DO NOT PUB: Changi air hub’s flourishing crucial for economy: Experts, Singapore News & Top Stories

In January last year, just before the onset of the Covid-19 pandemic, Changi Airport was the 9th largest airport in the world based on scheduled airline capacity.

It is now in the 134th position.

Changi was linked to a total of 173 cities as at Dec 2019, but the number has now dropped to 97. Only 64 airlines were operating at the airport as at the first week of this month, down from 91.

Meanwhile, Singapore Airlines (SIA) was ranked 49th in terms of the number of passengers its scheduled flights could carry. It has now dropped to the 90th place.

The SIA Group, comprising SIA and Scoot, now covers 67 destinations, down from 137 previously.

While these numbers are an improvement from a year ago, there is still a long way to go before the air hub is restored to its former glory.

Experts said the road to recovery will not be straightforward, given that the air hub’s fate hinges on a number of factors.

But it is critical that the air hub flourish again, considering its importance to the wider economy. Singapore’s status as business hub and headquarters for companies is linked to Changi Airport’s recovery as well, the experts noted.


DBS Group Research senior analyst Paul Yong cited data from the International Air Transport Association and global advisory firm Oxford Economics, which showed that the air transport sector supports about 375,000 jobs in Singapore, directly and indirectly. It is estimated to have contributed 11.8 per cent of the country’s gross domestic product before Covid-19, directly and indirectly.

Associate Professor Walter Theseira of the Singapore University of Social Sciences said beyond benefiting related industries, such as aerospace engineering, Singapore’s air hub status has given it a huge advantage as a global business centre.

“Air hub status means that you enjoy frequent and competitive flights to a large number of destinations, including direct flights to major global cities,” he said.

He noted that Singapore was a good location for global businesses that knew they were only a few hours’ flight away from any of their regional operations.

But it is unclear if this matters any more, given that businesses have managed without executives and employees flying for the past two years, added Prof Theseira.

“We are facing an environment where the US and EU have largely opened up, at least domestically, and so has China. Comparisons are inevitable and become more difficult to address as travel gets back to normal elsewhere.”

Independent aviation analyst Brendan Sobie from Sobie Aviation said he has heard anecdotes about people leaving Singapore and companies reducing size owing to the continued inability to travel.

He added this was a regional issue, citing examples of expats and companies moving to Dubai from many Asian hubs including Bangkok, Hong Kong, and Singapore, as Dubai opened up faster.

CIMB Private Banking economist Song Seng Wun said Singapore cannot afford to stay shut.

“We have a very, very tiny domestic market and extremely small domestic consumption that we can rely upon as an offset.”

He said the fate of the local hospitality industry, including that of tour bus drivers and tour agencies, is closely linked to the air hub.

“Nobody can survive without income for this long. The Government has helped, but that is only a small offset,” said Mr Song.


While Changi Airport and SIA have tumbled down the rankings in terms of passenger numbers, they have improved from a year ago.

Changi Airport also has nine more links to cities than it had in December last year. In recent months, links have been restored between Changi and places like Phuket, Munich and Manchester.

The link to Phuket, for instance, has let Changi tap transit passengers heading to the Thai island.

On Changi’s fall in the rankings for scheduled passenger capacity, Mr Mayur Patel, head of Asia-Pacific at OAG Aviation, said: “Falling such a long way is obviously significant but it has to be placed in the context of a pandemic during which international travel has been severely restricted, allowing the list of the largest airports… to be dominated by those that have large domestic networks.”

SIA is expected to reach 33 per cent of its scheduled passenger capacity relative to before the pandemic by next month. But it is carrying only 4 per cent of its pre-Covid-19 traffic.

Mr Patel said: “In the long term, with a strong shareholder support, SIA is well positioned for recovery through its segment diversification and coordination with like-minded industry stakeholders.”

He said low-cost carriers like Scoot will recover faster when borders open across the region.

Mr Sobie noted that Singapore has begun opening up to Europe with the Vaccinated Travel Lane to Germany. But he said the numbers would not help the air hub much in terms of passenger volume.

He said VTLs would also not help draw in transit traffic, which accounted for about 30 per cent of the passengers at Changi prior to the pandemic.

He said the restoration of transit traffic is not entirely in Singapore’s control as it also depends on other Asia-Pacific countries opening up their borders.

On the airline front, he noted that SIA and the Government have made a strategic play to resume flights to more places even though demand remains low.

Mr Sobie said SIA has been operating most international flights in the region, enabling it to pounce should demand improve quickly. But he added any improvement in demand is likely to be gradual, which could somewhat negate any advantage that SIA and Changi may have, as other airlines and hubs will be able to gradually add back international capacity.


Experts said that while the impact of Singapore easing border restrictions unilaterally will be limited, it is still a step forward.

DBS Group Research’s Mr Yong said: “Our opinion is that if Singapore wants to maintain or strengthen its position as an air hub, as well as trade and finance hub, it has to keep pace with what the rest of the world is doing in terms of reopening borders, or even lead the reopening in the Asia-Pacific at least”.

Mr Mike Tansey, managing director and travel industry lead for growth markets at Accenture, said the firm expects that recovery in South-east Asia might not take place till June next year.

He said Singapore can speed up its recovery as a leading air hub by establishing an internationally recognised health visa verification system that lets governments verify a traveller’s vaccination and test credentials in advance of travel.

Mr Tansey noted that Singapore has still retained its international standing as a leading air hub.

“This success was not achieved overnight nor will it diminish as quickly,” said Mr Tansey.

“However, Singapore needs to steadily build momentum both in terms of the number of flights and – more importantly – the volume of passengers, to breathe life into and re-energise its aviation hub.”

DO NOT PUB: Changi air hub’s flourishing crucial for economy: Experts, Singapore News & Top Stories Source link DO NOT PUB: Changi air hub’s flourishing crucial for economy: Experts, Singapore News & Top Stories

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