Changi can afford to drop fees for airlines because it can count on spending by passengers who love what it has to offer them.
Changi Airport Group (CAG) the management company for Changi Airport, Singapore, has announced that it will commit S$100 million additional funds through various initiatives and take measures to reduce the cost to airlines of flying to Changi, under a program named the Growth and Assistance Incentive (GAIN).
This program will be implemented over the coming year to boost passenger traffic and, as CAG indicate, the “operational efficiency” at the airport.
From July 1, 2014 to June 2015, all airlines which operate out of Changi airport will receive a reduction in operating costs across-the-board, through rebates of 50% on aircraft parking fees and 15% on aerobridge fees–subject to regulatory approval.
Changi Airport will also reward airlines which increase their transfer traffic; indicating it is “keen to work with airlines to raise efficiency..of terminal operations and will provide funding support where appropriate.”
The airport management group encourages airlines to join the FAST@Changi initiative, comprised of a series of self-service options for departing passengers. The airport has not revealed the full details of how it will reward airlines for joining FAST@Changi, but says that it will reveal further details “in due course.”
CAG indicates that GAIN will provide airlines “temporary relief” as it lays the foundations for more efficient operations over coming years. Incentives after the initial discounts expire on June 2015 “will be calibrated” in keeping with the development of traffic patterns at Changi Airport, and the operating conditions of airlines.
Mr Lee Seow Hiang, CAG’s Chief Executive Officer, said of the new incentives:
“CAG values the deep partnerships we have with our airline partners and we are cognisant of the market conditions faced by them. While we cannot iron out the volatilities of the industry cycle, we believe that GAIN will provide helpful temporary cost relief as airlines implement the necessary measures needed to adjust to the evolving market environment. At the same time, we believe the programme provides encouraging opportunities for our partners to collaborate with us to explore new ideas and initiatives – whether to stimulate travel demand or to boost productivity – that will collectively position us strongly for the next wave of growth.”
In their announcement, CGA states that passenger traffic at Changi Airport has enjoyed strong growth since the 2008/2009 industry recovery from the global financial crisis, but that “a number of market factors–some unique to the region–contributed” to a decline in traffic during February and March of this year, compared to 2013. They also fault a stronger Singapore Dollar compared to the currency of other markets–such as India and Indonesia–as well as “political uncertainty in Thailand” and “reduced Chinese demand for travel to Southeast Asia” for the decline.
The group also highlighted the strain on airlines from “intense competition to fill seats in a tight aviation landscape and the weakening of major revenue-generating currencies,” leading to lower yields for airlines in the region despite passenger growth; therefore lower profit margins.
CGA has its sights firmly set on drawing more traffic and making the airport a premiere gateway to Asia. Over recent months it has introduced a number of improvements to the terminal, and established partnerships and initiatives to establish Singapore as a primary port of call for the cruise industry.
Marisa Garcia has worked in aviation since 1994, spending 16 years on the design and manufacturing of cabin interiors and cabin safety equipment. She shares insights gained from this experience on Flight Chic and Tweets as @designerjet.