What's behind the Changi push

458

changiairport

The real Changi Airport story is not that swanky and impressive-looking structure that is coming up at the carpark at Terminal 1. It is the plans for Terminal 5 that will show if Singapore can continue to retain its premier position in the aviation industry.

Siva Govindasamy, Reuters’ chief aerospace and defence correspondent for Asia, said: “Project Jewel is an aesthetic icon, like the Gardens By The Bay, rather than an actual airport development (although the space freed up will help to slightly increase T1’s capacity).

“What was interesting was the plans for T5 – which the PM said will double the airport’s capacity to handling 130 million passengers a year by the 2020s. That is a significant long-term investment, something that has not been seen since the late 1980s when plans for T3 were annouinced.

“In effect, with T5, Singapore is saying that it is not willing to cede its position as the main South-east Asian airport and as one of Asia’s main hubs. It shows that the government is keen to keep investing in aviation, which is a crucial plank of the country’s growth. It can help Singapore to keep ahead of the competition.”

Iconic infrastructure and capacity are just two of the pieces in the Changi jigsaw. “Singapore has to continue to bargain hard to get additional bilateral traffic rights (the Asean Open Skies, when it happens, will be a major boost) so that airlines can add new services or increase existing ones to the city. It has to remain open to airlines that may want to start joint ventures in Singapore. That will provide more competition for the Singapore-based carriers (SIA, SilkAir, Scoot, Tiger and Jetstar Asia).
“It has to balance the interests of its home airlines with the need to have a vital hub,” said Siva.

The way the airline industry is going, especially with the explosion in the growth of budget travel, incremental plans won’t do. Thus this big Changi push.

It doesn’t want to be caught out, like it was by the growth of low cost carriers which ended with the closure of the budget terminal last year.

Budget carriers introduced a new headache for airports. They use narrow-bodied aircraft, which take a longer time take off and land thus putting a major squeeze on aircraft movements.

Asked about Changi’s future in an increasingly competitive industry, Siva said: “The challenge from the Gulf hubs is increasing the pressure on Changi, as is the development of alternative hubs in the region. Changi is an important intra-Asia Pacific hub, but Malaysia and Indonesia are continuing to try to develop their airports to compete with it. Its position as a global hub is under pressure – passengers who travel to Europe, for example, can go via Dubai and Doha for example.

“Connectivity, rather than a domestic market, is crucial to Changi’s success. While there is plenty of air travel from Singapore to the region and beyond, given the strength of the island’s leisure and business market, it is not enough in itself to sustain Changi’s position. That is why the airport needs to ensure that it has the connectivity to link passengers who want to fly from one city to another.

“Markets like India, China, Australia and Indonesia are absolutely important for Changi. That is also why the airport is making a concerted effort to become a low-cost hub – that is where the growth is in the region, and that will continue to be the case for a long while.”