The new air services pact between Hong Kong and Australia announced last Friday hit a sensitive nerve in Singapore, which is worried about increasing challenges to its position as a regional aviation hub.
Over the next two years, the pact will double, from 35 to 70, the number of return flights each week between Hong Kong and Australia, thus boosting passenger travel between mainland China and Australia via Hong Kong, some of which would otherwise have gone via Singapore or Bangkok. The pact also gives Australian airlines, led by Qantas, the right to use Hong Kong as a stopover on the way to and from Britain, a key trunk route that presently goes via Singapore or Bangkok.
After a long period of heady growth based on increased international air travel, Singapore's Changi airport and the country's national carrier, Singapore Airlines (SIA), are being buffeted by severe headwinds. Changi is being challenged by the rise of bigger, more modern airports, among them Hong Kong, and the arrival of ultra long-range aircraft that are starting to bypass Singapore by flying direct to Australia, among other places.
SIA must cut costs and innovate to meet stiff competition, including a wave of low-cost carriers. One of them, partly owned by Qantas, recently announced that it will soon begin flights from Singapore. The government has told SIA that the interests of Changi airport as an air hub come before those of the national airline, even though it is majority owned by the government.
The stakes are high. Singapore's air hub industry accounts for about 9 per cent of the island nation's gross domestic product and provides an estimated 220,000 jobs. It is a metaphor for Singapore's success as a small, resource-poor country that has been able to leverage on its geographical position, political stability and pro-foreign investment policy to become a regional centre not just for transport and logistics, but for finance, industry, education and medical services as well. Of course, it is not just Singapore that is under threat from passenger jets that fly longer distances non-stop. Executives of US plane-maker Boeing said at a briefing at the Asian Aerospace air show in Singapore in February that their studies showed more flights in the next 20 years would involve ferrying passengers across continents without the need to land at airports in between. This will threaten East Asian hubs like Japan's Narita airport, Bangkok, Hong Kong and Singapore with slower growth, if not loss of traffic.
The huge Airbus A380-800s, scheduled to start commercial operations in 2006, will carry a maximum of 840 passengers over 10,000 miles without refuelling, compared with up to 525 passengers over 8,000 miles for Boeing's 747-400, currently the biggest civil aviation plane.
