Melbourne will become the biggest city in Australia by 2030, and with this comes added constraints on an already busy airport.
Melbourne will also subsequently overtake fierce rival Sydney. The city that Melbournians will tell you to steer well clear of.
A spotlight has been shone on infrastructure, especially in the transportation sector, through added growth.
At the 151st IATA Slot Conference, held at the Melbourne Exhibition Center in the middle of November 2022, delegates from the aviation industry came from far and wide to discuss slots, future growth plans, technology and recovery from the pandemic, with Melbourne Airport being the host airport, it allowed them the opportunity to highlight growth plans in their city.
On the sidelines of the 151st IATA Slot Conference, I had the opportunity to sit down with Jim Parashos, the Chief of Aviation at Melbourne Airport, to discuss the COVID recovery, new airlines, future outlook and how necessary upcoming infrastructure will be for the airport, communities and travellers.
Jim has had a fruitful career that has always seen aviation be at the forefront, his love for aviation always shining through.
At the end of 2021, he returned home to Melbourne following multiple decades away to take up the General Manager of International Recovery position before transitioning in July of 2022 to the Chief of Aviation. Before the roles at Melbourne Airport, he spent close to 5 years at Brisbane Airport and almost eight years at Northern Territory Airports, occupying the Chief Airport Officer role towards the end of his tenure, among other positions.
Visiting Melbourne Airport since the pandemic has presented its challenges, with construction being front and centre, construction that is part of a master plan decades in the making, it’s no secret that such a plan will be crucial to the long-term future of the airport and to help cope with the expected growth that the city will face in the decades to come. However, while an airport with just two runways as of 2022, in the master plans, there were always plans for more. Jim tells me
The third runway is no surprise to anyone because it’s been in the master plan for the last 40 years, and ultimately, the airport is set up to have four runways. The new one will be a north-south parallel runway, similar to the current main runway
Jim Parashos – Chief of Aviation at Melbourne Airport
However, it’s not just the four runways that give the airport and city its charm. Melbourne is the home of multiculturalism, with people from all walks of life located in the city.
Melbourne is preparing for families of those calling Melbourne home to visit friends and then for onward travel to new cities. With the city centre being home to quirky cafes, the city prides itself on its bustling nightlife and cosy restaurants emerging from a pandemic like any other.
These are great ways to pull people into visiting an airport, but making the journey from the airport to the central business district, or CBD, easy is another task. At the moment, Uber, Taxis and Skybus are all alternatives, but one thing missing is the Airport Rail Link, a fundamental piece of transportation infrastructure that Sydney and other major cities all have.
After much delay, the Melbourne Airport Rail or its branded SRL Airport, has seen work begin, with the expectation that completion and opening will come in 2029.
The 27km of the line will see Sunshine become a mega transport hub and link up with the proposed Suburban Rail Loop, faster rail through to Geelong, Bendigo and Ballarat in the future, as well as the upcoming Metro Tunnel. All part of Melbourne’s big build.
Reshaping how Melbournians, visitors and more use transport in the city. Jim shared insight on how this will benefit those coming to and from the airport.
I think the airport rail will ultimately serve two purposes, well, perhaps three market segments. First, domestic and international tourists can get the train to the city, particularly if they’re staying in the city. Second, I think it will serve Victorians who prefer public transport over other modes to get to the airport. The third one is for workers connected from the city to the airport. So I think it’s a project that needs to happen, and it will benefit many of the market segments.
Jim Parashos – Chief of Aviation at Melbourne Airport
For Melbourne Airport, lots of land and the ability to have four runways can all be beautiful things. The airport prides itself on several other critical components, including a 60-minute minimum connection time. The airport is open 24/7, which means it operates without a curfew and an airport that is wholly connected. Seeing all terminals located in the same space and walkable is essential to them, as is cargo. Melbourne Airport sees heaps of food perishables, meat exports and more pass through daily, and as we all saw during the pandemic, when flights were disrupted, and people weren’t boarding flights, it was freight that became of heightened importance.
The giant elephant in the room for Melbourne and Australia has been recovery from the global pandemic. COVID-19 hit like a train of bricks in March 2020 and caused the immediate border closure. However, what it bought to Australia was uniqueness in that states also closed themselves off to other states, effectively removing Australia as one. Melbourne, after many years, became the most locked-down city in the world, which meant for air travel, and this plummeted.
As of November 2022, Melbourne has seen an 85% recovery in domestic markets. This was once as high as 90%. However, airlines have adjusted schedules, and there have been flight disruptions.
