By Siva Govindasamy
SINGAPORE Aug 23 Singapore's ambitious project
to double its air passenger handling capacity by the mid-2020s
is set to extend its lead over neighbours like Kuala Lumpur,
Bangkok and Jakarta, whose airports are struggling with
congestion and construction delays.
Changi, Southeast Asia's biggest and most popular
international airport, is keen to seize a greater share of a
boom in regional traffic, mindful of competitors' plans to grow
into international hubs.
The increased capacity also plays into the hands of budget
carriers such as Malaysia's AirAsia Bhd, Singapore
Airlines Ltd affiliate Tiger Airways Holdings Ltd
, Qantas Airways Ltd affiliate Jetstar Asia,
which is based in Singapore, and Indonesia's Lion Air.
Low-cost carriers such as these account for a third of
Changi's traffic, up from virtually zero just eight years ago,
and are hungry to expand routes and flight frequencies.
The expansion plans, which include a third runway and a
fifth terminal by the mid-2020s on top of a fourth already under
construction, will double current capacity to around 130 million
passengers annually and cement Singapore's leading role as a hub
of Southeast Asian business.
Regional traffic predictions point to the need for bold
construction plans as airports will have to double their
passenger capacity every 12 years just to keep up, said Andrew
Herdman, director-general of the Association of Asia Pacific
"It's no good thinking in terms of incremental capacity
enhancements of terminals or airports or runways," he said.
Driven by growing economies and rising middle-class incomes,
passenger traffic in Southeast Asia is expected to rise 7.6
percent a year in the 20 years to 2031, outpacing a global
average of 5 percent, according to research firm Strategic
Airport Planning Ltd.
Travel between Southeast Asia and South Asia, for example,
is expected to grow even faster, at 9.5 percent a year.
"Changi has big growth markets such as Vietnam and Indonesia
in its region that it can serve. That can drive demand," said
Shukor Yusof, aviation analyst at Standard & Poor's.
NARROW BODIES, MANY FLIGHTS
The rapid rise of Asian low cost carriers caught much of the
airport industry unprepared and led to Changi's decision last
year to shut a budget terminal and build a larger one, the T4.
"To continue its lead position in the fast-growing Southeast
Asian market, Changi needs the space to handle more flights,
particularly narrowbody flights as it is the short-haul market
that is growing the fastest," CAPA, an aviation consultancy,
said in a report.
The use of narrow bodied aircraft, such as Airbus
A320s and Boeing Co 737s, means the number of individual
aircraft movements grows more quickly than the actual traffic
growth rate, sometimes leading to congestion problems for the
That has not stopped the airlines from going ahead with
their expansion plans. Lion Air has existing orders for more
than 500 Airbus and Boeing jets, while AirAsia has around 350
A320s still left in its order book.
"As the airport grows, we will have more capacity and
opportunities to grow as well so we definitely welcome the good
news," said Logan Velaitham, CEO of AirAsia's Singapore unit,
which has long wanted to set up a joint venture in the city.
For now, Changi does not appear to have a serious challenger
to its place as Southeast Asia's leading international hub.
It has over 630,000 weekly international seats, more than
Kuala Lumpur International Airport's 438,400 and Bangkok's
Suvarnabhumi with 274,700 according to CAPA.
For Changi's rivals, setbacks have come in spades.
Kuala Lumpur International Airport has been working on a 45
million passengers a year terminal to replace a low-cost one but
has been plagued by delays, with its opening pushed back three
years in a row. It is now slated to open in April 2014.
The postponements have prompted scathing comments for
operator Malaysia Airports from AirAsia CEO Tony
Fernandes who has warned that Kuala Lumpur could be left behind
by its neighbours.
But even after the extension, which will double its
capacity, the airport will still lack an extensive airline
network like Changi, with much of its business reliant on
In terms of overall traffic, Changi was outstripped last
year by Jakarta's Soekarno-Hatta airport which handled 57.8
million passengers in 2012, nearly six million more.
But its flights are largely domestic. Soekarno-Hatta was
only built for 22 million passengers, resulting in frequent
delays and much congestion. Work has started on an expansion,
with an eventual goal of 62 million passenger capacity, but the
timeframe for that is unclear.
Political infighting since 2011 has also delayed Airports of
Thailand's expansion of Bangkok's Suvarnabhumi airport.
The plans call for capacity to grow by 15 million to 60 million
passengers a year by 2017. It also intends to expand the
secondary Don Muang airport, which is used by low-cost carriers.
In the wider Asia-Pacific region, other airports are also
upping the ante.
Hong Kong International Airport, which handled 56.5 million
people in 2012 and is projected to handle 102 million in 2030,
is proceeding with a study for a third runway and expanded
terminal. Studies are also underway for the expansion of Seoul's
Incheon Airport and for a second airport in Beijing, while
debate about a second Sydney airport has also been reignited.