ASIAN HUB WAR HOTS UP

B. J. Johnson reports

The Singapore government is determined to maintain its user-and business friendly approach to the aviation industry that has resulted in Changi airport being one of the most efficient, yet also one of the cheapest airports, in the world.

This commitment was outlined by Singapore prime minister Goh Chok Tong at the 60th annual meeting of the International Air Transport Association (IATA).

Making the keynote speech on Monday, Mr Goh told about 600 delegates that airport should be more cost competitive, while governments needed to liberalise and low-cost carries would revolutionise Asia’s aviation industry.

Mr Goh’s comments could be seen as a wake up call to the Airport Authority and the government in the face of competition from nearby Pearl River delta airports, especially Guangzhou’s new Baiyun airport.

Mr Goh, said: “Airlines and airports share a symbiotic relationship. Airports and other players in the aviation value chain will also have to cut costs and improve productivity.?

He said Changi airport has launched a S$250 million incentive programme to attract airlines to the island-state. ``Landing fees at Changi are the second lowest in Asia but efficiency levels are one of the highest,? said Mr Goh. He added that Changi would continue to invest in an effort to boost Singapore’s connectivity that boasts 71 international airlines flying to 162 cities in 52 countries. This investment includes, building a dedicated low cost carrier terminal if there was support from carriers.

“Where our national carriers lose through lack of protection, Changi airport gains. Singapore’s connectivity and hub status are of higher national priority than our airlines,?Mr Goh said.

He believed Asian budget carriers would “have the same kind of revolutionary effect?as those in the US and Europe where they accounted for 25 per cent and 11 per cent of each respective market.

Budget airlines would also drive increased liberalisation of air services, although some government have already started down this path. Citing the example of Hong Kong, Mr Goh said the SAR had agreed unlimited direct flights with Thailand and Malaysia.

He said further progress would be made. “In ASEAN, restrictions on the number of flights that airlines can operate between capital cities will be lifted by 2008 as part of the roadmap towards a limited open skies framework by 2015. Cambodia, Laos, Myanmar and Vietnam have also inked a liberal multilateral agreement, freeing up both passenger and cargo movement. Brunei, Singapore and Thailand recently sealed a multilateral agreement on the full liberalisation of all cargo air services.?

But the development of low cost carriers and increased liberalisation meant full-service carriers would have to “trim unnecessary frills, improve efficiency and raise productivity?

Speaking later, IATA director general and chief executive Giovanni Bisignani said low cost airlines should not receive any preferential subsidies at the expense of mainline carriers.

Outlining the challenges facing the industry, Mr Bisignani said the airline industry had survived the “four horsemen of the apocalypse ?Sars, conflict in Iraq, terrorism and the economy. But a fifth horsemen ?the price of oil - could add up to US$1 billion per month?to airline costs.

He believed China, together with India, has the potential to reshape the travel industry but infrastructure improvements are needed to cope with the expected growth.

And while passenger traffic in the Asia Pacific region is 8.7 per cent higher than in 2001 and cargo volumes climbed 25.2 per cent above 2001, compared with an industry average of 15.5 per cent, greater efficiencies are needed to support future growth.