Macau could be about to face a ferry price war after a new operator declared it is undercutting the existing operators by as much as 34 percent on the price of a single weekday ticket from Hong Kong to Macau.
The newcomer Macao Dragon’s weekday single economy fare from Hong Kong to the Pac On Ferry Terminal at Taipa, is HKD88, compared to CotaiJet’s HKD134 for the same route.
TurboJET charges HKD134 for a weekday economy ticket from Hong Kong to the Macau Maritime Ferry Terminal on Macau Peninsula. New World First Ferry charges HKD133 for a weekday economy seat from Tsim Tsa Tsui in Kowloon to Macau.
Macao Dragon won’t, however, offer the same frequency as the other operators. It plans to run a service three times per day in the Macau direction, and four times a day in the Hong Kong direction. The company adds it will initially carry a maximum of 600 passengers on each trip although its four Singapore-built catamaran craft are each designed to accommodate 1,200.
An interesting question is whether the new operator, Macao Dragon, will ally itself with any of the existing casino operators for cross marketing purposes or whether marketing on board will be available to all comers.
TurboJET is operated by Hong Kong-listed shipping and property conglomerate Shun Tak Holdings, run by Pansy Ho, with Dr Stanley Ho, Macau’s former gaming monopolist as chairman. Although TurboJET allows any casino operator to provide promotional and advertising material on board its ferries provided they pay, the company tends to be seen in marketing terms as primarily an SJM-focused ferry operator
CotaiJet, as a Las Vegas Sands Corp entity, is seen as primarily focused on delivering passengers to The Venetian Macao on Cotai. Sands China, the local unit of LVS, uses a multi tiered marketing strategy aboard CotaiJet ferries, including video presentations and offer vouchers. In common with its rival operators, Sands China uses an army of greeters at the doors of both of Macau’s main ferry terminals to try and ensure as many ferry passengers as possible choose either Sands Macao or The Venetian Macao as their first (and preferably only) port of call.
LVS takes ferry services very seriously as part of its overall marketing strategy. In its first quarter results for 2010, the company said it had USD201.7 million of long term debt related to ferry financing as of 31st March 2010, at an interest rate per annum of Hong Kong Interbank Offered Rate plus 2.5 percent.
New World First Ferry Services Ltd is owned by Chow Tai Fook Enterprises Ltd, a Hong Kong based private conglomerate with interests in property development, hotels, casinos, transportation, jewellery, port and telecommunications businesses. Its chairman Dr Cheng Yu-tung, the chairman of New World Development Co Ltd, was one of the investors behind L’Arc, the SJM-licensed casino that opened in Macau last September.
It’s not clear at this stage whether Macao Dragon has any behind the scenes alliances with existing casino operators. The company is privately held, so doesn’t have to declare its ownership structure publicly and the Maritime Administration of the Macau government has so far declined to give more details.
In January, the Macau government issued permits to five companies including Macao Dragon, allowing new routes between Macau, Hong Kong and Guangdong province on the Chinese mainland. The companies had 180 days to launch the new services or risk revocation of the licences.
Arrivals at the Pac On Ferry Terminal at Taipa rose 24.9 percent year on year in the first four months of 2010 according to Macau’s Statistics and Census Service (DSEC).
