Singapore’s air transport recovery journey
Air Transport | 13 Jul 2022
The air transport industry in Singapore and across the globe has been one of the most battered sectors because of COVID-19. Globally, the COVID storm crashed into the air travel industry with such force that in 2020 itself, the number of flights dropped sharply from 40.3 million pre-COVID to 16.9 million flights post-COVID.
Airline industry worldwide – number of flights 2004-2022 | Statista
For most of 2021 in Singapore, Changi’s traffic hovered at around 3 percent of pre-COVID-19 levels, according to the Changi Airport Group (CAG). Within three months after the launch of the Vaccinated Travel Lanes (VTL) in Singapore, air traffic numbers grew to about 13 percent of pre-COVID-19 levels in December 2021.
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About the air transport sector in Singapore
In Singapore, the air transport sector employs about 119,000 people according to the International Air Transport Association (IATA). The sector supports airlines, airport operators and enterprises (including retailers and restaurants), aircraft manufacturers, and air navigation service providers, as well as supporting another 78,000 jobs by buying goods and services from local suppliers. The air transport industry, including airlines and its supply chain, is estimated to support US $22.1 billion of Gross Domestic Product (GDP) in Singapore, which amounts to 11.8 percent of Singapore’s GDP in total.
Singapore’s air transport industry’s recovery in 2022
International passenger numbers have returned to 42 percent of 2019 levels in the first quarter of 2022, with most of Asia opening up, and international travel nearly doubling from 24.5 percent in 2021. Air travel has exceeded predictions and Director-general of IATA, Mr Willie Walsh, said that the air travel industry might hit 2019 levels by 2023, sooner than the previous forecast of 2024. The trend in passenger movement numbers can most clearly be seen from the monthly numbers from CAG, where there has been a 243% increase between January and May 2022.
Monthly Breakdown of Passenger Movements 2022 | Changi Airport Group
Furthermore, with the passenger traffic averaging above 40 percent in April 2022 compared to April 2019, Singapore is closing in on its target of reaching 50 percent of pre-COVID numbers by the end of 2022.
Mr Walsh said: “Singapore is leading the region in terms of the recovery from border closures. It is a stable environment and the Government has worked hard to reassure people that Singapore wants to open again. It has influenced how other countries have looked at the reopening.”
While the reopening of travel is good news, Singapore’s air transport sector lost nearly a third of its workforce during the COVID-19 pandemic. Bringing back the airport workforce and gearing up operational systems will be a huge challenge. To do that, CAG was looking to fill more than 6,600 job vacancies in the air travel industry’s first and largest recruitment drive in two years called the One Aviation Careers Fair, which was held in May.
In further positive news, Singapore Airlines Group flew a total of 1.7 million passengers in May 2022, 17.4 percent more than in April 2022, when Singapore’s border requirements for vaccinated travellers were largely dropped. In addition, SIA’s group passenger load factor hit 78.2 percent, the highest since the pandemic began, while freight capacity rose 30.2 percent year-on-year.
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Asia Pacific’s air travel journey to recovery
The pace of recovery in the Asia Pacific and Africa regions continues to be challenging, where a full recovery of seat capacity in Asia and Pacific is expected only by 2023-24. The Asia-Pacific region’s international passenger demand in March 2022 reached 17 percent of pre-COVID levels, after hovering below 10 percent for most of the two COVID-years. In contrast, the global trend saw markets recover to about 60 percent of pre-crisis levels.
In his keynote address at the Changi Aviation Summit, Mr Walsh said, “Asia-Pacific is playing catch-up on restarting travel after COVID-19, but there is growing momentum with governments lifting many travel restrictions. The demand for people to travel is clear. As soon as measures are relaxed there is an immediate positive reaction from travellers. So it is critical that all stakeholders, including governments are well-prepared for the restart. We cannot delay.”
At the Singapore Airshow 2022 media roundtable, Mr Lim Ching Kiat, Changi Airport Group’s Managing Director of Airhub Development, shared that international travel for Asia has been lagging the other regions but is slowly picking up momentum. The key difference between 2022 and 2021 was because of the vaccination numbers as well as the pent-up demand for travel. In December 2021, the top travel destinations were India, Malaysia, Thailand and the United Kingdom. These markets were among the earliest VTLs, and Singaporeans were swift to make the most of them.
Innovation and transformation for the breath of air the travel industry needs
Digital innovation as a solution for air travel
As the world gradually emerges from more than two years of lockdowns and travel safety measures, what is the role that innovation can and will play to rebuild travel confidence and to improve the end-to-end travel experience?
Technology, automation, and innovation will be key to relaunching air travel operations and creating competitive differentiation among air travel operators. Data intelligence will be heavily used to calibrate operations, for example, adding excess operational capacity too soon, and/or getting a wrong sense of demand, may mean correspondingly high related costs and risk. Careful planning and strategy will be needed to survive and thrive in the future and innovation teams will become a key resource to create and nurture this growth.
Even though airport and airline IT budgets were slashed because of COVID-19, spending on automation saw a rise. While there are numerous hurdles to overcome to stimulate global travel, low-touch and efficient operations have become essential. COVID-19 taught the air travel industry that it is crucial to regain travellers’ confidence in safety without sacrificing efficiency. Airports and airlines continue to use automation and digitisation to future-proof their operations and provide seamless travel in the face of ongoing health concerns.
