of both Heathrow and Gatwick airports, he says that incidents such as SARS and terrorist events may not have been global but caused a global response such as tightened security.

He notes that governments feeling obliged to act can resort to blunt or draconian restrictions and worries there could be a similar response during the rebound to COVID-19.

He argues airports should push to shoulder some of the burden of defining the measures needed to get back up and running rather than wait for regulations to land on their doorstep.

“It’s coming from that mindset of don’t try to do it all on your own,” he says “There’s actually a bunch of people here who can think through this stuff and put in place some really good measures which provide people with assurances but don’t overburden the process.”

By Steve Creedy


About Steve Creedy

An award-winning journalist, Steve began covering aviation in the United States in the early nineties before returning to Australia later that decade and editing The Australian’s aviation section for 17 years. He is editor of Airline Ratings and has co-authored books on industry initiatives aimed at reducing greenhouse emissions.

Steve has joined the AAA to write interesting and informative editorial on the aviation industry.

 

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