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.

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Garuda Indonesia poised to expand

IT came so timely that following the opening of the new Terminal 3 at Jakarta’s Soekarno-Hatta International Airport and its declared ambition to rival Singapore Changi Airport and Kuala Lumpur International Airport in attracting international traffic, Indonesian carriers have been cleared to resume flights to the United States after an absence of nine years.

The Federal Aviation Administration (FAA) is satisfied that Indonesia is complying with International Civil Aviation Civil Organization (ICAO) safety standards. Formal final approval from Department of Transport (DOT) and FAA is expected soon.

Indonesia has been plagued by a number of air mishaps involving home-based airlines Lion Air, Mandala Airlines and Garuda, particularly in the years before 2007 when the US imposed a ban on its operations on its soil. More recently in 2014, Indonesia AirAsia crashed into the Java Sea, killing all 162 people on board.

The US lift of the ban came after the European Union had lifted its ban on three other Indonesia airlines – Lion Air, Batik Air and Citilink – in June this year.

Garuda AFP

With the US and Europe open, Garuda for one, if not the other Indonesian carriers as yet, is poised to expand. The Indonesian flag carrier has launched direct services to London (Gatwick) and is planning to launch services to New York (JFK) and Los Angeles next year. And if the Sytrax survey for the last two years (2014 and 2015) is anything to go by for its success, the airline was ranked among the world`s top ten airlines which include other Asian airlines namely Singapore Airlines, Cathay Pacific and EVA Air.

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.

Can Emirates tie-up save Malaysia Airlines?

Courtesy Wikipedia Commons

Courtesy Wikipedia Commons

Malaysia Airlines (MAS) has signed a mega codeshare deal with Emirates Airlines. The commercial partnership will allow the former access to more than 90 locations in the United States, Europe, the Middle-East and Africa via Emirates’ Dubai hub. MAS will terminate its own direct flights to Paris and Amsterdam along with codeshare agreements with existing partners. In exchange, Emirates passengers can connect MAS flights within the Asia Pacific region.

Sounds familiar? Indeed, this looks like new man Christoph Mueller at the helm of the loss-making Malaysian flag carrier doing what Qantas chief Alan Joyce did in 2013 when a mega alliance with Emirates allows Qantas passengers similar extensive access to a host of destinations out of Dubai. Hired to makeover and turn MAS around, Mr Mueller said of the Emirates tie-up: “Our network architecture is largely complete with this move. It’s a very, very big and important piece in our puzzle.”

But can the tie-up replicate the success of Qantas and contribute immensely to saving MAS? Lest we be too hasty here, it should be noted that though the move is similar, the circumstances aren’t exactly the same.

Mr Mueller’s task is focused largely on cutting costs for a tighter ship, and he has since becoming chief executive in March this year cut thousands of jobs. Another measure involves cutting back on unprofitable routes, and the carrier has so far trimmed capacity by 30 per cent. Mr Mueller was set to shift the focus from operating long haul routes to beefing up regional routes, literally downsizing the carrier; routes that had been dropped include flights to Istanbul and Frankfurt, a precursor of its withdrawal from continental Europe with the exception to London (as in the case of Qantas). This creates a gap in its network which Mr Mueller hopes will be compensated by its tie-up with Emirates, moving away from what he referred to as the traditional ‘kangaroo-route-centric approach”.

The codeshare makes sense since MAS is not making money on its long haul flights. Cost aside, in truth, MAS is just not able to measure up to the competition of regional rivals that ply the same routes, most notably its closest rival Singapore Airlines (SIA). Kuala Lumpur International Airport (KLIA) where MAS is based and Singapore Changi Airport are less than an hour apart, but Changi outperforms KLIA in attracting hub traffic. Here lies the difference between Qantas and MAS. The Australian flag carrier’s move involves a critical shift of its kangaroo route hub from Changi to Dubai, advantaging the latter in the hub competition. Unlike Qantas, MAS does not enjoy a similar base market out of KLIA. Qantas’ shift is also an attempt to lure more traffic away from its rival SIA to connect through Dubai. It is unlikely that MAS will be able to lure hub traffic away from Changi to fly out of KLIA and connect onward from Dubai. MAS’ tie-up with Emirates is best seen as a necessary cost-cutting measure.

Quite clearly Mr Mueller who is often credited as the man who turned around Aer Lingus before joining MAS understands the criticality of the beleaguered carrier recovering strength before competing. He is building a strong regional network which can at the same time feed the longer routes. But the competition in this arena is just as tough. Besides legacy airline competitors such as SIA and Cathay Pacific, there is also an array of budget carriers that are becoming a real threat to full-service airlines. On home ground, MAS faces challenges from AirAsia, which is Asia’s largest budget carrier. The competition will intensify as Asean moves towards a more liberal open skies policy. (See The Elusive Asean Open Skies Dream. Dec 17, 2015).

When Qantas and Emirates inked their agreement, some sceptics cast doubt about its benefits to the former and in fact believed that the latter would gain more by it. But it was Qantas that needed it more as it introduced a transformation program to turn round its bleeding international arm, which Mr Joyce had said in subsequent reports of the airline’s financial performance that the arrangement has boosted the flying kangaroo’s bottom line.

If the Emirates tie-up was a lifeline thrown to Qantas, surely it is all the more so to MAS. In exchange for allowing MAS access to 38 destinations in Europe, 15 in the US and 38 in the Gulf region, Africa and Indian Ocean, Emirates will gain access to some 300 daily MAS flights in its Asian network. The question is: Does Emirates really need it? Perhaps selectively, to tap into the growing markets in countries such as China and Vietnam.

