And then there are three

From four to three (if you exclude SIA Cargo which will be absorbed as a division of the parent airline in 2018), Singapore Airlines (SIA) will now have three carriers in its stable as sister budget subsidiaries Scoot and Tigerair announced the completion of their merger come July 25, 2017. SilkAir, defined as a regional carrier, makes up the trio.

Both Scoot and Tigerair will henceforth operate under the Scoot brand. It seems logical, considering the poor reputation of Tigerair and the plans to expand Scoot into the long-haul. Unlike Tigerair, Scoot was launched as a medium-haul budget carrier.

The merger was long anticipated as the operations of the two carriers began to overlap with Scoot operating the short-haul as well. At the same time, loss-making Tigerair’s days were numbered as it struggled through a period of difficult times both financially and operationally, scarred with customer complaints of poor service.

While it certainly makes sense for the two carriers to eliminate intra-competition and pool their resources, it also opens the field for Scoot to expand its network. Already it is trailing behind Malaysian budget carrier AirAsia, whose chief Tony Fernandes is known to be testing new boundaries beyond the four-to-five hour limitation of the budget model. While AirAsia is not always guaranteed success, it has enjoyed headstart advantages.

Courtesy AirAsia

Scoot has announced a service to Honolulu by the end of the year, six months after AirAsia launches its service from Kuala Lumpur. Both carriers will operate via Osaka. It will be interesting to see how the competition plays out.

Scoot may be advantaged by its hub connections at Changi Airport while AirAsia will rely on its wide regional network to take advantage of Kuala Lumpur International Airport’s lower costs in a price-sensitive leisure market.

Scoot will benefit from the reputation of the SIA brand association, but somehow that has not rubbed off on the beleaguered Tigerair.

The competition is set to redefine the budget game as Scoot and AirAsia battle it out to be the region’s leading carrier not only for the short-haul but also beyond.

Asian airports dominate Skytrax best rankings

Courtesy Changi Airport Group

Not surprising that Singapore Changi clinched Skytrax’s 2017 Best Airport award for the fifth year running, commended for having the best leisure activities. As a hub airport, it is how best travellers are relieved of the stress of travel that will garner an airport favourable ratings. Changi is a favourite transit airport with its array of amenities, restaurants and shops.

What else can we infer from the survey said to be based on 13.82 million responses from 105 different nationalities, conducted from July 2016 to Feb 2017?

The top spots are held by familiar names of the last five to six years – Incheon International (3rd), Munich (4th), Hong Kong International (5th), Munich (4th), Zurich (8th) and London Heathrow (9th).

Incheon was ranked the best airport in 2012 before Changi took over in 2013, and until this year, it was a close second.

Special mention should be made of London Heathrow, which was the world’s busiest airport for international traffic until Dubai took the honours from it for two years now – Dubai did not make it to the list as being among the best.

It would appear that performance consistency is key, yet stagnation can lead to one losing the competitive edge. Changi has always prided itself as being innovative, constantly upgrading and expanding its facilities.

Making strides are Tokyo Haneda (2nd) and Doha’s Hamad International (6th). Tokyo Haneda was ranked 9th in 2013, 5th in 2015, 4th last year and 2nd this year. Hamad entered the top ten list at the bottom last year and made it up to 6th this year.

Besides Tokyo Haneda, there is a second Japanese airport in the list, namely Centrair Nagoya (7th). Tokyo Narita and Kansai Osaka were also ranked in previous years. It does say a lot about Japanese airport management.

It is no surprise that four Japanese airports are ranked among the top ten cleanest airports – Tokyo Haneda (1st), Centrair Nagoya (3rd), Tokyo Narita (5th) and Kansai Osaka (9th). Except for Zurich (8th) and Hamad (10th), this list is dominated by Asian airports, the others being Incheon (2nd), Taiwan’s Taoyuan (4th), Changi (6th) and Hong Kong (7th).

