MIA CEO cautiously optimistic for recovery in second half of 2009
Malta International Airport's CEO is cautiously optimistic about the prospects for the second half of next year saying there has been a considerable interest in Malta and that though we will not be immune to the negative effects of a worldwide crisis...
Malta International Airport's CEO is cautiously optimistic about the prospects for the second half of next year saying there has been a considerable interest in Malta and that though we will not be immune to the negative effects of a worldwide crisis and passenger figures are still expected to dwindle, business lost through decreased passenger movements can be made up through non-aviation sources such as retailing.
MIA CEO Julian Jaeger told The Times Business in an interview that although 2009 will be quite a difficult year - especially in the first quarter - the prospects for the second half of the year appear to be better. He said: "The global economic downturn will definitely affect MIA and 2009 will be compared with 2008 and 2007 which were record years. In 2008 we will have roughly 3.1 million passengers.
Passenger movements at MIA in October decreased by 6.1 per cent and aircraft movements decreased by 8.8 per cent compared to the same month last year. Mr Jaeger said MIA was in contact with a number of new carriers from Eastern Europe, the UK and other places to encourage them to fly to Malta "and we received so far more interest than expected which makes us more cautiously optimistic for the second half of the year".
He said that although at this point in time it was very difficult to forecast the traffic results for next year MIA will in January come out with its forecast and in February "we should have a clear picture of the airlines' schedules for the summer".
"One thing which will increase capacity is Air Malta's decision to base a 12th aircraft here in summer. This will certainly increase capacity in Germany, France, Russia and other markets," he said.
Mr Jaeger said he had absolutely no indications that some operations by low cost carriers could be depleted. "My guess is that the low cost carriers would have more or less the same market share next year as they had this year."
He believes the government's incentive scheme for attracting new carriers to Malta was successful adding that "such a scheme works in conjunction with MIA's incentive scheme. There are quite a few of these low cost carriers operating from Malta so these incentive schemes have had positive results. We should see more of these carriers responding to these incentives."
MIA's CEO pointed out, however, that the most important thing for the company is new capacity and new routes. "If Ryanair or Easyjet increase their capacity here it is the same for us as a new carrier coming over. The government has tendered for new routes from three UK regional airports Newcastle, Leeds and Bristol and we hope there will be new routes by next summer."
Asked how the slowdown of UK traffic had affected MIA - last October witnessed a decrease of 17.8 per cent - Mr Jaeger pointed out that the UK has been hit even harder than mainland Europe by the economic downturn.
"We will feel the slowdown of the UK which after all started earlier than other European countries. The UK is still our most important market but we will see increased capacity from Germany and France next summer. The UK market is a particular one but as we have seen it can be replaced by other markets. This year all other main markets grew except for the UK," he said.
He does not believe decreased passenger movements will affect MIA's revenue from concessionaires in 2009 and the demand for new retail space from potential tenants, pointing out that the company has just increased the space for retail quite significantly and negotiated new contracts.
"The landside has been increased from 280 square metres to 680 square metres. The area after security control has been increased from 1,300 square metres to 2,060 square metres and all that space has been taken up. We did not get the feeling that there was less demand for such space.
"On the other hand there is obviously a connection between the number of passengers at the airport and the sales in the shops but we have managed to negotiate a number of new contracts which assure us of a very high minimum guarantee in revenue so we feel we can still increase our revenue from the retail outlets and the non-aviation field quite significantly.
"The contract we signed with Nuance - one of the world's leading operators of airport retailing and operators of the 700-square-metre walk-through duty free shop which should open at MIA in March - a few months ago guarantees us €25.5 million by the end of 2014 and we have a number of contracts like that. Obviously the figures are not always that impressive but the amount of guaranteed revenue to the airport is relatively high so we are quite optimistic."
Mr Jaeger explained that there are a number of new projects taking place at MIA. "We are at an advanced stage of a tendering process for a gaming hall which should give us some additional revenue, and we received a lot of interest for that. We have upgraded our executive lounge which should increase our revenue from that field by about 30 per cent. Furthermore, a food court consisting of a number of restaurants and food outlets with an international flavor will open shortly.
"We are in discussions with operators from the general aviation field - as we think there is a potential market there - and we have taken over the car park which should be generating more income and much better quality. From all those areas we think we can increase our revenue. The ultimate aim is to become less dependent on the amount of passengers passing through the airport," he said.
