The Singapore authorities are expecting a full recovery for Changi Airport in 2024. ST
SINGAPORE: After a year of steady recovery for Changi Airport in 2023, with passenger traffic reaching 91 per cent of 2019 levels in December, there is optimism among aviation officials and the authorities here of a full recovery in 2024.
Yet, with weak inbound travel demand and other headwinds, analysts have painted a more uncertain picture. Other major Asian airports are also fast closing in.
In an interview with The Straits Times, Lim Ching Kiat, executive vice-president for air hub and cargo development at Changi Airport Group (CAG), was sanguine, noting that passenger traffic at the airport is climbing steadily.
“People are travelling out. A lot of tourists are travelling in as well. Part of it is because of all the events that are happening here, such as Coldplay and Taylor Swift,” Lim said.
He pointed to the start of a mutual 30-day visa-free scheme between China and Singapore on Feb 9, which he said is expected to bring in a good number of tourists.
Independent analyst Brendan Sobie of Sobie Aviation, however, expects Changi Airport will handle about 65 million passengers in 2024 – about 95 per cent of the 68.3 million travellers it handled in 2019.
That said, there could be a complete recovery for some months, including February due to the leap year, he added.
In 2023, 58.9 million passengers passed through the airport, or 86 per cent of traffic levels seen before the Covid-19 pandemic.
The potential bottlenecks in 2024 include weak inbound travel from key markets such as China and Japan, low-cost airline Jetstar Asia’s sluggish recovery, and regulatory issues hindering the recovery of flight capacity on the Singapore-Jakarta route.
Mayur Patel, head of Asia at global travel data provider OAG Aviation, said Jetstar Asia has restored only half of its 2019 capacity. It has a 3 per cent market share at Changi Airport now, compared with 6 per cent in 2019.
Sobie noted that if Jetstar Asia was operating at the same capacity it was in 2019, the airport’s capacity would now be at about 98 per cent of pre-pandemic levels and it would likely reach 100 per cent in the second quarter of 2024.
Patel, who has described Changi Airport’s road to a full recovery as a “slow march”, said Singapore Airlines (SIA) and its low-cost arm Scoot have recovered only about 70 per cent of March 2019 frequencies on the lucrative Singapore-Jakarta route.
Separately, Shukor Yusof, founder of aviation consultancy Endau Analytics, pointed to geopolitical uncertainties as a potential stumbling block.
“While the operating climate for airlines remains favourable, it could change in the blink of an eye. Changi Airport and Singapore will do well if there’s global stability. If not, all bets are off,” he said.
The strength of the Singapore dollar is also a double-edged sword for tourism, Shukor added.
“A stronger currency is disadvantageous to many potential visitors, who may be put off by higher costs. However, Singaporeans travelling will benefit,” he said.
According to CAG’s statistics, the pace of growth at Changi Airport has tapered.
Passenger traffic at the airport crossed 80 per cent of pre-pandemic levels from March 2023, but breached the 90 per cent mark only in the last three months of the year.
One reason is inbound travel from other places is lagging.
Sobie noted that the number of overseas visitors arriving at Changi Airport in December 2023 was still about 25 per cent below 2019 levels, even though the number of Singapore residents departing the airport and the number of transit passengers have recovered fully.
The fall in inbound travel in the last three months of 2023 was driven by declines in arrivals from China and Japan, which are among Singapore’s largest markets.
About 15 million to 16 million people are expected to visit Singapore in 2024, or 16 per cent to 21 per cent fewer than the 19.1 million visitor arrivals in 2019, said the Singapore Tourism Board (STB).
Asked about this, Lim said STB may have been careful with its projections. He added: “Let’s see how things open up.”
Analysts told ST Changi Airport had an early advantage, being among the first in Asia to reopen to international travellers.
This head start has now mostly dissipated, with other airports in the region catching up quickly.