Similarly, the best airport staff service list is made up of nine Asian airports with the exeption of Vienna (10th): Taoyuan (1st), Incheon (2nd), Tokyo Haneda (3rd), Changi (4th), Centrair Nagoya (5th), Kansai Osaka (6th), Kuala Lupur International (7th), Tokyo Narita (8th) and Hong Kong (9th). Clearly service is an Asian strength.

One other Asian airport deserves some mention as the most improved airport – Jakarta’s Soekarno-Hatta Airport. Will it make it to the list as one of the world’s best?

By bow you have noticed that no airport outside Asia, the Middle East and Europe are listed in this year’s Skytrax top ten/ The only outsider was Vancouver International which was ranked 9th in 2012, 8th in 2013 and 9th in 2014. Yet again, this does not come as a surprise.

Singapore Changi is world’s best airport according to Conde Nast

Courtesy Alamy

Courtesy Alamy

IT is no surprise that Singapore Changi is voted yet again the world’s best airport by readers of Conde Nast. The airport has long been a darling of transit travellers, particularly those who needed a refreshing break for recharge on a long haul or those who wanted to waste no time in connecting to their final destination

If you consider Conde Nast readers’ choice of the top ten airports, Changi gets top marks for its facilities and amenities which contribute to its ideal of being a destination in itself, complete with indoor gardens and a waterfall, open-air decks and variety of restaurants, numerous shops, various lounges for all classes of travellers, a swimming pool and even a free 24-hour cinema. There are also quite nap areas to catch forty winks.

Little wonder that Qatar’s Hamad International (ranked 3rd), Dubai International (5th) and Hong Kong International (6th) are also noted for their shops and lounges. Hamad International has a hotel inside the terminal, which is a boon for travellers with long layovers needing to rest for half or a full day. Dubai International is the world’s third busiest airport but number one in terms of international travellers, and is long known to have the world’s biggest duty-free shop.

A wide network and quick connections are significant features of these airports. Hong Kong International, for example, is a popular regional hub with connections to some 50 destinations in China. This airport is often ranked as one of the top three airports in the region along with Changi and Seoul International, which took second place in the Conde Nast survey.

Proximity to the city and quick access seem to also swing the decision of Conde Nast readers in the airport’s favour.  Tokyo Haneda (8th) is only a 13-minute ride via rail to the city, compared to Narita. It s popularity has increased with more direct services offered by both Japanese and American carriers between Japan and the US. Denmark’s Copenhagen Airport is also a short ride of 12 minutes via train from the airport. And if you are travelling to or from Canada’s Billy Bishop Toronto City Airport (4th), it is an even shorter 6-minute walk via a pedestrian tunnel.

Other airports ranked in the top ten by Conde Nast are Helsinki Airport (9th) and Zurich Airport (10th).

Soekarno-Hatta International Airport ready to take on regional competition

Photograph by Gunawan Kartapranato, courtesy Wikimedia Commons

Photograph by Gunawan Kartapranato, courtesy Wikimedia Commons

Last week a new 5-trillion rupiah (US$382 million) terminal opened at Indonesia’s Soekarno-Hatta International Airport – also known as Cengkareng Airport (CGK) – in Jakarta, capable of handling about 25 million passengers a year when fully operational by March next year.

The airport is already handling more than 60 million passengers annually, almost three times the 22 million originally planned for. The capacity was subsequently expanded to 38 million. With a large domestic market, CGK ranked as the world’s 17th busiest airport.

Indonesian officials said CGK would be able to rival the neighbouring airports of Changi (Singapore) and Kuala Lumpur International (KLIA) (Malaysia) in attracting international passengers to transit at Jakarta. Rivalry in the region is to be expected. Changi has long been the indisputable airport of choice for transit and transfer traffic, and CGK is increasingly looking at retaining traffic out of Indonesia for the long haul direct from its base. Why, for example, should an Indonesian travel to London via Changi and not direct from CGK?

