Tourism and Aviation

Tourism and Aviation MINISTERIAL BRIEFING NOTE

ORGANISATION

DELEGATION CONTACT

DELEGATES ATTENDING

DELEGATE ISSUES

WEBSITE LINKS

ATTACHMENTS Cairns TNQ Convoy to CapitalQ

Advance Cairns, Tourism Tropical North Queensland and Cairns Chamber of Commerce are leading the region’s largest ever business delegation to Brisbane. The delegation includes more than 50 business leaders over a two-day period (February 18-19), representing 12 key business sectors to meet with State MPs and attend the Speaker’s Cocktail Reception.

Further information: Nick Trompf, Executive Chairman Advance Cairns E: nicktrompf@advancecairns.com | M: 0412 786 719

T ourism and Aviation:

Mark Olsen

1. Mark Olsen, CEO Tourism Tropical North Queensland (TTNQ) 2. John O’Sullivan, CEO & Executive Director ExperienceCo 3. Norris Carter, CEO North Queensland Airports 4. James Dixon, General Manager AAT Kings & Managing Director Down Under Tours Australia

Attached are bios on each delegate.

Tourism and Aviation issues to discuss:

• Destination Marketing • Cairns Aviation Route Development • Cairns Aviation Excellence Precinct

Attached are briefing papers on each issue.

• www.advancecairns.com • https://www.facebook.com/AdvanceCairns/

• Attendee biographies • Briefing papers

MAR K OLSEN CEO TOURISM TROPICAL NORTH QUEENSLAND (TTNQ)

Mark joined Tourism Tropical North Queensland in September 2019 as CEO after 25 years in the tourism and hospitality industry.

From route development and hotel feasibility studies to national and international strategy development, Mark has worked in over 70 countries with a focus on sustainable tourism, experience development, destination strategy including aviation and access, commercial operations and feasibility and consumer marketing.

JO HN O’SULLIVAN CEO & EXECUTIVE DIRECTOR EXPERIENCE CO

John has over 25 years’ experience in the tourism and related industries sector, having held senior executive roles with Football Federation Australia (Chief Commercial Officer), Events Queensland (Chief Executive Officer), Fox Sports (Chief Operating Officer).

For the last 5 years he was Managing Director of Tourism Australia where he managed a team of more than 200 sta ff in 13 locations, including China, London and Germany, and led the restructure of teams and people to improve performance and to place increased investment where required to achieve the best results.

John has extensive leadership capabilities and experience in sales and marketing, event management and digital technology on a local and global stage. He holds an Executive MBA and is a graduate member of the Australian Institute of Company Directors.

NO RRIS CARTER CEO NORTH QUEENSLAND AIRPORTS Norris Carter is CEO of North Queensland Airports, which operates Cairns and Mackay airports. He has extensive experience in aviation, including prior roles leading airline business development at Auckland Airport, and international network planning, revenue management and loyalty at Qantas.

He also is a Director of the Australian Airports Association, Tourism Tropical North Queensland and the Cairns Indigenous Arts Fair.

J AMES DIXON GENERAL MANAGER AAT KINGS & MANAGING DIRECTOR DOWN UNDER TOURS AUSTRALIA

With 30 years in business, James is Managing Director and co-founder of Down Under Tours Australia. He is also the General Manager of AAT Kings, who are Australia’s leading coach holiday company operating a modern fleet of 104 vehicles and employing 392 staff.

James has extensive domestic and international insights and experience allowing him to improve and adapt to the constant change required to operate a successful tourism business.

He is a board member and Deputy Chair for Tourism & Events Queensland and President of the Far North Queensland Tour Operators Association. James’ lengthy involvement and innovation in the tourism industry in Tropical North Queensland is showcased by his and his companies awards and achievements, at a local, state and national level.

COUNCIL: ALL TNQ STATE ELECTORATE: ALL TNQ FEDERAL ELECTORATES: LEICHHARDT, KENNEDY DESTINATION DEVELOPMENT

DESTINATION MARKETING

BRIEFING NOTE SUMMARY

• Tropical North Queensland (TNQ) has lost 17% of its national market share of visitor expenditure over the past three years. This equates to $1.2 billion in lost visitor spend, which would have supported 4200 jobs.

