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There have been significant
changes to Singapore’s aviation landscape since the start of the year. |
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Singapore now has two new
Singapore carriers, Valuair and Tiger Airways, with another, Jetstar Asia,
planning to start services by year end. With Tiger’s commitment, CAAS has
decided to build a dedicated terminal for such low cost carriers. |
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A third ground-handling licence
was awarded to Swissport International in Jun 04 while Dnata bought CIAS in
Sep 04. |
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For the past six months, Changi’s
network continued to grow, with an increase of four new airlines, nine new
passenger city links and 121 weekly services. Changi’s passenger and cargo
traffic is projected to reach a record of 30.2m passengers and 1.74m tonnes in
2004. |
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Low Cost Carriers (LCC)
Operations at Changi |
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Since Apr 04, two new Singapore
LCCs, Valuair and Tiger have joined Thai AirAsia at Changi. These three LCCs
now account for about 5% of Changi’s total flights. |
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Increased competition has also
reduced Singapore-Bangkok air fares on sectors like Singapore-Bangkok.
Nonetheless, full service carriers (FSCs) have maintained their frequency of
services on these routes. |
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Overall traffic on sectors served
by LCCs for Jun-Aug 04 has grown by an average of 12% as compared to the same
period in 2002[1]; ahead of Changi's overall traffic growth of 6%.
The NATAS travel fair in Sep 04 drew record sales, with strong demand for
destinations like Hong Kong and Thailand. |
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Jetstar Asia is expected to be
launched in Dec 04. |
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With more flights and passengers at Changi, other
aviation-related companies such as the ground-handlers, inflight caterers and
maintenance, repairs and overhaul (MRO) companies could also see an increase
in business. There would also be multiplier effects on our overall economy. |
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With Tiger Airways’ commitment, CAAS has decided
to construct a dedicated low cost terminal to cater to the no-frills operating
model of LCCs. |
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The terminal will be simple, functional and
cost-effective. There will be no aerobridges or a complex baggage handling
system. The single storey terminal will also eliminate the need for escalators
or lifts. CAAS plans to introduce an appropriate mix of retail and food and
beverage outlets to make the experience a pleasant one. |
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The 25,000 sqm (about 3 football fields) terminal
will be completed by mid-2006, and can handle 2.7m passengers a year. The
terminal can be expanded modularly as traffic grows. |
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FSCs can also use the low cost terminal if it
suits their operating model. Similarly, LCCs can choose to use Terminals 1 and
2. |
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Changi's Ground Handling landscape |
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In Jun 04, CAAS awarded Zurich-based Swissport
International a 10-year licence to be the third ground handler at Changi. |
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Swissport plans to start operations by Jul 05. It
is the world’s second largest ground handler in terms of revenue, with an
annual turnover of US$925m in 2003. |
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It operates at 160 airports worldwide, but mostly
in the US and Europe. With its strong global links and international
experience, Swissport is well-placed to contribute to Changi’s growth. |
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In Sep 04, Temasek Holdings sold its entire stake
in CIAS to Dnata, a unit of Dubai’s Emirates Group. Dnata is the sole ground
handling agent at the Dubai International Airport, with about 10 years of
experience in overseas operations, namely in Pakistan, Manila and Tehran. |
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As part of its restructuring to make itself more
competitive, SATS had undergone a retrenchment and outsourcing exercise in Sep
04. |
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The restructuring exercise will reportedly incur a
one-time cost of around $28m in the current financial year and result in
annual cost savings of around $20m. When completed, SATS will have a staff
strength of about 7,700, down 16% from last year’s peak of 9,200. |
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Intensifying Airport & Airline Competition |
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Today, Changi is an important international hub
serving many key routes. Many airlines hub at Changi because of our
efficiency, competitive charges and excellent connectivity. For example, we
are a leading player on the Kangaroo Route (between UK and Australia) as SIA
and Qantas/British Airways hub at Changi. |
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However, competition will continue to intensify as
travellers on the Kangaroo Route can choose to transit at other airports such
as Bangkok and Dubai. Even Hong Kong, which appears to be geographically less
ideal to serve the Kangaroo Route, is a possible transit point as the total
flight time between Australia and Europe via Hong Kong is only marginally
longer than via Singapore. |
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In addition, new aircraft technology in the form
of the ultra-long range aircraft (Airbus 340-500) has made it technically
possible for airlines to bypass Singapore (between UK and Australia).
Currently, there are no direct flights between Europe and Australia. As
end-to-end traffic between European points and Australia grows, it may be
commercially viable to have such flights in future. |
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To maintain our competitiveness on key routes such
as the Kangaroo route, SIA will have to continue to innovate and improve its
product while Changi will have to continually re-invent the “Changi
Experience” for passengers and be even more efficient and cost competitive to
anchor our airline partners. |
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Singapore will also have to remain attractive as a
business centre and leisure destination so that there is sufficient
origin-destination traffic (e.g. UK-Singapore and Australia-Singapore) for
airlines to continue to transit at Changi. |
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As Changi takes steps to enhance the “Changi
Experience”, other major airports like Dubai and Bangkok also continue to
upgrade themselves. |
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Dubai International Airport |
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The construction of Dubai’s new Terminal 3 is
on-schedule for completion in 2006. When completed, Dubai’s handling capacity
will be more than tripled to 70m passengers. |
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Dubai’s Terminal 3 also incorporates a new
underground design concept that directly links it to two concourses. Dubai
will hence become a very passenger-friendly airport with ample capacity for
future growth. |
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Dubai’s airport expansion and upgrading is
supported by the UAE’s open skies policy and the rapid expansion of its
national airline, Emirates. Emirates has been instrumental in helping to build
up Dubai as a hub for major trunk routes like the Kangaroo route. |
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Emirates today operates more than double SIA’s
flights to the UK, and has significantly increased its own services to
Australia and New Zealand since 2003. |
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Last year, Dubai won several best airport awards
from international organisations/publications such as IATA and Business
Traveller. With the expansion of its airport, heavy investments in improving
Dubai as a leisure/business destination and aggressive expansion by Emirates,
Dubai is set to become a major international air hub. |
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New Bangkok International Airport |
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Bangkok’s new Suvarnabhumi Airport will remove the
capacity constraints of the existing airport. It is envisaged to have an
interim handling capacity of 45m passengers, and 100m upon full development. |
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Bangkok’s traffic base and position as a hub is
further supported by Thai Airways’ (TG) revamp and Thailand’s liberal approach
in allowing foreign carriers to set up airlines in Thailand. |
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TG has revamped its domestic network, added more
international destinations, increased frequencies to existing destinations,
and expanded its fleet (including the Airbus 380 and Airbus 340-500/600
aircraft). Malaysia’s AirAsia also started operations from Thailand under the
Thai AirAsia set-up. |
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On the cargo front, Qantas has recently taken a
49% stake to set up a Bangkok-based cargo airline, Thai Air Cargo, with the
view to operate regional cargo operations from Bangkok. |
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[1] 2003 was not used as a base because
of SARS. |
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Source:
Ministry of Information, Communications & The
Arts Press Release 8 Nov 2004 |
Changes in Singapore Aviation Landscape
