Merimbula Airport Catchment Research Study & Market Research Findings

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Abigail Stafford
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1 Merimbula Airport Catchment Research Study & Market Research Findings Prepared for Bega Valley Shire Council June 2015

2 Report Contents Objectives and Methodology Sydney bound travel patterns Melbourne bound travel patterns Canberra bound travel patterns Air Travel Patterns Market Research Findings 2

3 Main Objectives & Survey Methodology Survey Objectives This report summarises the results of a catchment survey, undertaken by three consulting. The overall objective of the research was to develop statistically accurate data, measuring travel habits and patterns, within the Merimbula Airport catchment area. Other objectives for the research included: Identifying the overall market size for the catchment area Identifying any leakage to other airports in the region Establishing the size of the drive market to key cities in proximity to Merimbula Airport Establishing Origin and Destination demand patterns for both people who fly and those who drive Identifying possible profiles of visitors not currently using the airport Identifying price elasticities of demand Identifying demographic trends that may impact on usage Market Research Objectives The main objectives of the market research was to identify the overall potential catchment size of the region, define relevant travel behaviour, analyse the current travel flows and to identify any traffic leakage to other airports Survey Methodology The catchment survey was conducted over a 2.5 week period between 02 nd and 19 th June, 2015 It captured 501 completed responses which provides a maximum sampling error of plus or minus 4.33% at 95% confidence level The sample area was restricted to people who lived within a pre determined range of Merimbula Airport Data in this publication is subject to sampling variability because it is based on information relating to a sample of residents rather than the total number. Efforts have been made to reduce the non-sampling error by careful design of the questionnaire and detailed checking of completed questionnaires. 3

44 2551 3,452 42 2548 6,873 84 Total 40,993 501 Sample sizes were prorated according to the population

4 The Catchment Survey was undertaken in the main regions surrounding Merimbula Airport Postcode Population Sample Size , , , , , , Total 40, Sample sizes were prorated according to the population size The total population was calculated to be approx. 41,000 people

5 Report Contents Objectives and Methodology Sydney bound travel patterns Melbourne bound travel patterns Canberra bound travel patterns Air Travel Patterns Market Research Findings 5

6 The following slides examine the MIM-SYD/MEL/CBR travel patterns and specifically look at the ability to shift road travel to air travel MIM $? SYD MEL CBR Modal shift is heavily dependent on price levels offered to the market 6

had travelled by bus or train 30% of these had travelled by private car The majority of people had taken between 1

7 There is limited scope for modal shift from road to air due to the small number of respondents travelling to SYD by road 21% of residents had travelled to Sydney in the last 12 months 58% of these had taken a flight 12% of these had travelled by bus or train 30% of these had travelled by private car The majority of people had taken between 1 and 3 trips in the last 12 months The main reason for choosing to travel by car was that flights were too expensive 7

Two different methodologies were used to determine what various price points would convert road travellers into air travellers on the MIM-SYD, MEL and CBR routes Consumer Based Pricing This approach

to pay as little as possible for the same product without sacrificing quality; at the same time companies will want to charge as high a price as possible and often charge different rates based on a

8 Two different methodologies were used to determine what various price points would convert road travellers into air travellers on the MIM-SYD, MEL and CBR routes Consumer Based Pricing This approach is commonly used by many industries to determine how much each customer is willing to pay for its product or service Consumer based pricing needs to allow for the fact that customers will always want to pay as little as possible for the same product without sacrificing quality; at the same time companies will want to charge as high a price as possible and often charge different rates based on a changing landscape Price Sensitivity Modelling (PSM) The traditional PSM approach asks four price-related questions, which are then evaluated as a series of four cumulative distributions, one distribution for each question At what price would you consider the product to be so expensive that you would not consider buying it? (Too expensive) At what price would you consider the product to be priced so low that you would feel the service couldn t be very good? (Too cheap) At what price would you consider the product starting to get expensive, so that it is not out of the question, but you would have to give some thought to buying it? (Expensive/High Side) At what price would you consider the product to be a bargain a great buy for the money? (Cheap/Good Value) 8

9 In conjunction with the limited size of the drive market, the price sensitivity results reflect the lack of willingness to convert from road to air Acceptable Price Range Point of Indifference PMC Optimal Price Range PME The results of the PSM indicate: A point of marginal cheapness (PMC) of approximately $70 round trip A point of marginal expensiveness (PME) of approximately $190 round trip A point of indifference of approximately $145 round trip An optimal price range between $70 and $140 round trip In the 2 nd methodology, road travellers were asked what price they would be willing to pay to switch from road to air 50% of respondents were prepared to pay $100 -$149 for a round trip 50% of respondents were prepared to pay $150 or more for a round trip 9

