Premium Podcast: Launceston Airport CEO talks regional travel

But as the domestic aviation recovery stalls, how should regional airports adapt and grow?

In this special premium podcast, Jake Nelson asks Launceston Airport’s CEO, Shane O’Hare, about slots, carriers and expansion.

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Transcript (Generated by Otter.ai)

Jake Nelson (JN)

Hello and welcome to the Australian Aviation Podcast. I’m Jake Nelson. Now a lot of ink is regularly spilt about the big capital city airports such as Sydney, Melbourne, Brisbane, and Perth, but smaller regional airports are also vital links in our aviation network, connecting millions of people across Australia with the rest of the country.

Now Shane O’Hare is the CEO of Launceston Airport in Tasmania, which is currently in the middle of an $11 million infrastructure expansion project. He joins us today. Shane, welcome.

Shane O’Hare (SOH)

Hi, Jake. Nice to be with you.

JN

So Shane, first of all, let’s start by giving our listeners a bit of an idea about you. You’ve been involved in aviation since the late 70s and early 80s with a very accomplished CV. Which first sparked your interest in the sector?

SOH

I was probably growing up around Melbourne Airport, Jake and in the suburb of Keilor in Melbourne and spending all of my living weekends, as I remember, as a plane spotter. That really got me interested round the Keilor community. In those days, of course, a lot of aviation people living including pilots, cabin crew, etc. So with my friend, friend base and their parents who are pilots, etc., that really sparked my interest in aviation, and I have to say it’s never waned.

JN

So you’re the head now of Launceston airport. Give us a snapshot of the airport as it is today. For example, how many passengers does it handle?

SOH

It’s nearly 100 years old. It’s the first airport in Tasmania, definitely the most historically significant airport in Tasmania, and the birthplace of Australian National Airways. It’s little known that this was also the birthplace of Hudson Fish, the founder of Qantas, down here in Launceston. The current airport punches well above its weight for a regional airport and is the 11th largest airport in the country. Pre-COVID numbers around 1.4 million passengers and pleased to say that we’re getting back up to that to that level again on our forecasting for the next financial year.

JN

On the subject of the COVID numbers, how has the recovery been from COVID-19? I know that capital city airports have sort of taken a while to build back up to pre-COVID numbers.

SOH

So we’ve actually performed exceptionally well coming out of COVID. Interestingly, during COVID, we took advantage of some of the border closures throughout the country and worked with Virgin Australia, particularly in launching new routes and nonstop routes from Launceston to Perth, which was a historical first for the airport, in addition to Adelaide and to Coolangatta. In addition to that, we’re able to boost to states with no border closure. For example, in Queensland, we’re able to nearly triple our frequency between Brisbane and Launceston. A lot of that additional capacity has stuck, and Virgin have been fantastically supportive of continuing those because they did perform very well during COVID. So they’ve continued to be on COVID as well. So that gave us a really good starting point for the recovery of COVID. I think we’re in the top three best-performing airports from a recovery perspective coming out of COVID. The only other two airports are ahead of us, Gold Coast and Townsville. So it’s a good news story.

JN

What about being a regional airport do you think enabled such a strong recovery from COVID?

SOH

Well, I think there are a couple of factors here. There’s the uniqueness of Tasmania; it’s an island, and there aren’t many ways in and out of the island, except for by air or on the ship across the Bass Strait. So there’s a very, very heavy reliance for all passengers inbound and outbound for getting in and out. And that’s obviously recognized very heavily by the state and the people of the state here as well. In addition to that, Tasmania goes from strength to strength as an economy.

If you look at the CommSec data, Tasmania is the best-performing economy in the country and has been for the last at least 12 months. Tourism growth has been phenomenal because of the propensity for travellers to stay in Australia both during and coming out of COVID. Tourism spending has gone to a record $3.2 billion last year, very well above the forecast, which indicates we’re getting a very high volume of tourists staying here longer, but also high-quality spend of tourism as well.

So there are some factors, and internationally, although the international tourism growth is certainly back to about 65 per cent, We’re starting to see this Tasmania factor come through where globally Tasmania is becoming a place to visit on the global wish list of a lot of travellers so all of those things combined to build that healthy growth for us. The north of Tasmania is the economic powerhouse of the state.

And Hobart is certainly obviously the capital city and seed of government. A lot of the economic development happens in the north around agriculture, the farming. Launceston as a city is traditionally an entrepreneurial town. It’s recently been named the city of gastronomy as well. And there’s a lot of development, particularly in the energy hydrogen and other industries going on up the in the northern Bell Bay region, etc.

