The Singapore Commentator

AWAIR, the Indonesian arm of Malaysian budget carrier AirAsia that has recently been caught in the dispute between Singapore and Indonesia over landing rights between the two countries (see “Budget airline dispute shaping up between Indonesia and Singapore” and “Singapore under fire in airline dispute”), is not doing too well.

Indonesia’s Awair Loses Money Due to Inability to Land at Changi
Awair Airlines said it lost billions of rupiah owing to recent rejection by the Civil Aviation Authority of Singapore (CCAS) for its planes to land at Singapore’s Changi International Airport. Awair President Sendjaja Widjaja said the loss was affecting the performance of the airline. Sendjaja said the airline has to postpone serving the Jakarta-Singapore route to prevent further losses. He said the restriction announced recently by the Indonesian government on foreign budget airlines will not affect Awair.

In the light of what has been happening, the last two statements apparently made by AWAIR president Sendjaja Widjaja sound a bit strange, though.

Singapore and AirAsia, two of the other parties involved in the dispute, seem to be doing much better.

Singapore flies high
The 2003 outbreak of severe acute respiratory syndrome (SARS) had a dramatic impact on the local aviation sector. Yet the latest outbreak — this time of budget airlines, otherwise known as low-cost carriers (LCCs) — is likely to cause even more turbulence for the sector...

Soaring above all budget carriers in the region though is Malaysia-based AirAsia, established in December 2001 by its current chief executive officer and director Tony Fernandes. With a staff of around 1,600 and a customer base of 5 million, AirAsia flies from multiple points throughout Southeast Asia, including Singapore.

... AirAsia, which listed on Bursa Malaysia in November, now employs a fleet of 80 aircraft and has plans to add another 40 from early 2006. Services to China are also in the offing. The airline, which includes affiliates in Thailand (Thai AirAsia) and Indonesia (AWAIR), saw its profitability for the first half of the year rise substantially to US$14.2 million.

... While the flying public has certainly gained from LCCs, the biggest winner may yet be the Singapore government. This is likely not only from its investments — via its trading arm Temasek Holdings — in two of the low-cost airlines, but also from the jump in passenger traffic at Changi Airport and the growing number of tourists entering Singapore.

Passenger and cargo traffic hit new highs at Changi in 2004... The airport also handled a record amount of air cargo last year... Tourism numbers have also improved, with visitor numbers in 2004 surpassing the Singapore Tourism Board’s targets... LCCs can be assumed to have at least partly helped in this strong rise in visitor numbers and revenue...

One organization set to gain from the entry of new airlines into the Singapore market is Changi Airport, which appears to be banking on a bright future. Work aimed at expanding Changi Airport’s capacity continues, with the construction of the third passenger terminal building due for completion next year... Moreover, a terminal solely for LCCs and able to handle 2.7 million passengers annually will be built by early 2006...

Another piece of good news for Singapore is that it remains the top place in Asia for doing business, according to an Economist Intelligence Unit survey.

Singapore, Hong Kong retain top Asian spots in business survey: EIU
Singapore and Hong Kong retained their spots as the best places in Asia to conduct business in the next five years, a global survey showed Wednesday. Singapore, Southeast Asia's most advanced economy, was ranked number four in the survey by the Economist Intelligence Unit (EIU) which saw Denmark dethrone Canada in the number one spot... Singapore had the highest ranking among the Asian economies, followed by Hong Kong, which was in fifth place in the global tally...

This is evidence that the Singapore government’s economic policies is largely on the right track, even if some don’t seem too impressed with the results of its science policies.