• Tourism and Events Queensland’s whole-ofstate marketing activities are slowing the loss of market share for the State, but an increased investment in destination marketing is needed to regain lost market share in specific destinations such as TNQ.

• Tourism Tropical North Queensland (TTNQ) requires an additional $10 million per annum in destination marketing funds. This could be funded through an additional destination marketing fund through the State Government, or through providing Councils with policy mechanisms that facilitate the introduction of a 2.5% levy on all overnight visitors in commercial accommodation.

THE ISSUE Over the past decade, the Queensland tourism industry has lost both domestic and international market share, with Victoria gaining the majority of the lost market. Recent whole-of-state marketing activities such as the Connecting with Asia program have started to slow the rate of these losses, however a greater effort is needed over the next five years to regain lost ground. Tropical North Queensland (TNQ) is one of the key destinations affected by this shift in national market share. From 2016 to 2019 TNQ lost 17% of its national market share, worth the equivalent of $1.2 billion over three years, which would have supported up to 4200 jobs in the visitor economy. Tourism Tropical North Queensland (TTNQ) is the organisation responsible for bringing industry and government together under one destination brand and message to compete in the global marketplace. To be a successful in growing the contribution of the visitor economy to TNQ and the State, the destination needs a significant increase of marketing funds.

BACKGROUND TNQ stretches from Cardwell to the Torres Strait and west to the NT border and receives nearly three million domestic and international visitors annually, which equates to an estimated $3.3 billion in annual visitor spend. Two-thirds of the region’s visitor nights are domestic travellers, and one-third are international.

2020 STATE ELECTION PRIORITIES FOR TNQ The visitor economy, made up of holiday, visiting friends and relatives, business events, major events and education visitors, contributes over 17% of the regions Gross Regional Product (GRP), supporting one in five jobs directly and indirectly. Over the past decade the funds available for tourism marketing in the State have not kept pace with the increased level of competition both in Australia and globally, and the rising price of marketing efforts required to maintain the State’s ‘share of voice’. This has driven Tourism and Events Queensland (TEQ) to focus a significantly larger component of its funding to whole-of-state marketing and event activities. As a result, destinations like TNQ which have previously accessed dedicated destination marketing funds, have had to rely on whole-ofstate activities. The region and State’s main competitors (Sydney and surrounds, Tasmania, Great Ocean Road, Kangaroo Island and Ningaloo) are spending between $10 million and $19 million per annum in marketing their regions, which is vastly greater than TTNQ’s marketing budget of $4.5 million. These estimates exclude operating expenses and wages. To reach a comparable annual base funding the organisation needs to secure between $6 million and $13 million per annum of additional base marketing investment. In the past three years, TNQ has been supported by the Queensland Government through a number of funding programs that have boosted the region’s marketing efforts. This includes domestic marketing funds in the wake of the 2019 monsoon, and international marketing increases to support route

development and to assist in the recovery of lost market share from negative perceptions of the Great Barrier Reef. ($3 million over three years). Without these one-off injections of additional funds, the region would have lost an even greater market share. For the region to regain lost ground and reposition TNQ as Australia’s number one international nature-based and ecotourism destination, ongoing increased investment is required. To augment whole-of-state marketing activities and introduce new funding into the TTNQ marketing effort, Cairns Regional Council (CRC) is considering the introduction of a visitor levy which would bring an estimated $16 million in additional base funding to the region. Residents and businesses in the CRC area are already the second highest per capita contributor to the visitor economy at $20.54 per resident (based on the $3.4 million contribution), behind the Gold Coast at $25.65 per resident (ASPIRE, 2018 and CRC, 2019). A visitor levy is therefore one of a range of options that would increase the pool of marketing funds available. The option of a State-wide visitor levy was rejected in 2018 and as such, there is no obvious vehicle at present for destinations like TNQ to significantly increase marketing efforts outside of one-off funding programs.

