Changi, SIA need to move in formation
SUCH was its significance to the economy and Singapore's identity that it was a highlight of a National Day Rally - a massive expansion boost for iconic Changi Airport.
Prime Minister Lee Hsien Loong dwelt on its significance for Singapore's future in his 2013 rally speech.
A third runway and fifth passenger terminal were to be built on a site separated from the existing airport by Changi Coast Road.
The price was not given at the time but, nearly two years on, the total cost for the development of the 1,000ha Changi East site - about three-quarters the size of the current airport premises - is expected to run into tens of billions, at least.
It is a huge but necessary investment for the Singapore aviation hub, with demand for Asian air travel set to soar in the coming decades and rival airports in Hong Kong, South Korea, Kuala Lumpur, the Middle East and elsewhere boosting capacity to prepare for the growth.
However, some observers have questioned the scale and aggressive timeline for Changi East - it is set to be ready in the mid-2020s - given the slowdown in passenger traffic at Changi Airport over the last one to two years.
Their concern is that Terminal 5 (T5), with an initial capacity of up to 50 million passengers a year, or more than T1 and T2 put together, could end up a white elephant if traffic projections are inaccurate.
Apart from T5, the mammoth project includes building the third runway and more than 40km of taxiways - about the length of the Pan-Island Expressway (PIE) from Tuas to Tampines - to connect the airport's two existing runways to the third landing strip.
New aircraft maintenance and repair facilities, as well as hotels and offices, are being planned for the site.
When the works are completed, Changi Airport will be twice the size it is now.
But it will take more than just a spanking new terminal for the Singapore hub to fly high.
STRONG HOME CARRIER NEEDED
Be it Dubai, Doha or Hong Kong, the fast-growing hub airports have one thing in common: strong home carriers like Emirates, Qatar Airways and Cathay Pacific.
Airports that aspire to be major hubs for connecting passengers need solid backing from home or national carriers, said Terence Fan, a transport specialist from the Singapore Management University.
This is because foreign airlines are focused mainly on carrying people to and from, rather than through, an airport, he noted.
While this increases point-to-point traffic, it does little to boost an airport's position as a hub for connecting travellers, which is important for Changi Airport's long-term growth.
Based in a small country with limited attractions and domestic air travel market, it is critical for Changi to grow transit traffic, which now accounts for about 30 per cent of its total passenger haul.
This became a challenge following the global financial crisis of 2008, which dealt a serious blow to the premium long-haul business of flag carrier Singapore Airlines (SIA).
High fuel prices that followed the crisis made it tough for SIA to operate long-haul flights.
This led to the airline axing its non-stop flights to the United States and scaling back other services, even as rivals continued to spread their wings globally.
The last all-new destination SIA launched was four years ago, to Sao Paulo in Brazil.
Much of the growth within the group in the last few years has been driven by regional carrier SilkAir and long-haul budget arm Scoot.
Meanwhile, the threat from Gulf carriers - Emirates, Etihad Airways and Qatar Airways - continues to intensify.
In the 12 months to end-March, Emirates launched nine new destinations, including four freighter-only routes. It also added services and capacity to 34 cities on its route network across Africa, Asia, Europe, the Middle East and North America.
Last year, Dubai International Airport handled 70.5 million passengers, snatching for the first time the title of world's busiest international airport from London's Heathrow.
Changi Airport, in comparison, handled a record 54.1 million passengers last year but growth over the previous year was a paltry 0.7 per cent - the lowest since 2009.
Between now and 2020, the three Middle Eastern airlines expect to grow their capacity, measured by seat miles available, by more than 80 per cent to about 550 billion.
In contrast, SIA does not expect to grow this year, though subsidiaries SilkAir and Scoot plan to expand their operations.
Dubbed "super connectors" for their reliance on transit business, the Gulf carriers - with their aggressive expansion and seemingly unlimited funds - are out to dominate the global air travel market, posing a huge challenge to SIA and other traditional carriers in Europe and the US.
Already dominant in the Asia-Europe space - dealing a huge blow to SIA and other carriers like Lufthansa and Air France, which have seen their market share shrink - the Gulf airlines have now set their eyes on the US market.
Closer to SIA's home base, Cathay Pacific is opening six new long-haul markets over 18 months.
Within the region, low-cost carriers are giving SilkAir and Scoot, as well as Tigerair - more than half-owned by SIA - a run for their money.
Amid the brutal dogfight, critics have accused SIA of being stuck in a rut and risk-averse, traits that do nothing to serve the national agenda of growing Singapore as a premier aviation hub.
The airline is focused only on the bottom line and serving its shareholders, they further allege.
They are too harsh, said Associate Professor Fan.
"SIA being a profit-minded business is not a bad thing. A money-losing SIA may not necessarily bring in more visitors," he said.
Indeed, SIA needs a strong balance sheet to invest in new products and technology that ultimately improve service levels and attract even more customers to and through Singapore, other analysts said.
Everything that SIA does is about growing the Singapore hub, the airline's chief executive, Goh Choon Phong, declared unequivocally.
He told The Straits Times recently: "If you look at our portfolio, all our four carriers - SIA, SilkAir, Scoot and Tigerair - are based here. If we do not grow in Singapore, all four will be affected. How can we not grow in Singapore?
"The fact that we're putting so much (effort) into integrating the operations of all four shows how important Singapore and Changi Airport are for us."
He added that "the results will come but it will take some time" for all four to integrate their flight timings and operations so they can effectively feed each other, with Changi Airport as the home base.
The ultimate plan is for passengers to connect conveniently, not just between SIA and SilkAir, but also with Scoot and Tigerair.
With the demand for air travel currently being driven mainly by regional and low-cost travellers, the group is focused on building up its foothold in these markets.
As for SIA's long-haul premium business, which has been battered by Emirates and other rivals, the airline does not have the aircraft it needs to compete effectively.
Mr Goh said: "Like it or not, the reality is that the current aircraft is simply not as efficient, especially when it comes to long-haul operations."
SIA currently operates Boeing 777 planes, as well as the Airbus A380 superjumbo and the A330-300.
The arrival of the Airbus A350 from early next year will allow SIA, which has ordered 70 of the planes, to revive its long-haul business, Mr Goh said.
The plane - with a seating capacity of over 300 people - is touted to be about 25 per cent more fuel efficient than existing aircraft in the same category.
Less fuel burn will allow SIA to expand its long-haul operations, to Europe for example, in a more cost-effective and viable manner.
Mr Goh hinted at plans but did not divulge details.
While waiting for the A-350 planes, SIA has been building up partnerships with other carriers through codeshare deals which allow SIA to sell seats on flights operated by partner carriers.
This allows the airline to expand its global network of destinations without having to mount its own flights.
After several tough years, SIA seems to be turning the corner and Changi Airport's plans to significantly boost capacity with T5 are well on their way.
Now, more than ever, it is critical for Changi and SIA to join hands for a win-win for both parties and the Singapore air hub.