Changi has the edge in cutting edge technology, a reputation for efficiency and excellent customer service, and a wide spectrum of connectivity. Whereas in the past, its closest rivals in the region used to be KLIA and Bangkok’s Suvernabhumi (Don Muang before that), the challenge today comes from farther afield in Hong Kong International (HKIA) and Dubai International. It tells one things: the home-based carrier plays an important role in enhancing the advantage of the airport – Singapore Airlines in the case of Changi, Cathay in the case of HKIA and Emirates, Dubai International. So CGK may get a boost from Indonesian flag carrier Garuda as it continues to renew and grow.

Changi for one does not rest on its laurels as it continually upgrades and expands its facilities. But make no bones about CGK’s ambition. To put it more modestly, Ituk Herarindri, director of facilities of Angkasa Pura 2 which operates CGK, said: “We are planning it to be a hub like Singapore and Kuala Lumpur.”

Changi boosts capacity to combat competition

Courtesy CAG

Courtesy CAG

Singapore Changi Airport does not hide its ambition to be the region’s hub airport, and it is not sparing any effort including spending lots in holding on to that dream. Works are in progress for a fourth terminal, costing S$1.3 billion (US$949 million), to be completed by the last quarter of 2017, and this will be followed by the construction of a fifth terminal to be fully operational by 2025.

As competition among regional airports intensifies – the region being redefined in this age of long range aircraft to include Middle East airports such as Dubai International – it looks like creating capacity within impressive architectural structures complete with the ultimate in creature comfort and distractions (or attractions, so to speak) is the answer to staying ahead of the competition. That has been evidenced to a degree by Changi consistently winning awards as one of the world’s best airports.

Indeed, no airport is more passionately engaged in continually expanding and upgrading its facilities than Changi. Terminal 4 will add another 16 million passengers per year to existing capacity at three terminals of 66 million passengers. With the planned capacity of Terminal 5 to handle up to 50 million passengers, this will give Changi a total capacity of 132 million passengers by 2020. Terminal 5, according to Changi Airport Group (CAG), is set to be one of the largest terminals in the world if not third after Dubai and Beijing. And it looks like the project does not end there in land scarce Singapore. CAG said in its statement: “There will be land for subsequent expansion.”

There’s a lot of conviction there, and optimism no less. Last year Changi handled 55.4 million passengers, which means the airport was operating under capacity of close to 20 per cent. But that is not an issue of concern; viewed positively, Changi is well equipped to assimilate any unprecedented growth surge without bursting at its seams. The numbers for December looked good, and it is an optimistic 2016 ahead. Not having enough capacity to net the growth would be the greater evil. Besides, planning ahead, the extra room is to be expected. Then again there is the argument that capacity creates growth, and considering the lead time in airport development, Changi will not be caught short on supply. Of no lesser influence are the plans of competing airports such as Dubai to increase its capacity from 80 million to 250 million passengers, and Korea’s Incheon Airport similarly from 80 million to 145 million passengers.

The real issue, however, is whether the excess capacity is realistic vis-à-vis without creating uneconomical white elephant space. Historical data show Changi growing at an average rate of 2.85 per cent from 2011 to 2015.
Of course, convenient straight line extrapolation can be off the mark when the near term is expected to perform above average. Going forward, Changi’s growth is likely to be higher as demand for seats rises on the back of an improved global economy. According to the International Air Transport Association (IATA), air travel will continue to accelerate and expand by an average of 5.3 per cent this year, which is higher than Changi’s best year in recent times. Asia-Pacific along with Latin America and the Middle East will see the strongest passenger growth, with China leading the field, growing above the global average. Changi will need to target an annual growth rate of about nine per cent over the next two years to maintain its current level of overcapacity by the time Terminal 4 is operational. Whether that is a reasonable buffer is a different issue and dependent upon how CAG visualises the competition, but consider how Terminal 5 will add another 50 million passengers less than a decade down the road.

