Singapore defends air-hub amid no-frills competition<\/p>\n
Martin Abbugao, Agence France-Presse, Singapore<\/p>\n
Singapore is moving swiftly to carve out a slice of Asia's
\nbudget carrier market and preserve its status as an aviation hub
\namid intensifying competition ahead of an expected boom in no-
\nfrills travel.<\/p>\n
Three start-up regional airlines are expected to begin
\noperating from the city-state before the year is over, with two
\nof them backed by the government's powerful investment arm
\nTemasek Holdings.<\/p>\n
Thanks to its prestigious flag carrier Singapore Airlines
\n(SIA) and the ultra-efficient Changi airport, the island-nation
\nhas long been regarded as a premium air hub.<\/p>\n
But with increasing competition from other airports such as
\nthose in Hong Kong, Thailand and Malaysia as well as from other
\nairlines, Singapore is moving a step ahead to fend off the
\nchallengers.<\/p>\n
This could mean the government reducing its majority control
\nof SIA as it allows more carriers to be based at Changi and
\nbuilds a terminal for low-cost airlines to further cement its
\nair-hub position, analysts said.<\/p>\n
In the most recent development, Temasek teamed up with
\nAustralia's national carrier Qantas and two Singapore businessmen
\nto establish a budget airline to be based here. The new airline
\naims to fly before the year's end.<\/p>\n
Temasek also holds a majority stake in SIA, the pedigree
\nparent of budget carrier Tiger Airways, which is due to start
\noperations from Singapore in the fourth quarter of the year.<\/p>\n
ValuAir, a low-fare carrier set up by a former SIA executive,
\nis due to take flight next month, while Malaysian budget airline
\nAirAsia is waiting for a license to fly from the city-state.<\/p>\n
Peter Harbison, managing director of the Center for Asia
\nPacific Aviation in Sydney, described the move by a major carrier
\nlike Qantas to establish a foothold in Singapore as a
\n\"significant development\" that rival airlines will be watching.<\/p>\n
\"The government is trying to distance itself from Singapore
\nAirlines,\" Harbison told AFP, although he does not think this
\nwould lead to a full divestment of the state's stake in the
\nstrategic company.<\/p>\n
The government, however, is signaling to SIA that \"while you
\nare one of the airlines that operate in Changi, probably the most
\nimportant, we also have to look at a broader interest\" of
\nmaintaining Singapore's regional hub status, he said.<\/p>\n
The government can tell SIA that \"we can afford to be more at
\narm's length now because there are other operators offering us a
\nlot of new efficiencies\".<\/p>\n
Harbison's analysis compares with that of Senior Minister Lee
\nKuan Yew, who said that keeping Singapore ahead as an aviation
\nhub takes priority over keeping the government's stake in SIA.<\/p>\n
Being an air hub is crucial to the survival of the city-
\nstate's economy, which is dependent on connectivity, said Lee,
\nwho issued marching orders for SIA to \"transform its business
\nmodel\" within the next six to 18 months.<\/p>\n
The transformation should include outsourcing some basic
\nservices and divesting its stake in key units.<\/p>\n
Harbison said the competition would be fierce as other
\nregional airports would be taking a similar approach.<\/p>\n
Song Seng Wun, a regional economist with GK Goh brokerage,
\nsaid allowing more low-cost carriers to base themselves in
\nSingapore was part of a long-term strategy to enhance the
\ncountry's hub status.<\/p>\n
\"We're talking here of Singapore trying to broaden its
\nservices sector growth beyond manufacturing,\" he said, also
\nciting Singapore's plan to build a casino.<\/p>\n
Temasek Holdings, however, said its investments were based
\npurely on commercial reasons.<\/p>\n
\"We are seeing growth and broad-based recovery in the various
\neconomies in the region, with the emergence of a prosperous
\nmiddle class, interested in business and in travel,\" it said in a
\nstatement e-mailed to AFP.<\/p>\n
\"The low cost structure of such carriers can create and meet
\nthis growing demand. We would like to participate in and
\nhopefully also contribute to the growth and development of this
\nmarket segment.<\/p>\n
\"We will invest only when we are satisfied that the
\nopportunity meets our investment hurdles, and makes business
\nsense ... By investing in different attractive players, we are
\nbroadening and deepening our exposure in an attractive market
\nsegment.\"<\/p>\n
It said the market would ultimately determine the success or
\nfailure of these airlines.<\/p>\n
Patrick Gan, chief executive of Tiger Airways, welcomed the
\ngrowing competition. \"Only the fittest will survive,\" he said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/singapore-defends-air-hub-amid-no-frills-competition-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}