Changi operator to target travellers in second-tier mainland cities
Changi Airports International is taking the profits from its famous home in Singapore and investing it in the mainland's second-tier cities with plans to profit from growing domestic travel while avoiding the politics of the country's biggest airports.
'We are looking at second-tier airports where the international sector is still relatively undeveloped,' Changi Airports International chief executive Chow Kok Fong said in an interview yesterday.
CAI, the overseas investment unit of Singapore's airport operator, created in 2004 as a consultancy, is using some of Changi's US$400 million in annual profits to expand overseas.
It made its first direct investment in the mainland late last year by taking a 29 per cent stake in Nanjing Lukou International Airport for US$138 million, and Mr Chow says there should be another deal to announce within one year.
The company was also recently chosen to manage and operate the King Fahd International Airport in Saudi Arabia.
CAI says it wants to enlarge its portfolio to US$700 million and about 15 airports in three years, with about half of them in the mainland.
'They're looking to us principally to help them develop their routes further, particularly routes outside China,' Mr Chow said. 'All the airports are looking to become more competitive as far as offering airlines better connections and get more revenue from commercial and retail operations in the airports.'
However, the mainland has infamously restrictive airspace rules, and expanding international routes will take some time and 'a lot of negotiations' he said.
'The airports we are dealing with do not encounter this as a very serious problem because they are second-tier airports,' Mr Chow said. 'There are a lot of regulations, and all of these matters have to be considered by the central government. But a number of airports are increasingly given rights to develop their international routes over the next couple of years.'
For the time being the airport operator will improve logistics on the ground and create nicer lounges and shopping options to help generate more income from passengers using the facilities.
'Efficient processes release a lot more time for passengers in the airport to shop,' Mr Chow said.
In times of growing economic nationalism plans like these - CAI is owned by the Singaporean government - could cause a backlash.
But Mr Chow said Singapore's previous projects, such as the China-Singapore Suzhou Industrial Park, have paved the way.
'We feel we have some traction in the country because of some of the projects we have done in the past, which relate to the country's infrastructure,' Mr Chow said. 'We do have some relationships with some of these officials, who have since migrated to some other cities.'