Singapore's aviation ecosystem needs new strategic thinking

SINGAPORE is one of the biggest aviation hubs in the Asia-Pacific. The Republic is also home to a significant aerospace MRO (maintenance, repair and overhaul) community. The aviation sector contributes about 6 per cent of the country's GDP, employs over 60,000 people directly, and supports as many more indirect jobs.

A myriad of players - MRO providers, component manufacturers, airlines, airport operators, and a supporting cast of ground services specialists and concessionaires - feed off each other. But the players are not always on the same page. The epicentre of Singapore's aerospace ecosystem is Changi Airport Group. Owned by the Ministry of Finance, it makes money by charging rentals to concessionaires, fees to users, airlines and other operators.

Meanwhile, the airlines, owned by various private or public entities, depend almost wholly on passenger traffic and revenue. Their profits are subject to factors such as the fuel price and various fees and charges. Yield pressure in a highly competitive environment is something every airline CEO grapples with. MRO players and independent ground handling and logistics players depend on the overall robustness of aviation traffic, while airport concessionaires or shops depend on foot traffic at the airport.[/1] Sometimes, their interests clash. If the airport operator is to shoot for a high margin, it could mean a margin squeeze for airlines, concessionaires and other players. Similarly, airlines can make decisions which may not be beneficial to the bottom line of other airport players.