Heavy security a distraction from the real battle at Changi

PUBLISHED : Friday, 14 June, 2002, 12:00am
UPDATED : Friday, 14 June, 2002, 12:00am

DISEMBARK AT SINGAPORE'S Changi International Airport these days and you are likely to see squads of troops patrolling the check-in desks and duty-free counters with automatic weapons tucked under their arms.

The uniformed guards are a feature of the post-September 11 world, there to keep the peace in what is commonly regarded as one of the world's finest aviation facilities.

But these days, the threats to the smooth-running Singapore air-hub do not come just from terrorists bent on destruction. The city-state's flagship airport - the region's largest when it first opened its doors at the eastern end of the island in 1981 - is also facing a growing challenge from regional rivals.

'Remaining No 1 is not easy. As you are all aware, competition in the region is heating up,' Singapore Transport Minister Yeo Cheow Tong said last year in a comment typical of many that he has made. 'A number of new airports have already been opened, or are under construction, equipped with state-of-the-art facilities.'

Perhaps the most potent threat to Changi's long-standing commercial supremacy comes from Malaysia, home to Kuala Lumpur International Airport (KLIA). Built at a reported cost of M$9 billion (about HK$18 billion), the new terminals and runways to the south of the capital are capable of handling 25 million passengers a year.

Last year, KLIA saw about 15 million, and to boost that figure its operator, Malaysia Airports Holdings, is going after Singapore, which handled about 29 million passengers last year. In May, Malaysia's Transport Minister Ling Liong Sik said landing and parking fees for new airlines using KLIA would be waived for five years. The same bonus would be available for existing airlines that added extra flights, he said.

This struggle was thrown into sharp focus this week with the news that British Airways (BA), Germany's Lufthansa and Australia's Qantas had all rejected KLIA's strong overtures to relocate to Malaysia. The trio is staying put - at least for now.

'We believe Singapore has a great airport with excellent connectivity for our north and southbound flights. It is a stronger market for us in terms of our traffic,' Qantas regional manager Stephen Thompson was quoted by local papers as saying.

Singapore and Malaysia's airport rivalry fits neatly into a wider pattern of rising competition between the two countries that stretches right across the transport spectrum. Just as KLIA is taking pot-shots at Changi, so Malaysia's seaports are taking on PSA Corp, which runs Singapore's giant container terminal, and other Malaysian airports are attempting to grab a larger slice of the region's air-cargo trade.

The Port of Tanjung Pelapas (PTP), a new cargo port in Malaysia's Johor State just north of Singapore, has successfully lured away two of the city-state's main shipping customers, Maersk and Evergreen Marine. A recent brokers' report from GK Goh claimed that PTP's charges were 'effectively 20 per cent to 30 per cent cheaper than the rate in Singapore', but its service standards were just as good.

A few kilometres away, Johor's Senai Airport is being upgraded in an attempt to seize more air-freight from Singapore. Malaysia recently signed an M$800 million deal with a German airport-management company to bolster the push at Senai.

In each case the commercial challenge from Malaysia is essentially the same. Whether it is a battle for air passengers or sea containers, Malaysia-based firms are trying to offer lower-cost options than those on offer in land-scarce Singapore.

As Singapore's Mr Yeo acknowledged in his address at Changi, (in which he also noted that the airport had won no fewer than 16 'best airport' awards in 2000): 'Singapore is not the cheapest place to operate in. The question then is, 'can we do things more efficiently and more effectively so as to provide better value for money?''

The decisions by Qantas, BA and Lufthansa to stay put in Singapore demonstrate that cheaper landing fees may in themselves not be enough to attract their business just yet.

Aside from the cash incentives, KLIA is also beefing up its challenge in other areas. Earlier this year, a rail link to the capital was opened, making the airport more accessible for its users. Next month, services from the older Subang Airport, including those of fast-growing, low-cost carrier Air Asia, are to be shifted to KLIA, boosting its flow of passengers.

Officials at Changi are not standing still either. A rail link with the city-state's mass transit system was opened this year. More importantly, plans for a giant third terminal, which last year were reviewed during the recession, now appear to be firmly back on track.

The expansion, which includes facilities to handle the new generation of super jumbos, should boost Changi's total handling capacity to 64 million passengers. Terminal 1, the oldest, is being expanded, while terminal 2 is set for a 'major refurbishment', according to Mr Yeo.

The dogfight is getting fiercer.