By comparison, close rival Hong Kong International Airport (HKIA) grew 8.1 per cent last year to reach 68.5 million passengers, which is 23.6 per cent higher than Changi’s number. HKIA is expected to continue to grow at the same rate, particularly with the rising demand for air travel in China, which, according to IATA, will account for 193 million (of which 34 million will be travelling internationally) or nearly a quarter of the 831 million new passengers in its forecast. Situated at the doorstep of mainland China, HKIA has the edge over Changi, which will also benefit from the Chinese yen to travel abroad with Singapore as an attractive destination and a convenient stopover hop to other destinations. What has become more challenging for Changi is HKIA’s increased positioning as the gateway to Asia for trans-Pacific traffic.

The Asia-Pacific region itself is expected to add some 380 million passengers both domestically and internationally. Changi, which has experienced double-digit growth in budget traffic in recent years that outperformed full-service airlines, will benefit from regional traffic particularly with the long overdue full implementation of the Asean Open Skies. Connections with secondary airports will boost the number through Changi, whose top ten city links by passenger traffic in 2015 were all within Asia with the exception of Sydney at the bottom of the list (unless as some Australian politicians would have preferred it to be considered more appropriately aligned to the Asian economic bloc). Jakarta, Bangkok, Kuala Lumpur, Hong Kong and Manila are ranked the top five in that order.

However, as a hub airport which is highly dependent on connecting traffic, Changi is challenged by increased non-stop flights between destinations for the long haul and by alternative hubs, its most notable loss being the shift in 2013 by Qantas for its Kangaroo Route flights to stop at Dubai instead of Changi. Dubai has gained significant hub status for connections to not only Gulf destinations but also airports in Europe, Africa and the Americas. Changi’s competition used to be limited to nearby airports such as Bangkok Suvarnabhumi (since Don Muang) and Kuala Lumpur International (since Subang), not even including then Hong Kong Kai Tak (before its successor at chap lap Kok), the competition has widened to as far away as Dubai, which has emerged as Changi’s biggest threat. The Middle East airport, which is home to Emirates Airlines, boasted to have surpassed London Heathrow when it reported 11-month passenger traffic of 70.96 million passengers last year. That feat embraced an earlier victory in surpassing Changi. Notably, both HKIA and Dubai are handling more passengers than Changi.

To meet the challenges, Changi announced it has launched several initiatives to boost air traffic management capabilities and capacity. Indeed, as Singapore Senior Minister of State for Transport said, “It is not going to be enough just to build airport capacity and have lots of room for airlines to move in and out, because if you don’t have the air traffic management capabilities, you won’t be able to deal with the capacity.”As an example, Changi reduces the separation between airlines to allow more flights to land and take off. By the end of the next decade, Changi could handle 700, 000 flights a year, twice as many as it is handling presently.

CAG chief executive Lee Seow Hiang said: “2015 was a year of two halves for Changi Airport. Following 2014, which saw a number of airline incidents in the region and depressed yields for many regional carriers, we had a relatively weak first six months with flat growth for the period. Nevertheless, we pressed on to actively woo new airlines and seek growth opportunities with existing ones, and our efforts have yielded some positive outcomes.”

Last year Changi welcomed eight new carriers which are largely regional and no-frill operators, including Batik Air, Thai Lion Air and Myanmar National Airlines. Ten new points including Lucknow in India and Luang Prabang in Laos were also added to its network. More links including Nadi by Fiji Airways and Dusseldorf by Singapore Airlines are in the offing.

Mr Lee added: “Changi Airport is well placed to capture future growth with our expanding network, including many secondary cities, to key markets like China, India and Indonesia. We will continue to work closely with our airline partners to establish new connections to develop the Singapore air hub and better serve our passengers.”

So much for the optimism and with the industry blessed with favourable economic factors such as the low fuel price and the region’s growing affluence and its untapped tourism potential, this year and the next leading to the opening of the new Terminal 4 certainly look like exciting times of expectations for Changi. With so much money sunk into the projects, naturally there will be concerns about costs among users. Budget carrier Jetstar Asia CEO Barathan Pasupathi said: In 2016, even though fuel prices have come off in the market, our paramount challenge in Singapore is cost relative to Southeast Asia. For Singapore which is putting so much of investment in capital expenditure and in investments into airports – with Terminal 4, Terminal 5 (and) Runway 3, it’s going to be very important to find a model where Singapore is cost competitive as a hub.”