October/November also saw Australia host the 20/20 World Cup of Cricket. Many questioned if there was any rise in capacity at Melbourne Airport, with the city hosting the final at the MCG. Jim explained
I think we’ve seen … what we see overall is less capacity, which means because the demand is there, it’s generally higher airfares. But all in all, I think it’s about the same. Although some people, and I’m sure some Pakistani supporters came from Sydney, that happens week in, week out in Melbourne, whether it’s a footy (Australian Rules Football) or the tennis or anything like that or the Grand Prix.
Jim Parashos – Chief of Aviation at Melbourne Airport
International is sitting at 65% over pre-pandemic. Still, Melbourne Airport expects this to reach 70% by the end of the calendar year, boosted by the increase in services of many airlines, incredibly high load factors and the return of airlines that ceased services to the city during the pandemic.
Jim took the opportunity to highlight just some of the progress internationally, and since our discussion, Singapore Airlines announced that from 2023 they’d bring the Airbus A380 to Melbourne. He said:
Historically, 49% of international travel through the airport was for holidays. Now the number one reason for travel is visiting friends and relatives. So what we’ve also seen off the back of that is Air India’s increased the daily on Delhi and Qantas for the first time, is operating non-stop Melbourne to Delhi flights with an A330. So that’s been a real positive and reflects the importance of the multicultural society. We’ve also had a few new airlines start, so Bamboo started from Ho Chi Minh. AirAsia X from Kuala Lumpur back to Melbourne, switching from Avalon. We’ve got Qatar that’s gone double daily to Melbourne. Qantas to Delhi and the launch of Qantas to Dallas. United now has 40% more seats in Melbourne than pre-Covid.
Jim Parashos – Chief of Aviation at Melbourne Airport
United’s presence continues to grow and has been strengthened through codesharing agreements with Virgin Australia. While headquartered up north in Brisbane, Virgin Australia has a higher seat capacity out of Melbourne, meaning for passengers coming in on United flights, either from Los Angeles or San Francisco, the airline can send passengers onwards through the Virgin Australia network, something typically seen in Sydney. Jim said:
We’d rather suck traffic through here than lose people through other ports. And the other thing is, many of our other airline customers have also returned to pre-Covid level, so pretty strong return.
Jim Parashos – Chief of Aviation at Melbourne Airport
It isn’t just Virgin Australia playing an essential role in recovery at Melbourne Airport, in any case. It’s Rex as well. Regional Express, commonly referred to as Rex, has always had a presence at the airport, uniquely shown through its Saab 340 fleet, which has over 50 in its operations, with some being parked.
During the pandemic, Rex uniquely grew, unlike most carriers acquiring for the first time engine-powered aircraft, the Boeing 737-800, delivered from 2020 through now.
Rex prides itself on their on-time performance. Something that has won itself over. They fly on segments to Canberra, Sydney and even the Gold Coast, giving customers another option over the mainstays like your Qantas.
The carrier has experienced incredible growth, powered through these 737 additions, but the upcoming Bonza will look to shake up the market.
Hoping to launch this year, Bonza will offer attractive fares to destinations around the east coast of Australia and inwards, aiming to serve underserved markets. Melbourne will be, in addition, to the Sunshine Coast a base. I asked Michael Cullen, the SVP & Head of Airline Business Development at Melbourne Airport, just how this came about.
I think a lot of what Bonza’s network in Melbourne is about the ability to bring people from the regions into Melbourne. So for Melbourne Airport, the things we had to get right was providing them with the infrastructure in an efficient way and giving them a sense in terms of what’s the near-term kind of ability to be able to accommodate that. So that was very much what Bonza looked at. I think the appeal of Melbourne to them was, as I said, the ability to bring people in for our weekend event, calendars, the sporting events, etcetera.
Michael Cullen, SVP & Head of Airline Business Development at Melbourne Airport
Michael continued by discussing how the airport is in the perfect position to accommodate Bonza, and the reality is that there may not be a better time for them to join the fray.
So they’re the couple of things that we focused on and worked on with Bonza, and we’re in a very fortunate situation that terminal four is configured in a way that it’s a common-use facility. It is a former Tiger area. So we have some automation capabilities that can accommodate them. We’ve got a centralized security screening area. So for them, many of the things they would need in an airport were already there and ready to go. I mean, that’s the … I mean, they’re bringing in a new aircraft type that we haven’t seen yet domestically but will soon be common across Australia with the max.
Michael Cullen, SVP & Head of Airline Business Development at Melbourne Airport
Bonza will be the first Australian airline to fly the 737 MAX, with Virgin Australia expected to follow shortly after. Thanks to crucial business partner 777 partners, the upcoming Australian airline acquired the 737 MAX aircraft during the pandemic at a reasonable price, with each plane being new. Attractive delivery slots paired with this made it an opportunity too good to miss out on.
