CAG should consider next moves carefully

The Changi Airport Group's (CAG) decision to set up a $1 billion fund for investments in airports elsewhere ("Fund to support push into global market"; July 1) when it does not even have enough capital to finance its bullish plans for Terminal 5 here, is an anomaly that needs to be rationalised ("Changi Airport's T5 will be 10 times as big as VivoCity"; July 1).

What is CAG's top priority? Singapore's aviation hub or "the fantastic potential for airports in China"?

Is the latter all it is cracked up to be, given Beijing's massive roll-out of high-speed rail, potentially echoing the situation in neighbouring Japan where many airports are reportedly loss-making?

Did it also make sense for CAG to pay a huge premium to run Rio de Janeiro's Galeao airport with a Brazilian partner in late 2013 ("Changi tie-up wins Brazil airport concession"; Nov 23, 2013), or invest in ancillary assets like Project Jewel, when the mall could have been tailored specifically to Changi's core airport operations as part of the tender process, and owned by a world-class real estate consortium ("Project Jewel at Changi Airport to cost $1.47b"; Dec 21, 2013)?

The Government is fully justified in taking a phased approach for the expansion of Changi's airport business, starting with the much needed third runway.

This should give CAG enough time to review its priorities, as well as raise funds to expand its core activities at home; as all commercial bodies should be doing, instead of relying on state assistance.

Changi Airport does not need to be among the world's biggest for Singapore to continue thriving as a leading global aerotropolis. Unlike Dubai, we are not best placed to capitalise on trans-continental flows between Europe, Asia, Africa and the Americas.

Unlike Incheon in South Korea, we are neither a key hub for trans-Pacific travel, nor do we have a domestic hinterland of 50 million-plus residents and at least another half-billion middle-income customers to tap within a two-hour flight radius.

Our neighbours, especially key markets like Indonesia, are seeking to improve their aviation infrastructure as well as their airlines for direct intercontinental flights that bypass Changi.

CAG should be in full command of its strategic assets and the dynamic competitive environment for smart leveraging, instead of being swayed by the herd or, worse, its own ego for over-expansion at the expense of taxpayers.

Toh Cheng Seong

A version of this article appeared in the print edition of The Straits Times on July 14, 2015, with the headline 'CAG should consider next moves carefully'. Print Edition | Subscribe