Changi Airport has set up a more than US$1 billion (S$1.35 billion) kitty - partly funded by external investors - to fuel ambitious plans to export its technical and operational expertise.
With airports around the world embarking on aggressive expansion and development plans, the fund will help Changi invest in this growth and establish a strong foothold in other markets, Changi Airport Group (CAG) chairman Liew Mun Leong told The Straits Times.
The potential is huge, he said. "We see a lot of airports that need not just funding, but expertise. It's an infrastructure business that is very promising given the growth of the aviation industry."
In the last decade, Changi's foreign investment and consultancy arm, Changi Airports International (CAI), has snared many airport consultancy and development projects in growing aviation markets including China, India, Russia, Brazil, Latin America and the Middle East. From King Fahd International Airport in Saudi Arabia to Italy's Rome Fiumicino Airport to China's Chongqing Jiangbei International Airport, CAI has left its mark on over 50 airports in more than 20 countries.
But the returns have not been significant, industry analysts said.
While revenue grew from $18.5 million in the 2012/2013 financial year to $41 million in the 2015/2016 financial year, high operating costs, including taxes, in an already capital-intensive industry, as well as foreign exchange losses, have put pressure on profits, which fell to just $6 million during the same period.
By comparison, CAG reported after-tax profits of more than $780 million in the same year.
We see a lot of airports that need not just funding, but expertise. It's an infrastructure business that is very promising given the growth of the aviation industry.
MR LIEW MUN LEONG, Changi Airport Group's chairman.
But with the new fund, things should start to pick up for CAI, Mr Liew said. "Now that we have more (funds) we can do more," he said, adding that before this, there were constraints on how funds should be spent. "The Government said 'we give you money to build Changi Airport, why are you building in Saudi Arabia and Brazil?' Now we have external funding," Mr Liew added.
Besides Changi Airport, Malaysia Airports, Germany's Fraport, Schiphol in the Netherlands and Turkey's TAV are among the airports that are also keen to spread their wings overseas.
In an annual roundup, the International Air Transport Association (IATA) said last week that total passenger traffic grew by 7 per cent last year compared with 2015.
The Asia-Pacific accounted for 35 per cent of the total market, growing 11.3 per cent year on year, while traffic in the Middle East was 9.1 per cent higher. Both are key target regions for CAI, which has a 75 per cent stake in King Abdulaziz International Airport in Saudi Arabia - its biggest investment to date.
On whether there are concerns that CAI's efforts to help other airports build and operate better could eventually impact Changi's competitiveness, Mr Liew said: "People ask me this and I tell them that it's not a zero-sum game."
Working with airports globally gives the Changi team a better understanding of industry dynamics and challenges, he said.
"We know (first-hand) what's happening in Brazil, Abu Dhabi, China, India, because we are there, working with them. We see how they operate, how they are growing, the challenges they face," Mr Liew said, adding that such experiences provide invaluable lessons for the Singapore team.
Such ventures also provide a good opportunity for Changi to work directly with airlines based in overseas markets to promote air links and services to and from Singapore, Mr Liew said.
"At the end of the day, if we can mobilise the competency and expertise of Changi Airport - the best airport in the world - we can make a lot of money," he said.