James Ashton: Airline attempts to guess which way the wind blows
Global Outlook Perhaps the unlikeliest attraction in Singapore is the one that most foreign arrivals see first. Changi airport proudly reports it has one million visitors a year who aren't even catching a flight. In a city state where land is at a premium, many families drop by for a few hours to let their children run around.
Soon, they will have more space to spread out in. The hub airport increased traffic to 53 million passengers last year – compared with the 72 million who used Heathrow – even though it lost some traffic on the London-Australia route to Dubai after Emirates forged an alliance with Qantas. Now Changi has unveiled plans to increase capacity from 66 million to 135 million by around 2025. Work has already started on the first of two new terminals. The extension of a third runway currently used by the military is also part of the plan.
Asian airports are engaged in a space race to become the most important travel nodes in a region that has its best growth ahead of it despite new fears of an emerging-markets slowdown. They are also benefiting from the boom in low-cost carriers, which is a decade behind the jousting of easyJet and Ryanair that has characterised Europe's aviation market. Budget travel makes up 30 per cent of Changi's traffic.
Such a trend creates an opportunity and a headache for Mak Swee Wah, Singapore Airlines' executive vice-president for commercial operations. Facing long-haul competition from Gulf rivals such as Emirates and Etihad, the home of the Singapore Girl underscored its full-frills image by making an early investment in new fleet and it has just updated its cabins. This is an industry not for the faint-hearted: even replacing the in-flight entertainment system costs tens of millions of dollars.
As first to take the A380, the world's largest passenger plane, into commercial service, it won bragging rights. But Mr Mak admits it was "quite an adventure" because of a three-year delay. "If there is pain to be suffered for being launch customer, it was worth the pain," he said. There was a little more pain earlier this month when a flight from London had to make an unscheduled stop in Azerbaijan because of falling cabin pressure.
Understanding which way the wind is blowing, the carrier has placed a bet on the no-frills market too. It has interests in two low-cost carriers, Scoot and Tigerair, which give it coverage from Taipei to Australia. It's a juggling act that British Airways attempted with Go and is having another try at after backing the Spanish budget airline Vueling. There are economies of scale at the back end, but preventing travellers from spinning down to a cheaper ticket is a neat trick.
However clever airlines try to be, their destiny is shaped by external events to a greater extent than in most sectors. On the day we met, Mr Mak talked of better demand from America, tougher times in Australia and India and, hot off the press, a slump in traffic to Bangkok, where the roads had been blocked as campaigners tried to shut down the Thai government.
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