Changi operator eyes second-tier airports

PUBLISHED : Wednesday, 09 December, 2009, 12:00am
UPDATED : Wednesday, 09 December, 2009, 12:00am

Singapore's Changi Airports International aims to invest in or manage second-tier mainland airports to cash in on the country's robust aviation market.

'We are in talks with some mainland airports at the moment,' Eugene Gan, deputy chief executive of the airport operator, said yesterday.

He declined to disclose the names of the airports as the talks were in the preliminary stages.

Investment in mainland airports was highly regulated and the company would have to see how the Civil Aviation Administration of China set out the rules, Gan added.

The acquisition of a 29 per cent stake in Nanjing Loukou Airport by Changi Airports has yet to materialise, although the formal agreement was signed two years ago. 'We are still waiting for the approval from the CAAC,' said Gan.

The Singapore company's experience is a huge contrast to the expansion of Hong Kong International Airport's footprint on the mainland. The latter won the management contract for Shanghai Pudong Airport last month, on top of its stake in Hangzhou Xiaoshan International Airport in the Yangtze River Delta and running the management company of Zhuhai Airport.

'We think Hong Kong is in a better position to gain access to the mainland and we congratulate them on their achievements,' said Gan.

Another barrier for foreign investors to tap the market is the lack of mainland airports going public in recent years. There had been no initial public offering in the sector since 2003, Gan said. But Changi Airports last year became one of the top 10 investors in Hong Kong-listed Beijing Capital International Airport.

Also, the Government of Singapore Investment Corp owns 396 million shares, or a 21 per cent stake, in the capital's airport.

The reason Beijing was not keen for foreign investors to acquire stakes in airports was that China had abundant capital to fund the airport projects, Gan said.

Changi Airports is also looking at emerging markets in Abu Dhabi and India where it has already won some management contracts for local airports. 'We are helping out in airport operation, retail area planning and route development,' Gan said.

Singapore's main airport, the world's seventh-largest by international traffic, handled 37 million passengers last year.