NEXT STEPS TTNQ has evaluated four potential funding options that would increase base funding for the region to the sustainable level of at least $12 million per annum ($10 million more than current base funding). 1. Increased base funding from the State Government for TEQ to provide regions with destination marketing campaign funds. For TTNQ this would require a minimum of $10 million in additional funds per annum. 2. A reallocation of existing State funding and the introduction of a policy that supports increased contributions from AirBnB to generate an additional $10 million per annum for destination marketing. For

example, in TNQ this could consist of: • $2 million per annum for a Major and Business Events bid fund; • reallocation of $5 million per annum from TEQ to TTNQ from the current domestic and international marketing fund for the region; • $2 million per annum for an aviation marketing support fund to invest in route marketing (not route acquisition); • introduction of a ‘sharing economy’ accommodation policy which mandates a direct contribution from properties listed on AirBnB (and other platforms). The policy would apply to properties that are not registered accommodation providers and that are operating over 30 days. Contributions would be made directly to destination marketing either through Regional Tourism Organisation (RTO) membership or through a room rate contribution per night (up to $1 million per annum in TNQ). 3. Increased base funding from Cairns Regional Council from $2.4 million to $10.4 million through a business or general rates levy increase (the equivalent of $78 per resident, approximately double that of the Sunshine Coast to reach the same base funding). 4. The introduction of a 2.5% levy on all overnight visitors in commercial accommodation, which would generate from $16 million per annum (Cairns region only) up to $22 million per annum (Cairns, Port Douglas and Cassowary Coast regional council areas). Of the four options evaluated, the only sustainable funding options for TNQ are to generate an additional $10 million per annum in base funding administered through TEQ for destination marketing, or the introduction of a 2.5% levy on overnight visitors in commercial accomodation across the region.

OUR RECOMMENDATION

• That through Tourism and Events Queensland, the Queensland Government increase TTNQ’s base destination funding to provide the region with a minimum of $10 million in additional funds per annum.

• Alternatively, that through appropriate policy mechanisms, the Queensland Government facilitate the introduction of a 2.5% levy on all overnight visitors in commercial accommodation, providing the TNQ region an additional $16-$22 million per annum in destination marketing funds.

COUNCIL: ALL TNQ STATE ELECTORATE: ALL TNQ FEDERAL ELECTORATES: LEICHHARDT, KENNEDY DESTINATION DEVELOPMENT

CAIRNS AVIATION ROUTE DEVELOPMENT

BRIEFING NOTE SUMMARY

• An international flight to Cairns is an estimated $200 million per annum export business.

• There is unmet demand for at least four new daily flights, worth $800 million per annum in economic benefit.

• A new route has start-up costs of around US$30 million.

• The Attracting Tourism Fund introduced in 2018 has been highly successful in attracting investment to Queensland, however the fund is due to close on 31 December 2020.

• To unlock supply links to the region, an ongoing State budget commitment of $50 million towards a statewide Attracting Tourism fund is required.

THE ISSUE Air connectivity is key to the economic development of the Cairns region. It opens up new visitor markets, provides opportunities for the export of agricultural produce and promotes growth in the education sector. A daily international wide-body flight to Cairns is potentially a $200 million a year export business, with $100 million of international visitor spend, $50-$150 million of agricultural produce sales, and the potential to deliver more than 650 new jobs for the region. There are additional flow-on benefits as other trade is enabled by new air routes. These benefits are widely dispersed across businesses in the region. Currently, more than 80% of international visitors through Cairns Airport travel on domestic flights, however the number of international visitors to Cairns is constrained by the available domestic capacity. The lack of direct international flights means there is a large under-served demand of international travellers who have a desire to visit Cairns but who choose not to due to domestic capacity constraints, inconvenient travel itineraries and the cost of flying via intermediate ports.