10 Report Contents Objectives and Methodology Sydney bound travel patterns Melbourne bound travel patterns Canberra bound travel patterns Air Travel Patterns Market Research Findings 10

In line with Sydney, the Melbourne drive market is limited in size, therefore any ability to modal shift from road to air would be negligible 12% of residents had travelled to Melbourne in the last

11 In line with Sydney, the Melbourne drive market is limited in size, therefore any ability to modal shift from road to air would be negligible 12% of residents had travelled to Melbourne in the last 12 months 80% of these had taken a flight 11% of these had travelled by bus or train 8% of these had travelled by private car The majority of people had taken between 1 and 2 trips in the last 12 months The main reason for choosing to travel by car was that people preferred road travel. The number of respondents however fall below the margin of error and therefore cannot be used in any analysis. Similarly, for the price that respondents would be prepared to pay to convert from road to air, the average fare was $200 round trip, however the number of responses fall below the margin of error Only 1% of respondents have a need to travel to Melbourne by road, making the price sensitivity analysis unusable 11

12 Report Contents Objectives and Methodology Sydney bound travel patterns Melbourne bound travel patterns Canberra bound travel patterns Air Travel Patterns Market Research Findings 12

Canberra has a larger road travel market, coupled with the reasons given for not flying,

in the last 12 months No one had taken a flight 33% of these had travelled by bus or train 67%

in the last 12 months The main reason for choosing to travel by car was that road travel was

13 Canberra has a larger road travel market, coupled with the reasons given for not flying, indicates a potential opportunity for modal shift 25% of residents had travelled to Canberra in the last 12 months No one had taken a flight 33% of these had travelled by bus or train 67% of these had travelled by private car The majority of people had taken between 2 and 3 trips in the last 12 months The main reason for choosing to travel by car was that road travel was preferred All of the respondents that had a need to travel to Canberra, did so by car, bus or train 13

14 The 2 pricing methodologies indicate a very price sensitive market, however there does appear to be scope to modal shift from road to air Acceptable Price Range Point of Indifference PMC Optimal Price Point PME The results of the PSM indicate: A point of marginal cheapness (PMC) of approximately $50 round trip A point of marginal expensiveness (PME) of approximately $145 round trip A point of indifference of approximately $110 round trip An optimal price point of approximately $50 round trip In the 2 nd methodology, road travellers were asked what price they would be willing to pay to switch from road to air 20% of respondents were prepared to pay over $100 round trip 14

15 Report Contents Objectives and Methodology Sydney bound travel patterns Melbourne bound travel patterns Canberra bound travel patterns Air Travel Patterns Market Research Findings 15

16 43% of respondents had travelled by air in the past 24 months An average flier takes 1.31 trips per year Of those that did not fly in the past 24 months, high prices and do not like to fly are the main reasons Trip Type Response Average per Trip Trip Total Total Type Average per Flier Domestic International

Of those respondents that do fly, around 58% of respondents have flown from Merimbula airport in the past 24 months Respondents were asked whether they had flown from Merimbula airport in

17 Of those respondents that do fly, around 58% of respondents have flown from Merimbula airport in the past 24 months Respondents were asked whether they had flown from Merimbula airport in the past 24 months 58% of respondents had travelled from Merimbula airport in the past 24 months Of those that hadn t the main reason why not was due to living closer to another airport 17

