Viva Macau

It was in that background that Viva Macau Airlines was started in 2005 by a group of local private investors. However, from the start the carrier took a different approach to other LCCs establishing themselves in the region, choosing to build its fleet around Boeing 767s in a two class configuration, and a conservative growth pattern. And rather than seeking to compete with other carriers, such as neighbouring Cathay Pacific, the airline made leisure travellers to and from Macau and the wider Pearl River Delta region its target market.

“The core reason for us being here is to be part of facilitating the growth of Macau as a destination and connecting it to the world,” CEO Dr Reginald Macdonald told Australian Aviation during an interview in late February.

Today, the airline operates a fleet of two Boeing 767-300ERs and one -200ER, with direct flights from Macau to Ho Chi Minh City and Hanoi in Vietnam, Jakarta in Indonesia, Tokyo and Sapporo in Japan and Sydney and Melbourne in Australia. “We are the only operator operating direct flights connecting Macau to those countries, which is quite nice as an airline to not have to deal with head to head competition,” said Macdonald.

However, the flip side of that exclusivity is that the airline spends a great deal of time and effort building awareness of Macau’s attractions, often in cooperation with the government tourism authority and the resort and casino operators. “We have to do a lot of marketing, not only for Viva Macau but Macau in general to raise awareness, but once we create the market we own it. It’s a unique situation for an airline,” said Macdonald.

Nevertheless, he says that Macau holds major appeal for a number of tourists. On incoming services, passengers can be cleared through the airport in five minutes, and arrive at their hotels five minutes later by virtue of the lack of congestion at the airport and the small size of the island.

He adds that this smooth process also has appeal to those travellers transiting to and from other destinations. “When you have the largest casino floor in the world and the largest shopping mall in Asia two minutes from the airport, it means that if you have to stop over for a couple of hours between flights, it’s fantastic and very, very easy.”

Targeting the leisure market across Southeast Asia and Australia has seen the carrier make major inroads into the MICE (meetings, incentives and corporate events) market, while it also gathers other travellers attracted by low fares, such as students and VFR (visiting friends and relatives) traffic.

Given its mix of traffic, Viva Macau operates a two class cabin on its 767s, with regular LCC style Economy Class and also Premium Class.

While not opulent as some other carriers’ business offerings, Macdonald says that Premium Class meets the needs of a number of its target market. “We’ve seen it appealing very strongly to casino guests at the medium high roller category, some of the MICE and corporate groups who will book out a block, and also the regular tourists who want a business class type of experience but don’t want to pay through the nose.”

Australia has been a key market for the airline since it started its first service to Sydney in 2007, while in December 2009 it added Melbourne to its network, initially operating twice weekly services. The airline then announced in January that this would increase to three times weekly from March 29 onwards, which will be operated year round. At the same time, it announced that it would suspend its Sydney services from March 28.

“We had to make a strategic call between Melbourne and Sydney,” said Macdonald. “In the case of Sydney, we will bring it back and operate it on a seasonal basis in the northern winter, but for the rest of the year we made the call to focus more of our resources on establishing Melbourne as our key, year round foothold in Australia.”

Macdonald credits this to the teamwork between Melbourne Airport and the Victorian government. “Ultimately the thing that really swung our decision was the approach of ‘Team Melbourne’ – the approach of the airport and the state government, which demonstrated an ability to understand what we really need and come up with a solution that enabled us to manage our cost structure and operate and expand services there in a way that Sydney was unable to.”

However, Sydney will not be completely lost to the Viva Macau network, with the airline planning to serve it on a seasonal basis over the Northern Winter schedule in October.

With only a few months of operating to the Victorian capital, Macdonald says that the reaction has been pleasing. “Since we commenced in December our flights have been full. It made commercial sense to put additional flights where there is good demand and support,” said Macdonald.

He added that the airline was seeing strong demand from Melbourne for both passengers spending time in Macau, as well as those transferring on to other destinations. In some cases, passengers self connect on other Viva Macau or Air Macau services to ports in Vietnam, Japan and China, while a large number take advantage of the nearby ferries to make their way to Hong Kong or southern China.

This includes a large number of students and leisure travellers which take advantage of the cheaper connections rather than more expensive direct services to these destinations.

By virtue of its geography, Dr Macdonald notes that Viva Macau sits centrally within range of some of the largest aviation markets in the world. “From the Pearl River Delta we have access to the highest outbound overseas travel market in the world now,” he said. “It’s nice to have people who come across in buses from Juhai, Zhongshan and up through the Pearl River Delta area to catch our flights to Australia and elsewhere.”

The large export base of that region also sees Viva carry a large amount of underbelly cargo on its services. “From our perspective [it is] another nice form of ancillary revenue and quite valuable,” said Macdonald.

While it has benefited from being near the world’s export powerhouse, as well as the fast growing Macau tourism sector, Viva Macau has faced its challenges over the years. “We faced the same challenges as global aviation faced when fuel was $150 a barrel in the middle of 2008, and we felt some of the impact of the global financial crisis, and certainly felt the impact of H1N1 paranoia,” said Macdonald.

Nevertheless, Macdonald says that the carrier is planning to resume its growth pattern this year, albeit with a measured approach. He said that the airline was looking forward to enjoying more favourable lease rates as it seeks to expand its fleet. “We’re in a situation now where happily the aircraft market is in our favour so we know we have access to the aircraft that we need to expand at terms that we know have compelling cost structures.”

As such, the carrier is planning to expand frequencies on a number of existing routes, and has also identified starting flights to India as a priority. While the airline would also like to expand its network into mainland China, its agreements with Air Macau will likely prevent this for some time, and as such it will remain focused on opening up new routes not currently served where there remains strong potential.

“In our case, the unserved cities have an average size of 10 million people, so that’s great news for us,” said Macdonald.

Overall, he remains excited about the future prospects for the carrier, as well as its home base. “You’ll see more and more of Viva Macau and more and more of Macau as we go forward.”