For Melbourne Airport, it’ll be their first taste domestically with the new aircraft that will present a changing of the guard in terms of domestic aircraft utilized. Qantas will soon look to say goodbye to its A330s and 737s, two fundamental parts of its domestic operations, in favour of next-generation aircraft.
As Michael touched on, Bonza will be able to utilize space left behind by Tigerair, an airline that commenced operations in 2007 before ceasing them in 2020. It came as Virgin Australia, owner of Tigerair, entered administration.
It was confirmed that the Tigerair brand would not return after new ownership. Following this and, of course, with the pandemic, Terminal four at Melbourne Airport had space available, space that will soon see Bonza aircraft, subject to regulatory approval.
Melbourne Airport is experiencing fantastic domestic and international demand levels, with passengers flocking back to aircraft and load factors being incredibly high.
However, even with this, a market that is so important to Melbourne lags, that market being China. Once before the pandemic, multiple daily flights would depart, full of passengers.
Now, airlines operate networks only a fraction of the size with load factors nowhere near the market they’d want. All spurred on by consistent harsh restrictions in China as the location continues to try and sustain a zero covid policy.
So while Melbourne hurts from a market seemingly unable to recover, it would be naive to say the problem is centred on just Melbourne, all Australian airports hurt from this specific market, and it’s generally a global problem. When commenting on the market recovery and its effects, Jim said:
I think pre-Covid, the Chinese market accounted for about 11 or 12% of our passenger movements. But half of those were visiting friends and relatives. So our view is it’s a case of when, not if, the market comes back and we think sometime by mid-2023 is probably when things will start to relax. The winter will be over in the northern hemisphere. So we’re quietly confident that the market will come back. The speed of recovery, the shape of recovery, and the mix will be a little unknown, but we’re sure it will happen. The demand for VFR travel has proven itself in the last 12 months, and the China market will not be any different.
Jim Parashos – Chief of Aviation at Melbourne Airport
Melbourne remains optimistic as ever, however, also understanding that no matter how much you can predict, it doesn’t mean the results will be accurate, the Chinese market is unpredictable and determine when restrictions will relax like finding a needle in a haystack, it could be next week, or it could be into 2024. Generally speaking, the year mentioned, 2024 is when Jim expects the market to be fully back to normal, although 2023 is also entirely possible.
Jim also directly pointed to other markets that weren’t expected to recover as quickly but did as excellent examples. When people can fly, they’ll fly. For a market that has been so cornered off, for now, running on three years, Melbourne expects to be scrambling once the borders drop, especially with a sizeable Chinese community in the city.
While Melbourne Airport has seen its third runway, airport rail link, and such take the headlines, they’re also quietly working on some significant upgrades that you’ll only notice if passing through such a terminal.
In terms of the airport, we’re doing a lot of upgrades that were paused during Covid when there was zero revenue coming into the business. So that includes all the retail areas in Terminal One, where Qantas operates. We’re doing a major security upgrade project to the baggage and the baggage system for international. So the next three years will be quite busy with lots of boarding and work. The third runway, I’ve already mentioned. The government airport rail link is very well publicized. And, of course, we’re also spending a fair bit of money on upgrading the roads.
Jim Parashos – Chief of Aviation at Melbourne Airport
Travellers passing through Melbourne Airport has consistently battled with roadworks. Now the airport is looking to remove bottlenecks. Ultimately, these upgrades can cause an inconvenience to those passing through. Still, once completed, the goal will be a more seamless travel experience that’ll cope with all the added passenger, freight and various other types of traffic that’ll utilize the roads. Alongside these upgrades,
Melbourne Airport has also welcomed sizeable facelifts in recent years to Terminal two, the international terminal, both before and after screening; check-ins see more automated bag drops, while duty-free past security has been transformed, now an area oozing luxury.
Security processing times have also drastically improved thanks to new technology. On recent travels, I cleared both in under 3 minutes.
Melbourne Airport will be the biggest city in Australia by 2030. The airport has exciting projects underway sourced from its master plan, including a third runway, updates to the interior terminal, a rail project and much more. As people continue to return to travel, the industry moves along, and Melbourne can be excited about the future.
It’s a city that never sleeps, alongside an airport that benefits from a 24/7 operation without a curfew, quick connection times and room to develop roads, terminals and land around for their business park or airlines. There’s a lot on the horizon for an airport that has seen its city called the most liveable multiple years before the pandemic.
