Have we lost the steam to set the trend ? KLIA vs CIAS

Atobe SG

Singapore has long been known to set the pace in most spheres of economic activities.

Have we lost the steam to set the trend and must be pushed to respond to events that have overtaken us ?

Changi Airport moves up to second-cheapest in Asia
Fighting travel slump with rate cuts, Changi becomes more attractive to airlines but is still trailing KL airport

By Karamjit Kaur

CHANGI Airport is now cheaper for airlines to fly to and has narrowed the gap with the Kuala Lumpur International Airport (KLIA).

RACE TO STAY AHEAD

What airports charge for a Boeing 747-400 with three-hour turnaround

(Table cannot be reproduced in correct tabulation - click to view directly from the site:

http://straitstimes.asia1.com.sg/topstories/story/0,4386,207882,00.html? )

A year ago, it was the third cheapest international airport in Asia, behind KL and Bangkok.

Changi is still behind KLIA, but is now the second cheapest in Asia.

Malaysia moved speedily last year to attract business to its new airport, which opened in 1998, by waiving all landing and parking fees for new airlines flying into KLIA for five years.

But the downturn in travel, sparked by the Sept 11 terrorist attacks in America, saw Changi fighting back with a $210-million Air Hub Development Fund last November.

The fund helps the Civil Aviation Authority of Singapore (CAAS), which manages Changi, to offer competitive charges and some free landings.

It also came in handy when Sars caused a drastic drop in the number of flights and passengers this year.

The International Air Transport Association (Iata) ranked 11 airports in the region in June, comparing the charges payable for a Boeing 747-400 with a three-hour turnaround time.

Charges at KLIA were the lowest at $1,018 - and that was $959 less than last year.

Changi charged $2,524, a sharp drop of $1,803.

Third-placed Jakarta charged $3,594, or just over $1,000 more than Changi.

The most expensive was Tokyo's Narita Airport, which charged $16,956.

Apart from lowered rates for landing and use of aerobridges, which passengers use to pass between plane and airport, Changi now offers free landing to new airlines and carriers flying new city links.

Among those which have benefited are three new airlines - Xiamen, Royal Nepal and Merpati Nusantara.

United Airlines, Northwest Airlines and Singapore Airlines Cargo also touch down for free at Changi when they arrive from new destinations.

The concessions introduced in January will be in force for two years.

In addition, all airlines flying to Singapore now enjoy a 45 per cent rebate in landing fees. This will be cut to 15 per cent from Jan 1 next year and the new rates will be valid until the end of 2005.

Speaking to The Straits Times yesterday, Mr Lasantha Subasinghe, Iata's assistant director (user charges), said: 'Changi Airport offers airlines value for money. The facilities provided are good and yet the rates are very competitive.'

A CAAS spokesman said: 'Many have the impression that Changi's landing, parking and aerobridge charges are high. These figures indicate that is not the case.'

Industry analysts said CAAS efforts to cut costs for airlines were timely and in line with various measures to ensure Singapore companies remain competitive.

Gun SG

Not at all.

Contrary to perceived ineptness of GIC-related enterprises, Changi a/p itself realises it will go the way of PSA if they fail to pre-empt how the market focus had shifted and the inevitable increase in competitive intensity and tempo. I put it this way as a sign of paradigm change in the entire global system after the 97 finanical crisis, and more importantly the post-Sep11' event. These coupled with lighning fast infocomm development, and China's entry to WTO has created a chain of push-event that NIC-wannabe nations like Malaysia, Thailand, Phillipines, Latin Americas and even the former-Soviet bloc countries are forced to grow beyond the ideological differences and face the hard fact of what globalisation truely means, It is not democracy nor US-style politcal freedom that now influence these countries, but having ignore an awaken China for the last 3 decades, her presence is only truely felt in the last few yrs by the these countries.

Even "1st world economies " of Singapore, HK, Taiwan and S Korea are not spared by that momentum of change. That doesn't make things any more comfortable when all these nations begin to fight for that ever smaller pie. So how to survive ?
Cost cutting ? Simple isn't it ? But will these last ? Is it strategically viable ? Does it improve long term prospect of such investment ?Will cost-cutting measure turn becomese suicidal ?

For one, KLIA is a very very expensive investment build on these simple strategy of under-cutting your rival. So has it worked ? So far it looks good. But has it add value to its airline clients ?

From the recent massive blackout to the baggage system problem that plugged KLIA from day-1, I observed a rather haphazad way on how the entire plan made and executed. Airlines fly to your a/p not because you built impressive air termimals, but because of reliabilty, effeciency, connectivity and yes, cost.

Changi a/p has the edge, without doubt. But that edge can be quickly eroded if they maintain that PSA-style attitude. Even then, there are factors beyond our control which can easily cripple Singapore's economy. No, its not another PTP or KLIA...

...all it takes is the return of SARS and we mis-managed it or an act of terrorism.

Atobe SG

Singapore has to remain on its toes constantly, and not allow competitive events like "PTP leap frogging over PSA" to ever happen.

Truly, in an ever changing world, and as a small country that is constantly challenged in our area of strength and excellence from neighboring countries near and far, we cannot be complacent in our attitude.

While it is a useless exercise to continuously lower costs to the Airlines using Changi Airport, which can only eat into the operating profits and return on investments; we should be more innovative and flexible in commercial policies in the daily and long term operations.

Bangkok will soon be developing a completely new international airport to replace its current one, and Ho Chi Minh City will also build a newer and bigger airport.

Both of these airports will be vying to be regional hubs.

Malaysia will soon be developing and upgrading several smaller airports, including one near to PTP or upgrading the present Senai Airport near to JB, and are prepared to utilise the same strategy - that PTP has used to bite into PSA market share - to compete with Changi Airport as a regional hub.

While new airports will undoubtedly be equipped with more efficient and up-to-date equipment, the heart of the business will remain with the People operating it.

At times, other factors may hit the fortunes of every economy and airport operations in this region and the world, all things being equal, it remains with the People who will make or bread the business.

The People will need to be more forward looking, brain storming newer ideas to work in partnership with Airlines, offering speedy and fuss free services to Airline Passengers, and never allow ourselves to slip up in efficiency and reliability of operation that we have always to play a "catch up" game.

kenhor SG

The difference between KLIA and Changi is that KLIA has a domestic use and plenty of non-transit business to keep it going. If you have been to the old Subang Airport, it was overcrowded and definately running at full capacity. Hence KLIA was built to overcome that.

Who was using Subang then? Well, Malaysia still has thousands of foreign students studying overseas. And not to mention, plenty of tourists going off to have a holiday.

Now, they still have those 2 mainstays (students and holiday makers) .. but they have also now got tons of China tourist coming in, not to mention plenty of Arabs as well. So they have a lot of non-transit business that is their core, adding to their profitability. Added to that, once they come up with a way to tap into the transit market, Changi will have to go into a price war to stay afloat.

Is Changi catering to transit or non-transit customers? I believe that we have always catered to the transit business since day one. So if that is the case, that business will always be at risk.

Already Air Asia is coming up with a plan to go regional .. imagine if they can offer JB/KL to Bali/Hadyai/Phuket/Medan for RM50-100 per ticket ..

Our airline is best in class for Business and First class, while Malaysia Airlines is best in class for Economy and cabin crew .. we may get the rich .. but Malaysia will get the volume.