Channel NewsAsia

Growth of budget airlines, new air hubs will reshape aviation sector

The growth of low-cost carriers and the rise of new air hubs will continue to reshape the aviation sector in the coming years, says Transport Minister Lui Tuck Yew.

SINGAPORE: The growth of low-cost carriers and the rise of new air hubs will continue to reshape the aviation sector in the coming years, says Transport Minister Lui Tuck Yew.

Speaking at the Singapore Airshow Aviation Leadership Summit, he said these two trends will shake up the business and operating models of traditional and incumbent air hubs.

In Asia, low-cost carriers make up nearly 20 per cent of the aviation market today, up from almost nothing 10 years ago.

Within Southeast Asia, budget airlines make up more than half of the intra-Southeast Asia market, an increase from 10 per cent a decade back.

Mr Lui said a second trend which will reshape the international aviation landscape is the rapid rise of new air hubs.

Citing the Middle East, he said in just 10 years, air passenger traffic at Dubai, Abu Dhabi and Doha jumped more than 350 per cent, from less than 26 million in 2003 to 93 million in 2012

He said: "Air navigation providers will have to manage more congested skies, with more frequent take-offs and landings. Hub airports will become more congested and more confusing for passengers, necessitating careful planning. Utilisation rates for aircraft will rise, and regulators will need to be more vigilant in ensuring that air travel remains safe."

Mr Lui said the pressure will be on governments who have air hub aspirations.

Outlining how governments can respond, Mr Lui said sufficient capacity on the ground must be ensured.

Navigation systems must also stay ahead of growing air traffic.

Governments should also rethink how to better meet the needs of air travellers, especially low-cost carrier passengers who are becoming a dominant segment.

Mr Lui said that's why Singapore chose to tear down the Budget Terminal to make way for a new Terminal 4, which will be ready in 2017.

He said: "The new terminal we've decided will deliver the 'Changi Experience' rather than the 'Budget Experience'."

But Mr Lui said the growth in airport and air traffic capacity also has to be accompanied by growth in skilled manpower.

And this is something that the government has a critical role to play in, especially in ensuring that there are enough training places and programmes, and improving the attractiveness of a career in the aviation industry.

And while the government plays a firm regulatory role in ensuring aviation remains safe, Mr Lui stressed that it must guard against over-regulation in other areas.

He said: "It should instead strive to create space for the airlines and airports to respond to market changes and opportunities. Instead of looking just at the interests of its own airlines in its aviation policy, governments would do better to consider the wider benefits to the economy and society of a liberal air services regime."

The International Air Transport Association (IATA) also stressed the importance of industry-government partnerships.

In particular, when it comes to implementing regulatory frameworks.

Mr Tony Tyler, Director-General and CEO of IATA, said: "At the moment we are seeing such an inconsistent pattern of regulation cropping up around the world. For example, over 50 different countries have brought in what they call consumer protection regulations and they are all different. It's very difficult for airlines to comply with a bunch of different regulations and it's very confusing for consumers as well."

The IATA has asked that governments seek industry views first before implementing regulations. 

Tweet Photos, Videos and Update on this Story to  #cna