However you view Changi’s ambition, the airport will be an aviation jewel of showcase reputation. Not difficult to figure out if that in itself is a significant driver in the race to be the world’s best.

Handling priorities in a bomb threat situation

BETTER the hassle and feel safe than the convenience and risk security. So it is not surprising, even expected, that airlines and airports once again rally to implementing additional security measures following the Paris attacks last month. Never mind about some cynics admonishing the world not to over-react or respond with what they have referred to as knee-jerk reaction. You can’t be too careful about security especially in the wake of yet another senseless debacle.

So it is that passengers arriving from Paris get screened more thoroughly than normal even as according to many passengers they are already subject to stringent checks in Paris, apparently held back for as long as four hours. A friend told me that even arriving from Kuching recently, the passengers were subject to similar checks. But they weren’t exactly complaining about another two hours at Changi.

Photo: Jeanne Ong/TWITTER

Photo: Jeanne Ong/TWITTER

On Nov 23, The Straits Times reported that Singapore Airliens (SIA) flight SQ001 had received a bomb threat (“Bomb threat causes 2-hour wait to leave SIA plane at Changi Airport”). As reported, “the aircraft was moved to a relatively secluded part of the airport, and that passengers were not allowed to disembark until around 2om.”

It is not easy to decide on the best course of action to take under the circumstances, and the authorities had to act fast and move discreetly such that they do not cause any unnecessary alarm and panic among the passengers. But it does lead one to wonder if the standard procedure should not be to evacuate passengers and crew from the plane and isolate them in a holding room, where they may be frisked and questioned as necessary. Isn’t the safety of passengers and crew the top priority? Heaven forbid that something untoward should happen with all the passengers and crew still on board!

In the case of SQ001, the aircraft was moved to a relatively secluded part of the airport, and passengers were not told about the threat but that there was an issue at the boarding gate. Baggage was subject to additional security screening, the first bags arriving on the claim belt more than three hours after the plane had landed. But that was to be expected. Noting that security procedures may contain sensitive information and access to them may be limited for obvious reasons, travellers will have to rest assured that the authorities to the best of their knowledge understand their priorities.

Changi Airport feels the heat

Courtesy Changi Airport Group

Courtesy Changi Airport Group

Singapore Changi Airport is feeling the heat of competition, which has pressured the world’s best airport (Skytrax survey 2015) to cut airport charges for airlines and introduce incentives for ground agents. The airport admits to the increased competition posed by airports such as Hong Kong International (HKIA) and Dubai International.

Airlines operating large aircraft (weighing over 360 tonnes) can expect discounted landing fees of up to 5% from May, in addition to existing rebates of 50% for long haul flights of more than nine hours which will continue to be in force until Mar 31 next year. Current discounts of 50% on aircraft parking and 15% on aerobridge charges will also be extended to Mar 31 2017.

Interestingly, the slate of concessions will benefit not only the airlines but also ground handlers and transit travellers.

Handling companies Singapore Airport Terminal Services and Dnata (previously Changi International Airport Services) will enjoy a 20 per cent rebate on flight catering franchise fees and a similar discount for ground-handling fees from May until Mar 31, 2017.

Transit passengers will pay a lower passenger service fee from July 1, a hefty reduction from S$9 (US$6.82) to S$3. Departing passengers pay a fee of $S34.

Changi Airport Group (CAG) chief executive officer Lee Seow Hiang said: “Changi Airport’s success is very much dependant on the contributions of our airport partners, including airlines and ground handlers. Notwithstanding lower fuel prices, the operating environment in the near-term remains challenging for the region’s airline industry. Likewise, there are also tough conditions for our ground handlers. They face severe manpower constraints which may affect their ability to maintain the high level of service and efficiency expected by airlines and their passengers.”