BACKGROUND Cairns Airport is the nation’s seventh busiest in terms of combined international and domestic passenger movements. It handles around 130,000 aircraft movements and over 5.2 million passenger movements per year. The airport is widely recognised as one of the most significant economic drivers in the Tropical North Queensland (TNQ) region and its facilities are critical pieces of economic infrastructure. Across the airport precinct, Cairns Airport supports a skilled, permanent aviation and engineering workforce and plays a critical role in supporting national Defence and Border Force contracts, including search-and-rescue capabilities for AMSA and airborne surveillance activities. In addition, the precinct is home to the Cairns Aviation Skills Centre and CQUniversity’s Asia Pacific Aviation Hub, which together provide trade or degree-based career pathways for regional students. Tourism is a major contributor to the TNQ regional economy. An estimated 30% of all visitors to Cairns and surrounds arrive by air, making air travel vital to the agriculture, education and resource sectors. Cairns is also a hub to provide services to remote communities. A key constraint to growing the region’s tourism economy is limited access to direct international flights. Analysis by Tourism Research Australia

for the year ended 30 June 2019 indicates international tourism visitation to TNQ reduced by 1.7% compared to the prior year. This contrasts with a 3% increase in international visitation at the national level over the same period. To address this worrying trend for the TNQ tourism sector, in addition to tourism product development and direct investment in destination marketing there is a need to increase direct international aviation routes. Additional capacity would unlock significant international visitor growth without reducing passengers on existing flights. To unlock this growth, Cairns Airport is targeting four new priority routes: one each from the Middle East and Southeast Asia (to serve Europe); one from China, and one from North America. Together, these four new air routes would provide $800 million per year in additional economic benefit to the Cairns economy. More international services direct to Cairns will create more capacity for domestic visitors and encourage international visitors to stay longer and spend more while in the region. While the case for new international aviation routes into Cairns is compelling, temporary ‘start up’ funding packages are required to de-risk initial establishment for the airlines involved and secure these new routes in an extremely competitive international market.

NEXT STEPS The contestable Attracting Tourism Fund introduced in 2018 by the Queensland Government has leveraged both private sector and other Government investment in key tourism infrastructure, demonstrating the success of the initiative. However, the Fund is due to close on 31 December 2020 and does not currently appear in the State budget forwards. The establishment of an ongoing and flexible $50 million state-wide Attracting Tourism Fund is therefore needed, with a dedicated focus on regional aviation and with funds able to be used for Tourism and Events Queensland marketing or other means of support. This will encourage greater dispersal of economic benefits across the State. Increased dispersal will encourage visitors to extend their average length of stay in Queensland, helping the State to regain lost market share in visitor nights while contributing to the establishment of new international aviation routes for Queensland, including the priority routes identified for Cairns.

OUR RECOMMENDATION

• That the Queensland Government establish an ongoing and flexible $50 million state-wide Attracting Tourism Fund to contribute to the establishment of new international aviation routes for Queensland, including the priority routes identified for Cairns.

This request is in addition to ongoing destination marketing support in source markets via Tourism Australia, Tourism and Events Queensland (TEQ), and Tourism Tropical North Queensland, with the Fund able to be used for TEQ marketing or other means of support.

RECOMMENDED INVESTMENT

Estimated project cost $50 million (recurring)

State Investment 2020-2021 2021-2022 2022-2023 2023-2024

COUNCIL: ALL TNQ STATE ELECTORATE: ALL TNQ FEDERAL ELECTORATES: LEICHHARDT, KENNEDY INDUSTRY DEVELOPMENT

CAIRNS AVIATION EXCELLENCE PRECINCT

BRIEFING NOTE SUMMARY

• The Aviation Services industry will be worth $2.7 trillion in the Asia Pacific (APAC) region by 2038.

• The APAC region is the single largest destination for commercial jet deliveries over the next 20 years, with the region expecting 40% of global deliveries (17,390 aircraft).

• To meet the growing demand for Maintenance, Repair and Overhaul services in the APAC region, Cairns Airport has developed the Cairns Aviation Excellence Precinct masterplan.

• A Queensland Government investment of $20 million is sought to progress the masterplan, with Cairns Airport to invest $32 million towards the $52 million project.

