Sunday, 19 February 2017

SINGAPORE: Airlines To Cash On Higher Tourist Arrivals

Singapore not only welcomed a record number of visitors. More significantly, those who came spent more.

Tourism receipts grew by almost 14 per cent year-on-year to $24.8 billion, far outstripping the 7.7 per cent jump in the number of visitors, which hit 16.4 million.

Preliminary data collated by the Singapore Tourism Board (STB) put Indonesia, which accounted for 17.7 per cent of total arrivals, and China, at 17.5 per cent, neck-and-neck in the race for the top market spot.

Malaysia and India took third and fourth positions, respectively.

The good showing did bode well for the economy, specifically the tourism-related sectors, including retail, entertainment and food and beverage.

Hotels and other accommodation providers also benefited.

For the aviation sector, the knock-on effect was more patchy.

The positive impact was obvious for Changi Airport. More visitors - the bulk of whom would have come by air - meant more business for the airport, which also handled a record number of passengers last year.

There is a strong correlation between STB's visitor arrival numbers and Changi's passenger movements, particularly for key markets such as China, Indonesia and India.

Among Changi's top 10 markets last year, China saw the fastest growth at 15 per cent.

The airport has been actively growing the Chinese market by establishing new city links in China and welcoming new Chinese airlines to the airport - an added boost to the tourism sector here, said airport spokesman Ivan Tan.

Spending at airport shops and restaurants also increased, with total sales hitting a record high of $2.3 billion last year, 5 per cent higher than in 2015.

Travellers from China were the biggest spenders, accounting for about 30 per cent of the airport's retail market.

Other top spenders were from Indonesia, India and Australia.

For Changi, which collects rent from tenants as well as a percentage of sales, increasing revenue from commercial activities is key to keeping the airport competitive.

This is because part of the takings are used to subsidise aircraft parking and landing, as well as other aeronautical charges.

With Jewel Changi Airport due to open in early 2019, commercial takings should get another shot in the arm.

The multi-storey complex being built in front of Terminal 1 will offer mainly retail and dining options.

While Changi benefits from the increase in overall visitor arrivals, it is also important for the airport to grow its transit traffic to boost Singapore's status as an air hub.

Currently, stopover traffic makes up about a third of the airport's total passenger traffic.

As the airport continues to strengthen its connectivity to secondary cities in China, Indonesia and India, air travel to and from these key markets should remain healthy this year.

With much of the growth in visitor numbers coming from Asian markets, and especially second- and third-tier cities in China and India, budget airlines and full-service carriers that operate mainly regional flights are the key beneficiaries of the upswing.

For others, such as Singapore Airlines, the key is to grow its home base and work closely with its low-cost subsidiaries, such as Tigerair and Scoot, and regional arm SilkAir, to not only bring more people to Singapore, but also from here to other destinations within the group's network.

Budget carriers, such as Tigerair, Scoot, Jetstar and AirAsia, play a key role in boosting Singapore's visitor numbers, with a growing number of flights to regional destinations.

AirAsia's Singapore chief executive Logan Velaitham said: "Flights on our key trunk routes, like Kuala Lumpur-Singapore, are consistently operating at loads of 95 per cent, while services to second-tier cities in the region are achieving average loads of about 77 per cent."

While fuel and other operating costs such as salaries also factor into the bottom line, volumes are critical for budget carriers that earn not just from the fares they charge, but also add-ons, such as food and priority seating fees.

For airlines and ground handlers that do passenger and baggage check-in, and firms that repair and maintain planes, a rise in passenger numbers and flights is welcome, but competition will keep a lid on profits.

As the demand for intra-Asian air travel continues to grow - and with ongoing efforts to remove travel restrictions, for example, the push for a single visa for all Asean countries - tourism numbers will rise.

STB and Changi Airport will no doubt work closely with key players, in both the tourism and aviation sectors, to capture a big chunk of the traffic.