Traffic at Seoul’s Incheon Airport, for instance, recovered to about 92 per cent of 2019 levels in December 2023. Taipei’s Taoyuan International Airport came in at 87 per cent and Bangkok’s Suvarnabhumi Airport clocked in at 85 per cent.
Sobie said Incheon Airport has already overtaken Changi Airport, posting higher recovery rates since September 2023, and it would likely be the largest international airport in Asia in 2024 by passenger volume.
For Hong Kong International Airport (HKIA), passenger traffic recovered to about 76 per cent of 2019 levels in December 2023, despite the territory reopening only in February that year.
Patel expects HKIA to surpass Changi Airport in terms of scheduled seat capacity, with plans to build a third runway by 2024 on track.
CAG has said capacity at Changi Airport will be tight until Terminal 5 opens in the mid-2030s.
In the meantime, two arrival immigration halls at Terminal 1 will be expanded by 2025 and about 30 more aircraft parking stands will be built over the next seven years.
The airport’s third runway is also slated to open by the mid-2020s.
What’s next for Changi Airport?
Looking ahead, Lim said CAG will work with airlines to add more capacity on high-demand routes by increasing frequencies or getting carriers to use bigger planes.
For example, South Korea continues to draw healthy demand for inbound and outbound travel.
Another bright spot is India, as passenger traffic and connectivity have already exceeded pre-pandemic levels.
“We are looking at new destinations like Jaipur and Lucknow. We think there’s demand there,” Lim said.
For China, which is still in the recovery phase, Lim said CAG is looking to add more direct links, especially to provincial capitals such as Guiyang in Guizhou province and Harbin in Heilongjiang province.
Sobie said Changi Airport’s lower arrivals can be partially made up with larger outbound and transit numbers.
This is the case for Japan, which a record 591,000 Singaporeans visited in 2023, and likewise for China over the Chinese New Year period, with more Singapore residents – including Chinese citizens working in Singapore – travelling there.
He suggested Changi Airport allot foreign airlines more take-off and landing slots, including reassigning slots Jetstar Asia is not using.
Singapore could also consider reducing its airport charges, said Sobie. One suggestion is to lower charges for flights to Asean countries, which Malaysia has done since 2016.
This will make travel more affordable for budget-conscious travellers, and allow some airlines to drive up demand, especially on short-haul flights, he added.
Shukor said Changi Airport could tap non-traditional markets such as Central Asia and the Middle East to make up for the fewer Chinese visitors.
Subhas Menon, director-general of the Association of Asia-Pacific Airlines, which counts SIA and Hong Kong’s Cathay Pacific among its 15 members, said the Asean, Indian and South Korean markets have punched above their weight.
He is hopeful they will pick up 25 per cent to 50 per cent of the slack left by China for the Asia-Pacific region.
In the longer term, Sobie said a greater focus on regional travel would improve Changi Airport’s hub position.
It would also enable Singapore to capitalise on rising travel demand from nearby countries and rely less on extremely competitive intercontinental routes.
To do this, CAG would need to adjust its slot policy, and eliminate rules banning turboprop planes and prohibiting aircraft with fewer than 150 seats from operating at peak times, he added.
Already, Scoot plans to use smaller 112-seat Embraer E190-E2 jets to serve “thinner” and less popular routes in South-east Asia. Five of these planes will be delivered in 2024.
Meanwhile, Australia’s Qantas will fly between Singapore and Darwin from December 2024 using 94-seat Embraer planes. These will be the smallest passenger jets at Changi Airport in terms of seat capacity.
Scoot’s chief commercial officer Calvin Chan told ST potential headwinds for the airline in 2024 include geopolitical risks, macroeconomic uncertainties, inflationary pressures, elevated jet fuel prices, supply chain disruptions and increased competition.
But these are challenges Scoot has faced before, he said.
For Menon, the skies over the Asia-Pacific are bright.
“We’re a bit too hung up about 2019... Flights are full and airports are congested. All that points to the fact that we have actually already recovered,” he said.
“Let’s focus on getting back onto the growth trajectory.” - The Straits Times/ANN