18 SYD & MEL represent the largest aviation markets for respondents Catchment Market Breakdown Market Trips % of Total Market SYD % MEL % PER % OOL % BNE % ADL 9 2.9% AKL 5 1.6% NAN 5 1.6% DRW 5 1.6% LON 4 1.3% HKT 4 1.3% LAX 3 1.0% CHC 3 1.0% SIN 3 1.0% HBA 3 1.0% Other 3 1.0% BKK 1 0.3% DXB 1 0.3% GFN 1 0.3% ZQN 1 0.3% BME 1 0.3% HKG 1 0.3% ATH 1 0.3% HMI 1 0.3% TSV 1 0.3% FCO 1 0.3% CPT 1 0.3% WLG 1 0.3% HNL 1 0.3% CNS 1 0.3% TOTAL % Respondents Airport of Origin Origin Airport Trips % of Origin Market MIM % CBR 75 24% SYD 18 6% MYA 17 6% TOTAL % The most frequented destinations for all respondents are Sydney and Melbourne with 34.9% and 27.7% respectively of the total market share Merimbula is the origin airport for 64% of respondents Sydney and Melbourne represent over 83% of MIM s total market Merimbula Survey OD Profile OD pair Trips % of MIM Market MIM-SYD % MIM-MEL % MIM-PER 8 4.1% MIM-BNE 3 1.5% MIM-HKT 3 1.5% MIM-OOL 3 1.5% MIM-NAN 2 1.0% MIM-LAX 2 1.0% MIM-LON 2 1.0% MIM-DXB 1 0.5% MIM-GFN 1 0.5% MIM-AKL 1 0.5% MIM-ZQN 1 0.5% MIM-BME 1 0.5% MIM-HKG 1 0.5% MIM-CHC 1 0.5% MIM-DRW 1 0.5% MIM-ADL 1 0.5% MIM-FCO 1 0.5% TOTAL % 18

19 Rex holds 61% of the market, however 34% of respondents have to connect to reach their final destination Connecting Airports Flew Direct or Connected to Destination Response Percent Response Total Flew Direct 66% 142 Connected through another airport 34% 74 Total 100% 216 When asked to identify the airline they usually use to fly out of their most frequented starting point, 61% reported flying with Rex 20% of respondents reported having flown with Virgin Australia with 16% flying with Qantas 66% of respondents flew direct to their destination whilst 34% connected through another airport Of those respondents who had connected, 92% of them did so through Sydney Connecting Airport 1 Response Percent Response Total Sydney 92% 67 Dubai 4% 3 Canberra 1% 1 Singapore 1% 1 Hong Kong 1% 1 Perth 1% 1 TOTAL 100% 74 Connecting Airport 2 Response Percent Response Total Brisbane 9% 1 Johannesburg 9% 1 Perth 9% 1 Rio de Janiero 9% 1 Singapore 64% 7 TOTAL 100% 11 19

20 There is a healthy mix between holiday, VFR and business traffic When asked about the purpose of their last trip, 44% of respondents reported travelling for holiday purposes 28% had travelled to visit family/friends or relatives along with for business purposes 14% of respondents conducted a same day return trip with the majority (60%) staying away for more than 7 nights 88% of respondents usually travelled in economy class Premium Economy class featured quite prominently with 10% of respondents travelling in premium economy Usual Class of Travel Response Percent Response Total Economy 88% 191 Premium Economy 10% 21 Business Class 1% 3 First Class 0% 1 TOTAL 100% 216 Number of nights away from Response Percent Response Total home 7 29% % 49 Same day return trip 14% % % % % % 5 4 1% 2 TOTAL 100%

21 Merimbula airport is the preferred airport for 70% of respondents Preferred Airport Response Percent Response Total Merimbula Airport 70% 152 Canberra Airport 22% 48 Moruya Airport 4% 8 Sydney Airport 4% 8 TOTAL 100% % of respondents stated that all things being equal, their preferred airport to depart from was Merimbula airport Canberra was the next preferred airport with 22% of respondents wishing to depart from there The main reason respondents chose Merimbula airport was the proximity to their home in comparison to other airports Main reasons for choosing Canberra airport were closer to their home, more accessible and better general and retail facilities 21

22 28% of respondents have used air travel for business purposes 28% of respondents indicated that they had flown for business purposes in the past 12 months. 61% were from the Technology sector 25% were from the Services sector 5% were from the Education and Health sectors 22

23 On average, respondents paid $706 for a round-trip fare to their most frequented destination Band Figure Highest $3,000 Lowest $200 Average $706 Median $500 On average respondents paid $706 for their return trip to their most frequented destination The median price paid was $500 for a return trip 12% of people paid over $1,000 for their return trip 30% of respondents were unsure of the price paid 23

26% of respondents would take more trips if the airfare was to decrease by 10% 24% of respondents would fly regardless of how much the ticket price was to increase 43% would reconsider flying if

24 26% of respondents would take more trips if the airfare was to decrease by 10% 24% of respondents would fly regardless of how much the ticket price was to increase 43% would reconsider flying if their ticket price was to increase by up to 20% 36% of respondents said they would not increase the number of trips if the air fare decreased by 10%, indicating a price inelastic market for some respondents 24

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