Joining the dots between Sydney’s rich retail harvest and international pax numbers
Sydney’s Kingsford Smith Airport in Australia revealed a strong set of financial figures for FY2017 recently where retail outperformed passenger increases by a considerable margin. CiR have reviewed the numbers to show where that growth is coming from.
March 2018 | by Garry Stasiulevicuis, President
Retail growth was up by +12.7% against a total passenger rise of +3.6% last year, while total revenue at the airport was up by +8.7%. This is in sharp contrast to a number of European airport hubs such as Groupe ADP (the operator of Paris Charles de Gaulle and Paris Orly), Amsterdam Airport Schiphol, and London Heathrow where total revenue did not keep pace with traffic.
Through Business Lounge our analysts have drilled into Sydney’s historical figures in some detail to determine its particular strength. Looking at compound annual growth rates in the five years from 2013-2017, retail revenue has consistently outperformed pax growth: +8.4% versus +3.4%. In fact, retail grew more than twice as fast as passengers over that period.
A further breakdown of the passenger traffic into domestic and international offers some further insight: for both FY2017 the CAGR 2013-2017 international traffic outstripped total traffic growth significantly at +7.2% and +5.8% respectively, versus +3.6% and +3.4%.
International passengers are a key driver of duty free and travel retail spending at hub airports, so it is no surprise that they have been pivotal in pushing up spending at Sydney. However, Sydney has also had the benefit of a strong – and growing – Asian influence in its passenger mix that airports in Europe have not had to the same extent.
Among inbound travellers, the five fastest growing markets over the past five years have all been Asian: Philippines +24%, Vietnam +20%, China +16%, Indonesia +7% and Japan +6%. Our data on spending by nationality puts the global average at $251. But nations such as China and Japan spend significantly more at $528 and $353. With Sydney having a continued significant focus on Chinese routes in particular we're confident that this contributed to raising spending levels at the airport.
In absolute passenger numbers, Chinese traffic is only outranked by Australia itself while India is now in third place ahead of the US – and also a fast-growing market for the future. This is a major opportunity as there is only one route to India at the moment – to Delhi – compared to 20 routes to Greater China in the first half of 2018. In short, the future continues to look prosperous for Sydney.