Asked whether MIA will be able to maintain its dividend levels despite lower passenger movements, he replied, categorically: "At this point in time I have no indication that the board of directors will change its policy regarding dividends".
MIA CEO Julian Jaeger told The Times Business in an interview that although 2009 will be quite a difficult year - especially in the first quarter - the prospects for the second half of the year appear to be better. He said: "The global economic downturn will definitely affect MIA and 2009 will be compared with 2008 and 2007 which were record years. In 2008 we will have roughly 3.1 million passengers.
Passenger movements at MIA in October decreased by 6.1 per cent and aircraft movements decreased by 8.8 per cent compared to the same month last year. Mr Jaeger said MIA was in contact with a number of new carriers from Eastern Europe, the UK and other places to encourage them to fly to Malta "and we received so far more interest than expected which makes us more cautiously optimistic for the second half of the year".
He said that although at this point in time it was very difficult to forecast the traffic results for next year MIA will in January come out with its forecast and in February "we should have a clear picture of the airlines' schedules for the summer".
"One thing which will increase capacity is Air Malta's decision to base a 12th aircraft here in summer. This will certainly increase capacity in Germany, France, Russia and other markets," he said.
Mr Jaeger said he had absolutely no indications that some operations by low cost carriers could be depleted. "My guess is that the low cost carriers would have more or less the same market share next year as they had this year."
He believes the government's incentive scheme for attracting new carriers to Malta was successful adding that "such a scheme works in conjunction with MIA's incentive scheme. There are quite a few of these low cost carriers operating from Malta so these incentive schemes have had positive results. We should see more of these carriers responding to these incentives."
MIA's CEO pointed out, however, that the most important thing for the company is new capacity and new routes. "If Ryanair or Easyjet increase their capacity here it is the same for us as a new carrier coming over. The government has tendered for new routes from three UK regional airports Newcastle, Leeds and Bristol and we hope there will be new routes by next summer."
Asked how the slowdown of UK traffic had affected MIA - last October witnessed a decrease of 17.8 per cent - Mr Jaeger pointed out that the UK has been hit even harder than mainland Europe by the economic downturn.
"We will feel the slowdown of the UK which after all started earlier than other European countries. The UK is still our most important market but we will see increased capacity from Germany and France next summer. The UK market is a particular one but as we have seen it can be replaced by other markets. This year all other main markets grew except for the UK," he said.
He does not believe decreased passenger movements will affect MIA's revenue from concessionaires in 2009 and the demand for new retail space from potential tenants, pointing out that the company has just increased the space for retail quite significantly and negotiated new contracts.
"The landside has been increased from 280 square metres to 680 square metres. The area after security control has been increased from 1,300 square metres to 2,060 square metres and all that space has been taken up. We did not get the feeling that there was less demand for such space.
"On the other hand there is obviously a connection between the number of passengers at the airport and the sales in the shops but we have managed to negotiate a number of new contracts which assure us of a very high minimum guarantee in revenue so we feel we can still increase our revenue from the retail outlets and the non-aviation field quite significantly.
"The contract we signed with Nuance - one of the world's leading operators of airport retailing and operators of the 700-square-metre walk-through duty free shop which should open at MIA in March - a few months ago guarantees us €25.5 million by the end of 2014 and we have a number of contracts like that. Obviously the figures are not always that impressive but the amount of guaranteed revenue to the airport is relatively high so we are quite optimistic."
Mr Jaeger explained that there are a number of new projects taking place at MIA. "We are at an advanced stage of a tendering process for a gaming hall which should give us some additional revenue, and we received a lot of interest for that. We have upgraded our executive lounge which should increase our revenue from that field by about 30 per cent. Furthermore, a food court consisting of a number of restaurants and food outlets with an international flavor will open shortly.
"We are in discussions with operators from the general aviation field - as we think there is a potential market there - and we have taken over the car park which should be generating more income and much better quality. From all those areas we think we can increase our revenue. The ultimate aim is to become less dependent on the amount of passengers passing through the airport," he said.
Asked whether MIA will be able to maintain its dividend levels despite lower passenger movements, he replied, categorically: "At this point in time I have no indication that the board of directors will change its policy regarding dividends".