JN

How would you say sort of narrowing the scope to Tasmania itself? How would you say the loan system compares to Hobart airport?

SOH

Well, if you look at the dynamics of the state, the population base is roughly 50 per cent, north to south. So Hobart has their own 250,000 population, north of the state has about 250,000 as well with Launceston Around 120,000 people. So it’s a relatively smaller city than Hobart, of course, but the coverage for Launceston covers half the state. The other significant thing about Launceston Airport is its geographical location. It was the first airport in Tasmania for a reason. It’s geographically centred right in the middle of the state. And for many, many decades, up until probably the era of deregulation was actually the biggest airport in the state as well.

So the other key points with the development of tourism in the early days of tourism Tasmania and the development of the tourism industry here. There’s a very, very heavy emphasis on fly-drive holidays, so most of the tourists and the packaging actually came through into Launceston itself. So if you draw a map of Tasmania, you’ll see that most of the major tourism draw cards and infrastructure within two to three hours maximum of Launceston, and that’s an advantage over, I guess, some of the distance required to travel from Hobart, so Cradle Mountain is a good example.

There are some of the best golf courses in the world just an hour from here, Barnboogle, that affiliation a day of fires are all within a very close distance here. And Launceston itself is really punching above its weight so far is a very, very sophisticated small regional city within Australia. As I mentioned before, the recent granting in Launceston of the UNESCO City of Gastronomy is a significant move forward and recognizes just the richness of the area just from the food Farm to plate and agricultural sector here.

JN

Alright, well, we’re going to take a quick break, but when we get back, we’re going to talk a bit more with Shane about Launceston Airport and, in particular, this $11 million infrastructure overhaul. All right, welcome back to the Australian aviation podcast.

BREAK

We’re with Shane O’Hare. He is the CEO of Launceston Airport. So Launceston is in the middle of an $11 million overhaul to its infrastructure, which began, I believe, last year. Tell us a bit about that overhaul and where that $11 million dollars is going.

SOH

So it is probably one of the largest increases in our investment from a capital infrastructure perspective for some time. The airport has great bones. As I said, it’s evolved from being the first airport in Launceston, the birthplace of Australian National Airways and Holloman Airways, some decades ago. And quite interestingly, the terminal was originally designed and supposed to be allocated to be Australia’s capital city terminal in Canberra.

However, for some political reasons, it was decided to build it here. So the airport infrastructure, from the outset, has always been very strong. It has excellent terminal facilities, but we’re working towards a fairly heavy growth path over the next 10 years or so. And that could see us up to about 2.5 million passengers a year by about 2035 to 40. So we’re planning for the future. Now. The first part of that is a new check-in ball and facility.

And that’s going to include state-of-the-art security equipment and also the latest technology from a check-in perspective on what we call jute and house technology. And that construction is underway. Now. In fact, the first phase of that will open in August, second phase will open in December with a new security screening. So that will increase the terminal size by about 30 per cent. That will then flow through to a complete refurbishment and upgrade of our retail area, providing more retail facilities for our customers. Qantas lounges relocated on the air side of the terminal and we’ll be working through a complete revamp of our departure areas and gates as well.

The third phase of that will then be the arrivals area which again was going to increase the terminal footprint quite considerably, and that will open up and provide more arrival amenities for our customers as well, from baggage retail and other ancillary rent a car, which is a very important part of what we do here, and other facilities for our passengers. In addition to that, we have our normal capital upgrades program on pavement, runway overlays, and other upgrades around car parking, etc.

In addition to that, I think a lot of airports have learned through COVID the importance of non-aviation activity and revenue opportunities for the airports. We were blessed with a lot of land around our airport here, at least 40 hectares on the eastern precinct of our airport. We also have a railway line that runs around the perimeter of our airport. This is a natural intermodal hub region. It connects very closely to Launceston, which is just 10 minutes away. Plus also the major highways highway one from north to south as well as Hobart and up to Burnie, Devonport. Plus, the Rail Link Plus the air link was working strategically towards building Launceston as a major intermodal hub for the state but also the most significant intermodal hub in the state as well.

JN

So how’s the progress been on the upgrades? Has it been sort of smooth sailing so far?

SOH

Yes, it has; we took full advantage of some of the downtime, if you like, through COVID to make sure that our planning was sound up to scratch to develop the capital program. We’ve been able to swing into action very soon after COVID When we’re able to get back to normal resourcing for structure and structural development with our building, industry, and so on and so forth.