A good case no doubt of landlord and agents working closely together to the benefit of users, but very clearly, this is about the survival of the airport Changi. Mr Lee added, “We work with them to achieve success and growth of their operations at Changi Airport.”

While Changi stands head and shoulders above its immediate neighbouring airports such as Kuala Lumpur International (KLIA) and Bangkok’s Suvarnabhumi Airport in terms of infrastructure, facilities, efficiency and service, it is no longer endowed with guaranteed business as aviation geography shifts to include competition wider afield from airports outside the Southeast Asian region such as HKIA and Dubai farther away. These hub rivals are as well equipped and offering equally attractive propositions for both airlines and travellers.

Take, for example, the kangaroo route. Qantas has shifted its hub from Singapore to Dubai, which is repositioning itself as the centre of the aviation world with connections to Europe, Africa, the Americas, the Middle east and Asia. Where once Middle East airports such as Bahrain and Abu Dhabi were positioned as necessary technical stops, Dubai today is able to leverage on advanced long range aircraft technology to offer a one-stop hop competing with Changi.

Another example is how HKIA is positioning itself as more than just a door into the massive China market but the Asian gateway for transpacific traffic.

Changi is therefore becoming increasingly challenged as a hub airport that relies heavily on connecting and transit traffic and its ability to extend its traffic hinterland, the very reason why it is paying a lot of attention to such travellers and constantly upgrading its facilities in its promotion of the airport as an attraction or destination in itself, the much-hyped airport city concept. It is easy to see why Changi is the world’s best airport, the way that travellers are pampered even for a short layover, such attention becoming even more critical if they have to sit through long hours of waiting.

However, if being the world’s best airport is not enough to stave off competition from rival airports, ultimately cost becomes the swing vote for operators. Airlines whose business is largely transit traffic may choose to stop between destinations where the cost is lower, assuming all other essential factors that matter have been reasonably satisfied. That includes good connectivity that helps the operators to avoid more costly stopovers, and today’s proliferation of codeshare arrangements has certainly facilitated such options. Changi’s concessions granted to large aircraft and long haul flights demonstrate its desire to retain and attract international traffic through its hub.

A simple comparison of the published fees for Changi (pre-discounted) and Dubai show the former to be more costly, charging for example twice or more as much for landing, say, a 100-tonne aircraft. Changi also charges a minimum base rate of equivalent US$39 to US$78 for parking whereas Dubai offers free parking for up to three hours. Aerobridge use for a 450-seat aircraft at Changi costs the equivalent of US$400 compared to Dubai’s equivalent of up to US$266 (including security services if needed and fire coverage).

Not keeping its cost down to be competitive may also reduce Changi’s attractiveness as the airport of choice for regional flights when cheaper alternatives are only a hop away. The airport continues to thrive on the growth of budget carriers as regional skies become more liberal, but this also means the potential of increased competition from cheaper secondary airports. Malaysia recently announced plans to revitalise Sendai Airport, which is a stone’s throw from Changi, starting with a new carrier named flymojo to be based there. In time to come, Changi may be pressured into re-examining its non-discriminatory handling of legacy and budget carriers within the same terminal (after the short life of a separate budget terminal which has since made way for the construction of a new non-specific terminal). However, instead of making it less attractive for low-cost carriers, it seems Changi is making it more attractive for the big long haul operators through its plate of rebates.

What more can you ask when excellent facilities are matched with competitive rates? It looks like an attractive package. Changi, as any airport, must now understand that geographical advantages can shift. The aviation landscape is constantly changing, influenced by not only technological advances but also political and commercial relations. KLIA and Suvarnabhumi may well revive an erstwhile threat to Changi’s continuing growth. Or another airport in the region. There is good news and there is bad news. While airports too can contribute to that shift, it is not improbable that a threatened incumbent may be able to do something timely to check the erosion of its importance. That’s the challenge for Changi.

This article was first published in Aspire Aviation.