The Straits Times says

Seletar's turn to spread its wings

Aviation, which already generates US$2.4 trillion (S$3.4 trillion) annually in worldwide economic activity, certainly offers much promise. Twice as many people as now will get the chance to fly in the next two decades, according to the International Air Transport Association, and global fleet size is also expected to double. It is from this growing pie that Seletar aims to carve a lucrative niche - a regional business aviation hub powered by Asia's strong demand for business jets. It also accommodates a range of aviation activities at the aerospace park, like maintenance, repair and overhaul; and the design, manufacturing and testing of systems and components. The strategy is sound as new entrants can gain access to a wealth of services from over 100 aerospace companies based in Singapore, and be positioned right in the heart of their customer base, as industry captains have noted.

Built in 1929, Seletar played a low-key role while Changi Airport was on the rise. It was only in 2008 that work began to turn the area around Seletar Airport into a vibrant aerospace hub. At the current pace of development, it could run out of space in about 10 years. Such spatial constraints and higher business costs are typically what Seletar's competitors in Malaysia, Indonesia and Vietnam cite to win over the investors it courts. To maintain an edge, Seletar must continue to improve on its "comprehensive range of services and products as well as superior logistics and other support services", as consulting firm Frost & Sullivan observed. Of course, a nearby player like Senai's "Airport City" could play a complementary role, with Seletar catering to global players and Senai offering secondary or support services.

Competing on quality rather than just price is a better strategy given the characteristics of the aerospace industry. Global players have reason to not jump into emerging markets because of concerns like "the complexity of the industry's technology; its extraordinarily high regulatory, quality, and safety requirements; (and) the critical importance of protecting intellectual property in areas such as aircraft engine design or avionics", as noted by management consulting firm McKinsey.

Volumes are lower than other manufacturing industries and the degree of design and production customisation is higher. Hence the need to emphasise the development of a host of specialised skills to help lift Seletar as it spreads its wings. It will then have what it takes to become a premier regional business aviation hub, even if it lacks the sprawling land that is offered by emerging aerospace players. Seletar's focus on delivering quality services and its complex coordination capabilities can give it an edge in a competitive market. Together with a regional aviation campus, a secondary airport for business and general aviation, and more lifestyle options within the hub, Seletar should be able to stay aloft for years to come.

A version of this article appeared in the print edition of The Straits Times on February 18, 2016, with the headline 'Seletar's turn to spread its wings'. Print Edition | Subscribe