Long-haul sector poses challenge for Changi

Changi Airport offers travellers extensive connections within Asia and to Australia as well as convenient transfers to Europe and North America.

But its footprint in the Middle East and especially Africa, a fast-growing air travel market, is limited.

With the arrival of Ethiopian Airlines last week, there are now 17 weekly services from Singapore to Africa, compared with about 30 each from Bangkok and Hong Kong.

There are several reasons for the gap. First, Asia has been the fastest-growing region. In recent years, low-cost carriers like Tigerair, Jetstar and AirAsia have grown a significant market share out of Singapore with new flights and destinations.

Singapore Airlines (SIA), its regional arm SilkAir and budget offshoot Scoot are also expanding their network in the region. The result has been a boom in intra-Asian links from Changi.

By the year end, for example, the airport will be connected to 28 cities in China - more than for any other country from the airport.

Singapore will also have more air links to China than any other South-east Asian nation.

Developing long-haul markets, a space dominated mainly by full-service carriers like SIA, presents a bigger challenge for Changi.

To boost traffic, an airport can do two things - lure foreign carriers or encourage home airlines to spread their wings farther and faster.

Airlines have seen oil prices go up in recent years while at the same time, competition has intensified. As a result, they have cut fares and seen yields go down. This was a key reason why SIA recently axed its non-stop flights to Los Angeles and New York.

For Changi, lower operating costs at rival airports like Bangkok's Suvarnabhumi are an added challenge when trying to entice foreign carriers - especially those from weaker developing markets like Africa. It took the Singapore airport about three years to woo Ethiopian Airlines.

SIA's strong branding and premium power can also hinder Changi's marketing efforts. Not being able to take on the Singapore carrier on the Auckland-Singapore sector forced Air New Zealand to exit the market a few years ago, after 40 years.

South African Airways and Egypt Air used to fly to Changi but also threw in the towel.

The challenges facing the aviation sector have also made SIA more conservative in testing new markets. Over the years, this has widened the gap between Changi's needs to expand its network and SIA's focus on the bottom line.

Things are different in the Middle East, for example, where national carriers and airports are run by the same people and have similar interests.

In a push to enhance Dubai's hub status, Emirates has launched flights to more than 20 African destinations in recent years. Qatar Airways flies to 19 African cities from its Doha base.

SIA spokesman Nicholas Ionides pointed out though that network growth is not just about adding new points.

He said: "It is also about increasing frequency to existing points to provide better connectivity. This helps boost the Singapore hub and provides more travel options to our customers."

For example, SIA has added frequency to London as well as cities in India, Japan and Indonesia.

The airline operates in a mature market segment and its strategy is to achieve and maintain steady and balanced capacity growth of about 4 to 6 per cent a year, Mr Ionides said.

As competition heats up among airports, Changi has to step up efforts to entice both home and foreign carriers to add more flights and city links.

Tie-ups with tourism authorities, marketing support and roadshows for travel agents and airlines to explore new and growing markets are all steps in the right direction.

Constantly knocking on doors can pay off in the end, as it did with Ethiopian. At a dinner to celebrate the new flights last week, the African carrier's chief executive officer Tewolde Gebremariam said: "At every conference I attended in the past three years, Changi Airport Group would be there asking me when we would commence our service."

karam@sph.com.sg


Get a copy of The Straits Times or go to straitstimes.com for more stories.