We’ve also worked closely with governments on some assistance on the development of our chicken haul here. We’ve also worked with them on a new freight facility for Virgin Australia. And I have to say it’s been pretty smooth sailing from the outset; all of our programs so far are on track and on budget, which is very pleasing. Given that, we know that there are quite a lot of challenges in the building industry right now.

JN

So what was the impetus for the infrastructure upgrade? Why now?

SOH

we believe that given the strength of the Tasmanian economy, given the importance of Tasmania and airports, as recognized by the government, that’s airport infrastructure is incredibly important for the state. Given the ambition of our shareholders, Launceston Airport is a very good investment. But it’s also very important that we support the community here and the economy here by continuing to grow and continuing to grow comfortably ahead of the like of pace of the rate of growth of the state right now. So we think now is the time, and definitely it’s a good time to be developing our airport infrastructure here.

JN

So what are you hoping for when all the dust settles and the upgrades are completed? What are you hoping to see? What benefits is Launceston Airport hoping to gain from the redevelopment? You mentioned this notion of the intermodal hub. Could that maybe turn Launceston once again into Tasmania’s main airport?

SOH

Well, I think the north of the state is growing exceptionally well; as I mentioned before, the business end of the state. Launceston is being recognized as a business centre, which is facilitating quite a lot of that growth. As a tourism hub. I think traditionally, the physical location of Launceston lends itself to becoming a vital centre for tourism here in the stages that continue to forge ahead. So we see nothing but an upside here on that potential, for Launceston to continue to grow its market share, if you like the total Tasmanian air travel pie.

JN

All right, we’re gonna take another quick break. But when we come back, we’re going to be talking with Shane a little bit more about Launceston as a regional airport and some of the unique aspects and challenges that it faces.

BREAK

Alright, welcome back. You’re listening to the Australian aviation podcast where was Shane. Oh, here he is, the CEO of Launceston Airport. Now Shane, you’ve worked at a big capital city airport in Melbourne, and you’re now the head of Launceston airport. What are some of the unique aspects and challenges of a regional airport as opposed to one in the capital?

SOH

So think the regional obviously Melbourne Airport second biggest airport in Australia. I do sit on the executive committee of that airport. So we do see obviously some key differences between the airports. There is a scale difference, of course, so Melbourne Airport, on a normal day, will welcome around anything from 100 to 120,000 passengers, which is something that we would say in a month. Of course, the dynamics of the airport are different in the sense that there is a very strong international component of Melbourne Airport. It is a capital city airport it’s serving a population base of somewhere around about four to 5 million people. And so, the daily operational needs are quite different. Pre-COVID Melbourne Airport has around 39 airlines flying there, and of course, the rate of return of those airlines is pretty strong. Now back to that kind of number.

So, of course, international operations provide a different type of challenge. And for Launceston, we’re very, very comfortable in our skin as a very strong regional airport. We’re a domestic airport. We don’t forsee international expansion, certainly in the foreseeable future. So we’re very, very focused on making sure that we’re providing that key link for Tasmanians, but also international and domestic visitors and business travellers into the state with our key airline partners, which currently, the Qantas group, of course, Virgin so the dynamics are quite different. But all the other elements have the same operational safety resilience, day to day operational challenges. The developments of both your aviation revenue and also non-aviation revenue, and also taking full advantage of the geographical region arranged to develop the footprint of the airport.

JN

On the subject of airline partners, regional airports have come into focus recently, especially with the advent of Bonza, which specializes in flying point-to-point between these regional destinations. It’s brought a lot of traffic to airports, such as, for example, its main base on the Sunshine Coast. Now have you been in talks with Bonza about adding Launceston as a destination?

SOH

So we were in continual contact with all airlines that continue to operate here. Of course, we have very, very strong partnerships with Qantas Group and Virgin Group. But of course, as an airport, our job is to facilitate the growth of aviation, and we’ve had some fantastic discussions with both Rex and Bonza on future potential growth. Launceston is a very, very attractive destination for those airlines as they grow. We know that Rex is very focused on capital city growth with jet operations at the moment. However, we do know that they have an ambition to fly to Launceston as do Bonza. So we are continuing those discussions with those airlines.

JN

Where do you see Launceston airport being in about 10 years’ time?

SOH

So we see it as, obviously, our vision is to be the best Regional Airport in Australia. We’re very happy to be awarded the best airport in the country last year by Australian Aviation Magazine. But we see Launceston becoming a very well-known airport with a very high level of customer advocacy. In the north of Tasmania, we see it as becoming, again, a very, very old, already preeminent airport, obviously, in the state. It’s the second-biggest airport in the state.