In the bigger picture, Emirates has been forging codeshare agreements around the world. In Asia, besides MAS it already has arrangements with Bangkok Airways, Japan Airlines, Jet Airways, Jetstar Asia, Korean Air and Thai Airways International. Outside that region, it has entered into codeshare agreements with Air Malta, Air Mauritius, Alaska Airlines (pending government approval), Flybe, Jetblue Airways, Jetstar Airways, Oman Air, Qantas, South African Airways and TAP Portugal. Although there appears to be a low count of codesharing with European carriers, Emirates being strong in the competition provides good connections to the region. While the withdrawal of airlines of Qantas and MAS from Europe may be welcome news as seeming reduced competition for European carriers (and other international carriers as well), the feed from those partner airlines into Emirates will actually further strengthen Emirates’ position.

As far as MAS is concerned, riding on the back of another strong carrier may yet be its best bet for recovery.

This is a version of an article that was first published in Aspire Aviation.

AirAsia woes

Photo: Mohd Rasfan/AFP

Photo: Mohd Rasfan/AFP

On Dec 28 last year, AirAsia suffered the loss of an Airbus A320-200 jet which crashed after taking off from Surabaya in Indonesia for Singapore, killing 162 people on board. Then there was talk about the weather being a factor and allegations about the lack of adequate measures governing flying permits.

A report by Indonesia’s National Transportation Safety Committee (KNKT) now points a finger at “the maintenance regime of AirAsia, as well as the actions of the pilots at the controls of Flight QZ8501 when it crashed.” The KNKT found inadequacies in the plane’s maintenance system, which may have overlooked the worrying trend of a recurring technical fault with the Rudder Travel Limiter, an inflight system that helps pilots control the aircraft rudder. Apparently the ill-fated aircraft showed a fault in the system 23 times in 12 months. And the recovered flight data recorder showed that the fault occurred four times within 40 minutes of take-off.

According to KNKT, the pilots managed to deal with all but the last warning alert, after which they apparently tried to reboot the system manually against protocol, causing a power trip that disengaged the autopilot and sending the aircraft into a violent roll or “upset condition”.

In response, AirAsia said its line maintenance crew had “rectified the fault messages at the time of occurrence in accordance with the Airbus maintenance manual and troubleshooting manual, which is why it never qualified as a repetitive fault.” But the KNTK said the carrier’s maintenance systems “did not optimise the post-flight reports.”

There is a second issue – the suspicion that the pilots of Flight QZ8501 might not have been trained to handle the A320-300 in “upset conditions”, such training that might even be considered not required because of the unlikely event of it happening. But Mr Jean-Paul Troadec, former director of France’s aviation authority BEA, said AirAsia had not followed the agency’s rules on training.

The KNKT report has opened the floodgates for potential legal suits by families of the victims. Already 11 families – and others are expected to join them – have filed a collective lawsuit against Airbus. US-based aviation lawyer Floyd Wisner who is representing them told The Straits Times: “We believe the recent report by the Indonesian authorities confirms our position that this tragic crash was caused, at least in part, by a mechanical defect in the aircraft and certain of its components.” The claims alleged that aircraft concerned was “defectively and unreasonably dangerous” in part because Airbus had “negligently breached its duty of care” in the design, manufacturing and assembling of the plane.

Mr Wisner is expected to make hay of the fact that Airbus was aware of the recurring problem, yet took no action to check the trend despite its many reported incidents.

AirAsia too may not be spared. Mr Wisner has lampooned AirAsia for “not handling the claims of its passengers pursuant to international standards.” He added, “Despite the promises of AirAsia’s owner, Tony Fernandes, that the victims’ families would be treated fairly, AirAsia is proving that it is a low fare, low compensation airline.”

Any air disaster of this magnitude is bad news for the carrier concerned. For as long as the memory stays fresh in the mind of would-be travellers, demand for seats to fly that same carrier is likely to suffer. It takes time to heal as the airline repairs its image. Between the time of Flight QZ8501’s fatal accident and the KNKT report, AirAsia might have regained some ground with Mr Fernandes himself spearheading the road to recovery. At the time of the incident, Mr Fernandes was quick to offer his sympathies and assistance to families of the victims. He was personally present to take charge of the situation and manage the media publicity. One year later responding to the KNKT report, Mr Fernandes graciously thanked the KNKT for its “very thorough investigations” and reiterated that his thoughts were with the families and crew of the ill-fated flight. He tweeted: “These are scars that are left on me forever but I remain committed to make Airasia the very best.”

However, as much as Mr Fernandes understands the business, the KNKT report is reopening the wounds of the fatal accident and setting the recovery back a few steps. At the time that the KNKT report was released, AirAsia experienced several flight delays out of Kuala Lumpur International Airport (budget terminal) that left hundreds of passengers stranded and angry. Call it a coincidence. Eleven pilots (some reports had the number as 13) called in sick and while there was speculation that this looked like a revolt by pilots unhappy with working hours and conditions, Mr Fernandes dismissed it as a “freak day” when a new rostering system was introduced. Echoing him, an AirAsia spokesman said: “We have over a thousand pilots. 13 is a small number.”

Sure, a small number per se but not in the context of what happened. If that response was not uttered in jest, it smacked of arrogance. Right now, AirAsia can do with a little less disruption but a little more positive reinforcement. Even in small doses.

This article was first published in Aspire Aviation, titled “Air Asia loses altitude”.

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.