Other innovation such as touchless technology in air travel will accelerate, including technology such as touchless biometrics to verify passenger identity. Wi-Fi opportunities and touchless in-flight entertainment systems are also expected to be further deployed by more airlines. In addition, airports and airlines will need to start working closely together to boost retailing opportunities to enter the e-commerce and mobile commerce world. For this to happen, data exchange, innovation sharing, and digital cooperation needs to occur between airlines and airports.
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Sustainability and the air transport industry
Various industry experts link innovation with sustainability and there is indeed a tenable relationship. There is increasing interest in how businesses and travellers can do their part to contribute to sustainability efforts. In this section, we will focus solely on sustainability in the air travel industry and zoom in on what Singapore is doing.
McKinsey’s survey of more than 5,500 air travellers around the world, conducted in July 2021, showed that sustainability remains a priority for the aviation industry. Respondents who plan to fly less to minimise their environmental impact was at 36 percent. Globally, almost 40 percent of travellers were willing to pay at least two percent more for carbon-neutral tickets, i.e. about $20 more for a $1,000 ticket.
Emissions was the top concern of respondents in 11 of the 13 countries polled. Regarding climate change, more than half were “really worried”, and thought that aviation should grow to be carbon neutral in the future. For now, travellers may continue to prioritise price and connections over sustainability. However, they might start to make different decisions if the booking process can more prominently highlight carbon reduction measures that will result in genuine environmental impact.
Airport efficiency and sustainability will work hand in hand
Agility, scalability, and operational efficiency have become crucial considerations for airports due to the unpredictable and fast-changing environment brought about by COVID-19. Airports will need to operate lean, adapt to fluctuating passenger numbers, and drive supplementary revenue to survive. In addition to operational efficiency, innovation can also help airports drive substantial sustainability gains. Almost all airports will implement business intelligence solutions for better visibility across their operations, which will help them more tightly manage costs and be more efficient with resources.
According to the Airports Council International, 235 airports across Europe have committed to net-zero carbon emissions by 2050, and more than 90 airports hope to achieve this by 2030. Many airports have implemented sustainability projects to improve airport infrastructure such as building green spaces, use of natural light, use of renewable energy, recycling points, and smart building technology. In fact, industry figures estimate that the improvement to aviation operations and infrastructure may reduce emissions by up to 10%.
Singapore as a sustainable air hub
With sustainability being a key priority for Singapore’s aviation sector, the Ministry of Transport and the Civil Aviation Authority of Singapore (CAAS) announced plans for the Singapore Sustainable Air Hub Blueprint. The blueprint aims to cut emissions, put in place other green initiatives, and is targeted be ready by 2023. A 20-member International Advisory Panel was set up to drive the development and publication of the blueprint which will focus on the key areas of sustainability in airport, airline, and air traffic management and will set medium-term (2030) and longer-term (2050) goals and identify practical, tangible pathways to achieve them.
At the International Advisory Panel’s inaugural meeting, Transport Minister S. Iswaran commented, “While the immediate focus of the Singapore air hub is to revive air travel, we cannot lose sight of the longer-term challenge of climate change. Sustainability is a national priority for Singapore.”
Having said that, the Sustainable Air Hub Blueprint is not the nation’s first green initiative:
- Singapore is one of the 107 states which voluntarily participated in the pilot phase of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) to meet a global aspirational target of carbon-neutral growth from 2020. In addition, Singapore is also offering other countries capacity building support to help them implement their CORSIA commitment.
- CAAS is working with key industry players to decarbonise the air travel sector, such as installing solar panels, electrification of ground fleet, implementing more energy-efficient systems and the use of more renewable energy at Changi Airport.
- Singapore Airlines (SIA) announced a one-year period starting from the third quarter of 2022, where all SIA and Scoot flights out of Changi Airport will use a blend of refined jet fuel and neat sustainable aviation fuel made from used cooking oil and waste animal fats. This pilot project is projected to reduce about 2,500 tonnes of carbon dioxide emissions.
At the Singapore Airshow 2022, Mr. Iswaran said, “And the (air hub’s blueprint) will articulate how Singapore can contribute to the decarbonisation of international aviation as well as our national sustainability efforts. This is a challenging endeavour especially at a time when aviation companies are still dealing with the effects of the pandemic…. It will require strong public-private partnership and cross-sectoral collaboration to innovate and reinvent the aviation eco-system.”
Singapore will seek to push ahead in a sustainable manner, but it will have to be done in a way that safeguards economic capability.
- The International Air Transport Association (May, 2022). Accelerate Asia-Pacific Aviation Recovery. Retrieved from: https://www.iata.org/en/pressroom/2022-releases/2022-05-17-01/
- CNBC: https://www.cnbc.com/2022/05/18/strong-air-travel-recovery-in-us-europe-latin-america-but-asia-lags.html
- Airlines IATA: https://www.airlines.iata.org/news/sustainable-recovery-for-asia-pacific
- Channel News Asia: https://www.channelnewsasia.com/singapore/singapore-blueprint-sustainable-air-hub-2498901
- Airports Council International: https://blog.aci.aero/the-seven-pillars-of-an-airport-survival-strategy-during-and-post-covid-19/
- Société Internationale de Télécommunications Aéronautiques (SITA): https://www.sita.aero/pressroom/blog/2021-in-review-the-air-transport-industry-must-bake-sustainability-into-its-transformation/
This article is contributed by Moses Ku, Engagement Manager, IndSights Research.