Inside Asian Gaming

INSIDE ASIAN GAMING | October 2011 30 T he increase in Shun Tak’s market dominance on ferry services from Hong Kong to Macau—brought about by its purchase of New World First Ferry and the failure of Macao Dragon—matters for a number of reasons. Over time, Shun Tak will be able to dictate pricing of services and create a more powerful marketing system that will make it even harder in the future for rivals to enter the sector. This is taking the transport infrastructure in exactly the opposite direction from the Macau gaming market, which has seen unprecedented competition in the past five years. But in Hong Kong and Macau—unlike in the European Union or United States— there are currently no rules against cartels or price-fixing and therefore no way to institutionalise competition and make it the norm. Even in the Macau casino sector there have been occasions—such as during the global economic crisis of 2008-09—when several of the overseas casino operators seemed keen to cosy up to Stanley Ho when he suggested an industry strategy that in effect amounted to price fixing. Things are not much better in Hong Kong. In January this year, Hong Kong’s legislature published for consultation purposes a Competition Bill after a decade of debate. But there is some scepticism about whether key provisions will end up watered down in order to protect the interests of the small number of families who currently control much of the commerce there. The New World First Ferry deal means Shun Tak now has a dominant position in the schedules of the two biggest ferry terminals out of Hong Kong— the Hong Kong-Macau Ferry Terminal at Sheung Wan on Hong Kong Island and the China Ferry Terminal at Tsim Sha Tsui in Kowloon. Nearly 30% of Macau’s 2.5 million visitor arrivals in July were Hong Kong residents— most of them travelling by sea. The total number of people travelling to Macau via Hong Kong by ferry is even higher because many tourists from the Chinese mainland combine a shopping and sightseeing trip to Hong Kong with a visit to Macau. There has been some improvement in ferry services—both in terms of larger, higher capacity catamarans capable of moving more people in one trip, and in terms of berth space—though the latter improvement has mainly been at the Hong Kong end. According to Hong Kong’s Marine Department, in the first six months of 2011 there was an 8.5% increase year-on-year in the number of inbound catamaran journeys from Macau to Hong Kong’s terminals (including the SkyPier at Hong Kong Airport and the Tuen Muen facility), and a 6.9% increase inoutbound journeys.Wide-bodied, high capacity catamarans now outnumber by 4-1 the older, smaller jetfoil boats that are part of TurboJet’s legacy fleet. There is, however, some evidence of strain on the system—possibly because of management practices by the ferry operators and the immigration services, rather than because of physical capacity at the ports. A year ago, the ferry journey from Hong Kong to Macau used to take “about one hour” as the recorded announcement aboard Shun Tak’s TurboJet ferries puts it. Now it’s not unknown for that same journey to take an hour and a half. Ferries on both legs of the journey often have to sit idling on arrival waiting for docking space to become available. This may be due to the sort of ‘stacking effect’ seen at busy airports. A ferry that is late departing may miss its slot at the other end. Boats now typically leave five to ten minutes behind schedule at the Macau end, not only because of docking and turnaround issues (vessel cabins must be cleaned before they can put to sea again), but because of the often long lines of passengers—many of them from the Chinese mainland—waiting to clear immigration prior to departure and whom have already been sold a ticket for a One dragon boat that won’t be racing next year No Contest Why Macau needs more competition in its transport infrastructure The busy Hong Kong-Macau terminal—with a ferry from ill-fated Macao Dragon in the foreground Feature