But we see a very, very strong market share development here in Launceston airport in the next 10 years with a very well-developed intermodal facility which will include very strong development in freight facilities. Rail links, road links, the development of green energy here with an ambition for hydrogen production at the airport, with hotel retail and office facilities and a considerably expanded terminal footprint.

JN

Can you give us a bit more of an idea about those green energy plans?

SOH

So we’ve signed an MoU just recently with a company called countrywide hydrogen, which has the ambition to develop hydrogen production facilities for the conversion of diesel to hydrogen for trucks and trains with three locations in Tasmania, Launceston airport being the largest location that would necessitate solar power as one of the inputs to hydrogen production. Though it would also revolutionize our energy requirements here as well for the production of green energy, which could lead to complete hydrogen conversion for even airport on ground vehicles and other power conversions in the airport as well.

Having said that, Tasmania operates mainly on hydropower. So we already have a very strong green footprint here. And obviously, we plan to continue to make sure that we’re at the forefront there on ESG.

JN

What would you say are some of the major issues that face Australia’s regional airports?

SOH

I think, as Australia is a very heavily populated country on the east coast, the cities are growing faster and faster. Regional airports are in different categories. There’s a very small regional airport. There are larger regional airports such as ourselves and airports like Carins, Sunshine Coast, Townsville, etc. So I think the key thing is to make sure that infrastructure development keeps up with growth. And I think that there’s also the need for the recognition for airports or the regional airports to be recognized that their importance recognized in the overall economic growth side of some of these regional cities, some regional cities as population decline, etc.

So Often, there’s a challenge to keep air services going to these to these places. Airfares can be quite high for some regional airports. Pleased to say it’s very competitive here at Launceston Airport. But I think that’s a continuing challenge as well for regional communities to be able to afford airfares into and out of the major cities, and that’s a challenge to the airports to work with the airlines and the local and state governments to ensure that there’s an equalization of airfares on regional airport routes as well.

JN

Now there’s been a lot of talks as well in the industry or recently around takeoff slots; you know, Sydney Airport slots are a particular bugbear for many airlines. How’s the slot system at Launceston if you had any issues there?

SOH

Launceston doesn’t have any slot issues. But of course, most of the network development for the airlines is because of the slot situation in Sydney. And also there are some pressure points in Melbourne as well, and a lot of the planning of the network needs to emanate from those key cities. And so, of course, that can have some impact on ideal scheduling for Launceston and some of the regional airports. But in itself, we do have some peak-hour challenges here in Launceston. We have an early morning peak; we have a late afternoon peak here.

And that can create some challenges for capacity. And some of that is driven by customer demand for a certain frequency of flight, so the morning as part of flights out of here, early evening departure flights out of here. So it’s really that balancing act between the capacity requirements of Sydney, Melbourne and the ability to operate to a reasonable schedule here in Launceston.

JN

Do you believe that there are any reforms needed to the slot system?

SOH

I think that’s a matter of Sydney Airport and the government’s work through. I think slots are always going to be challenged in the peak times for airports. And I think that will be a continuing issue. So I think the slot debates and evolving, evolving issues. And my sense is that the airports are managing this as best they can to facilitate the requirements of both international airlines in the case of airports and domestic airline peak hours as they standard as best they can.

JN

So we touched a little bit earlier on the vital role that regional airports play for their communities. How important would you say that regional airports like Launceston are to Australia’s aviation industry?

SOH

Look, I think they’re critically important. I think if you look at the situation in Tasmania, the driving distance from Hobart to, let’s say, Burnie or Devonport is somewhere around four to five hours. It’s very important that air travel is available within reasonable distances from regional cities around Australia. So enable obviously people to travel in and out whether that’s to visit family and friends, whether it’s tourism International, inbound, people travelling to connect to international flights, for emergency reasons. Airports are critical infrastructure in this country. And so the emergence and maintenance of regional airports are incredibly important for the Townsend centres and for economic survival, quite frankly.

JN

Right. Well, that’s about all the time that we have on the Australian aviation podcast for today. Thank you very much, Shane O’Hare, for your time and your fascinating insights into the operation of Launceston Airport and the importance of regional airports in Australia.

Just a quick plug before we go. Don’t forget that the Australian aviation awards, as Shane mentioned before, again this year, 2023, will be taking place on August 31 at the start of Sydney. You do not want to miss it. It will be an Australian aviation night of nights.

Until next time, though, I am Jake Nelson. Thank you so much for tuning into the Australian Aviation Podcast, and we will see you next time