THE ISSUE The Aviation Services industry will be worth $2.7 trillion in the Asia Pacific (APAC) region by 2038. The APAC region is the single largest destination for commercial jet deliveries over the next 20 years, with the region expecting 40% of global deliveries or 17,390 aircraft. Existing traditional Aviation Maintenance, Repair and Overhaul (MRO) destinations such as Singapore are already operating at or near capacity and airlines are already experiencing difficulty in securing MRO services for their aircraft in these destinations. In addition, the availability of the highly skilled people required is already constrained. Cairns is perfectly positioned to capture a share of this growing market. The city is geographically located in the centre of the APAC region, has a pipeline of highly skilled people, an existing reputation for excellence, and a geopolitically stable jurisdiction for aviation services operators. To meet the growing demand for MRO services, Cairns Airport has developed the Cairns Aviation Excellence Precinct (CAEP) masterplan. This will see the redevelopment of the existing General Aviation precinct adjacent to the Captain Cook highway.

2020 STATE ELECTION PRIORITIES FOR TNQ The land is at approximately 1AHD (Australian Height Datum). In practical terms, this means the aviation precinct is in a wetlands area and subject to frequent flooding. The land needs to be raised to approximately 2.65AHD before any construction of the 534,673m² of groundworks, aprons and roads can take place. This is a significant cost for Cairns Airport to overcome while also retaining competitiveness in attracting new business. Partial Government funding is therefore required to make this catalytic regional development viable.

BACKGROUND The CAEP will ultimately deliver at least 28 new business locations. These are a combination of different size hangars for MRO, as well as other industry operators in avionics, training, research and development and advanced manufacturing. More than 1200 high value jobs will be created in the precinct, contributing a minimum of $105 million into the local regional economy each year. This will support sustainable population growth, sustainable aviation route development, growth in the education research sector, tourism growth and advanced manufacturing

opportunities. It will also support the region’s Pacific engagement strategy. Over the length of the development, the true impact for Tropical North Queensland (TNQ) is expected to be well in excess of $3.3 billion. The CAEP is already home to a thriving aviation services industry with Hawker Pacific being a prominent example of an MRO operator in growth mode. In 2017 the Queensland Government announced a $2.5 million investment for Hawker Pacific to expand their hangar, which resulted in an additional 39 high value jobs worth an estimated $3.9 million. In 2019 Hawker Pacific confirmed winning $4 million worth of new contracts for 2020. This demonstrates success from a state investment in the industry. Cairns is perfectly positioned at the centre of the APAC region with equal flying distance to Bangkok, Shanghai, Tokyo, Hong Kong and Kuala Lumpur. Fiji and Hawaii are a manageable flight time away and the closest capital city, Port Moresby in Papua New Guinea, is less than half the distance to Sydney. In addition Queensland has a state government with a strong focus on growing the aviation sector through the MRO Taskforce and Aerospace 10-Year Roadmap.

Cairns Airport is home to the CQUniversity Asia Pacific Aviation Hub and Cairns Aviation Skills Centre (CASC). Since 2003 CASC has graduated 650 aircraft technicians and upskilled over 7000 aviation professionals, all with the industry reputation for excellence that comes from being trained in Cairns. Cairns should be a major destination for aviation services in the APAC region because it can meet the needs of industry geographically and geopolitically, and has a strong reputation for aviation excellence with a pipeline of highly skilled people.

NEXT STEPS An investment of $52 million is required to deliver on the Cairns Aviation Excellence Precinct masterplan. To ensure the project is viable, a partial investment of $20 million is sought from the Queensland Government with Cairns Airport to invest the remaining $32 million.

OUR RECOMMENDATION

• That in 2022-2023 the Queensland Government invest $20 million in the Cairns Aviation Excellence Precinct redevelopment, delivering 1200 high value jobs and positioning the region as a significant Maintenance Overhaul and Repair centre for the APAC region.

RECOMMENDED INVESTMENT

Estimated project cost $52 million 2022-2023