Changi Airport is expected to be buoyed by an economic resurgence in the Asia-Pacific and improved connectivity. - ST
SINGAPORE: Growth is the word on everyone’s lips when it comes to the outlook for Changi Airport in 2025, after the airport narrowly missed out on a full recovery in passenger traffic in 2024.
Having handled 67.7 million passengers in 2024 – 99.1 per cent of the record 68.3 million handled in 2019 – the airport is poised to grab a larger slice of an expanding aviation pie, industry analysts told The Straits Times.
Projections are for low single-digit growth in the year ahead.
The airport is expected to be buoyed by an economic resurgence in the Asia-Pacific and improved connectivity, with the introduction of new airlines and routes, and increased flight frequencies.
As at January, 100 airlines are operating more than 7,400 scheduled flights at Changi each week, linking Singapore to 163 cities in 49 countries and territories.
This is close to the scale of the airport’s network in January 2020 before the Covid-19 pandemic, when Singapore was linked to more than 170 cities. The aim is to have more than 200 city links by the mid-2030s.
But hurdles loom on the horizon that could pose a threat to Changi’s status as a leading hub.
Travel analyst Gary Bowerman said travel, tourism and aviation in South-east Asia and across the Asia-Pacific will get highly competitive in 2025.
Margins and profits will tighten, and the battle to attract travellers will intensify, added the Kuala Lumpur-based director of tourism consulting firm Check-in Asia.
At a dinner in September 2024 to mark the Civil Aviation Authority of Singapore’s 40th anniversary, Prime Minister Lawrence Wong highlighted the narrowing gap between Singapore and other regional air hubs, and the significant investments being made to improve and expand airports in these countries.
The Centre for Aviation said there are 170 known construction projects at existing Asia-Pacific airports, with a total investment value of US$217 billion (S$292 billion). There are also 90 new airport projects in the region, totalling US$121 billion in value.
Urging Singapore’s aviation industry to not rest on its laurels, PM Wong said that increasingly, flights that would have passed through Changi may also no longer be needed.
Bowerman said: “Singapore is a trusted airport by airlines and passengers, but in an environment of shifting growth drivers and uncertain travel patterns, there will be tough challenges ahead.”
Mayur Patel, head of Asia at aviation data consultancy OAG Aviation, expects a growth rate of about 3 per cent to 5 per cent at Changi Airport in 2025.
This is expected to be driven by robust travel demand in South-East Asia, the continued expansion of low-cost carriers, and investments in the region to boost air travel capacity.
Yet, bottlenecks that slowed Changi’s recovery in 2024, such as supply chain snags, may persist.
Shukor Yusof, founder of aviation consultancy Endau Analytics, said an annual growth rate of 1 per cent to 2 per cent in 2025 would be laudable for Changi.
For him, the biggest risks in the coming year include continued geopolitical unrest and a potential global economic slowdown triggered by US trade and financial policies.
Independent aviation analyst Brendan Sobie from Sobie Aviation said Changi’s passenger traffic is likely to reach six million in January.
This will be a 10 per cent increase year on year, and a significant milestone – it will be the first time the airport’s monthly traffic has hit six million outside of December, which is the busiest month.
But in Sobie’s view, the overall outlook for 2025 is mixed.
He said the volume of arriving visitors is still about 8 per cent below 2019 levels, and this market segment has been particularly weak in recent months.
An increase in transit traffic in 2024, which exceeded 2019 levels by 7 per cent, helped offset this shortfall, he noted.
The transit market is where there are opportunities for further growth in 2025, especially as Singapore Airlines (SIA) Group continues to add capacity, said Sobie.
However, he flagged concerns over recent service cuts by AirAsia, which will reduce the low-cost carrier’s traffic at Changi to about 25 per cent below 2019 levels.
According to OAG data, AirAsia will stop its daily Singapore-Phuket flights after March 6, and progressively reduce the frequency of its Singapore-Bangkok service from five daily flights to three over the next two months.
More capacity cuts are expected as AirAsia redeploys its assets to more profitable routes.
This, coupled with the slow recovery of Jetstar Group, raises questions over whether the Singapore market is sufficiently competitive, Sobie said.
“AirAsia and Jetstar are the two biggest competitors after SIA Group by quite a big margin,” he added. “Pre-Covid-19, they accounted for a combined 13 per cent of the overall market at Changi Airport. They now account for less than 10 per cent.”
One positive is that foreign airline growth at Changi will likely continue in 2025, at least for some markets.
Australian flag carrier Qantas said it will operate more than 3,000 flights from Changi in 2025 – 37 per cent higher than in 2019.
