Inside Asian Gaming

INSIDE ASIAN GAMING | October 2011 34 Feature publicly criticised theMacau government for allegedly not opening up the Taipa route to public tender (even though there was some prima facie evidence that for commercial reasons Shun Tak had actually opposed the Taipa terminal in the first place). The Taipa terminal opened on 16th October 2007, but CotaiJet’s services weren’t able to launch until a month after that—because of apparent berthing issues at the Hong Kong end. In December 2007, CotaiJet briefly had to suspend its service by order of a Macau court. It followed moves by another ferry operator—Hong Kong North West Express—which complained the Macau government had not conducted an open tendering process before granting the concession. It created the impression that for some parties in the market, the competition issue was a ‘card’ to be played strategically rather than a general principal to be adhered to. Without a change in mindset regarding the consumer benefits of competition for ferry services, it’s difficult to see how the quality of transport infrastructure to Macau can improve at the same pace as the service quality of the gaming industry that nurtures it. Macao Dragon offered cheap fares—in some cases half what the other operators were charging—and also innovations such as a wireless internet connection on board—a boon for those who like to work on the move. But it was handicapped from the beginning of its operations in July 2010 by a cap imposed by the Macau government on how many passengers it could carry per trip—750 on the outbound leg from Hong Kong and 600 on the return journey. That cap was reportedly because of the capacity limitations at the Taipa terminal served by Macao Dragon, though some wondered if there was an element of local politics involved. Given that the company’s four catamarans each had a capacity of 1,200 passengers, and the company’s low-fare business model was based on being able to operate each sailing at or near capacity, then the restrictions placed a serious burden on the viability of the venture from the start. The proposed road bridge linking Hong Kong, Macau and Zhuhai might go someway to creating competition to the ferry trade. It was originally due to be completed in 2015 or 2016. But with Hong Kong’s Court of Appeal yet to decide on a lower court ruling that quashed the environmental permits for two elements of the bridge project, it’s anyone’s guess as to when the thing will actually be finished. TurboJet rejects criticism that it is complacent toward the wellbeing of its customers or that it is anti-competitive. It has made much of the fact—in public statements to the media—that it froze its ferry ticket prices for around two years thanks to forward contracts on its marine fuel supplies. Since July, however, the price of an economy class weekday night sailing from Macau to Hong Kong has gone up from HK$155 to HK$175. That’s an increase of almost 13%—nearly double the 7.9% consumer price index inflation reported in the Hong Kong economy in July. And it comes in the context of the Macau government actually cancelling a departure tax previously imposed on outbound journeys. At the time IAG went to press, there was no sign that TurboJet planned to follow New World Ferry’s lead and pass on the saving to its customers. Pansy Ho, the managing director of TurboJet’s owner, Shun Tak, suggested in comments to the local Macau media that Macao Dragon’s failure was evidence that tighter criteria were needed for the issuance of ferry concessions in Macau. “Ultimately we notice that the administration’s wish to open up the market—something we support—has brought inconvenience to passengers,” Ms Ho was quoted as saying. Shun Tak’s “support” for an opening up of the Macau ferry market isn’t immediately obvious. In 2007, her father Dr Stanley Ho actively opposed the granting of a licence to CotaiJet. Dr Ho’s fourth consort—the Macau lawmaker Angela Leong—even asked Macau’s Secretary for the Economy and Finance Francis Tam during a Legislative Assembly session in November 2007 why the government had granted a ferry licence to a company [CotaiJet] “which does not have experience in operating ferry services”. That hardly sounds like the voice of economic liberalism in full cry. Competition isn’t just a word. It’s a state of mind. Turkeys may not vote for Christmas, but Christmas still comes around anyway. For Macau to move backwards in competition terms on something as fundamental as the means of moving millions of people to its doorstep risks harming the efficient operation of the tourism market—and ultimately the profits that the casino operators have worked so hard to achieve. Head winds—Las Vegas Sands’ CotaiJet had to fight for the right to compete with TurboJet Pansy Ho—champion of the free market?