But Sobie said there is a limit to this growth, pointing to overcapacity on some routes.
“This can be good for consumers, but it is bad for airline profitability, particularly given the significant increase in costs post-Covid-19,” he added.
Lim Ching Kiat, executive vice-president of air hub and cargo development at operator Changi Airport Group (CAG), said a key focus for Changi in the short term is to regain the connectivity in South-east Asia that was lost during the pandemic.
The aviation industry’s centre of gravity is shifting towards the Asia-Pacific, and the airport wants to tap this, he added.
It is looking at potential air links with cities like Jaipur and Lucknow in India and Dalian in China. In the long-haul market, Changi is keen to expand in Europe to include direct connections with Warsaw, Madrid, Geneva and Stockholm.
Lim said the airport is aware of the need to continue striving to provide the best that it can, as new air hubs emerge and competition for passenger traffic heats up.
He pointed to the $3 billion in upgrades being made to Changi’s four existing terminals over the next six years to ensure there is sufficient capacity to meet rising demand.
“In the next 10 years, we believe technology will transform air travel and the way we run airports,” Lim said. He cited the roll-out of passport-less immigration clearance as an example of how airport operations and the passenger experience can be improved further.
While traffic at other air hubs in South-East Asia, such as Bangkok and Kuala Lumpur, is still slightly below 2019 levels, the gap with Singapore continues to close, Sobie noted. Hong Kong is also catching up.
Seoul’s Incheon Airport, which overtook Changi in terms of recovery in September 2023, has remained ahead. Its total international traffic of 70.7 million passengers in 2024 was slightly above 2019 levels.
Patel said ongoing expansion and improvements at these hubs will pose a direct challenge to Changi, particularly in the years leading to the opening of Terminal 5, given that capacity here will be constrained before that.
When ready in the mid-2030s, the mega terminal will take Changi’s total handling capacity from 90 million to 140 million passengers yearly.
In the meantime, Patel said the recent launch of a three-runway system at Hong Kong International Airport will boost its capacity to 120 million passengers annually, positioning it as a preferred hub for those connecting to mainland China.
Incheon will also be a formidable competitor, especially in the long-haul transit market. It is able to handle 106 million passengers yearly with its fourth runway and expanded Terminal 2, which was completed in December 2024.
Farther afield, Middle Eastern carriers and hubs continue to attract long-haul traffic, bypassing Asian stopovers.
Then there are potential challengers, such as Cambodia’s Techo International Airport, which is expected to open in 2025 with lofty ambitions to eventually become a regional hub.
Analysts also flagged the emergence of new “hub-busting” long-range aircraft, such as the wide-body Airbus A350-1000 and the narrow-body A321XLR, which allow for more non-stop flights.
These new jets could diminish Singapore’s role as a transit hub, Patel said. For instance, Qantas’ order of A321XLRs could be used for non-stop services between Perth and India, which would otherwise have needed a connection at a hub such as Changi.
Another major factor that could affect Changi’s appeal is operating costs, which are set to rise. This is in the form of higher fees for airlines and higher passenger taxes to help fund the upcoming airport upgrades.
Citing AirAsia’s capacity cuts, Patel said low-cost airlines may find the airport charges unsustainable, causing them to redirect traffic to hubs with more favourable pricing.
Full-service carriers are feeling the pinch, too.
Qantas International chief executive Cam Wallace said ensuring cost competitiveness, compared with other hubs in the region, is going to be critical for Changi over the coming years.
“Changi is the strongest hub in this part of the world, but that doesn’t guarantee it always will be,” he added.
Still, it is hard to say to what extent the airport’s hub status will be jeopardised by these developments.
CAG’s Lim said more airlines using ultra-long-range aircraft will allow Changi to be linked to farther destinations in North and South America.
Mabel Kwan, a Singapore-based managing director at Alton Aviation Consultancy, said hubs will continue to be key.
What these new-generation jets allow airlines to do is increase the frequency of hub-to-hub routes, or start new flights to medium-haul destinations that would not have been viable previously.
“Empirical evidence in the last few years has shown that air hubs do benefit from the advent of these new-technology aircraft. In fact, they help to increase the value proposition of the air hubs as a demand aggregator,” she added.
On intensifying regional competition, Kwan said Singapore stands apart because of its focus on innovation, talent, and the strong collaboration between the Government and the aviation community.
With Asia set to be the dominant force behind air traffic growth in the next decade, she said: “A rising tide actually lifts all ships.” - The Straits Times/ANN
Unlock 30% Savings on Ad-Free Access Now!
