SINGAPORE: Minister Mentor Lee Kuan Yew said Singapore must restructure and strengthen its airport operations and regulatory system so that when recovery comes, the country's aviation sector will be ready to meet new challenges.

Speaking at the launch of the newly restructured Civil Aviation Authority of Singapore (CAAS) and the Changi Airport Group on Wednesday, Mr Lee – who was instrumental in developing Changi as an aviation hub – noted that the economic crisis has seriously dampened air travel.

But once the global economy recovers, he is confident the aviation industry will bounce back. He said the emerging economies in Asia and the Middle East will lead the next wave of demand for air travel and Singapore has to be ready for this.

He said: "For the present, the aviation industry is in survival mode, with record-high fuel prices last year and an ongoing global recession. The demand for air travel and services has dropped drastically.

"We see plunging airfares, falling demand for airlines' premium products and deteriorating cargo loads. All these are hitting airlines hard on their bottomlines."

Mr Lee suggested that full service carriers re-examine their business models and form new alliances or mergers. He added that Changi Airport and Singapore Airlines must not be left behind in the different operating environment.

He also stressed that one of the best investments that Singapore made in 1975 was to write off the S$800 million that was spent on Paya Lebar Airport – which was later handed over to the Air Force – and to build Changi Airport with two runways for S$1.5 billion.

At that time, he said, it was big money. If Singapore had followed foreign experts' recommendation and had built the second runway at Paya Lebar Airport, the country's airport would not have become a global aviation hub.

Mr Lee said Changi Airport has set the benchmark for service excellence and operational efficiency internationally. It has won over 300 awards since 1987, including 13 awards in the first half of this year.

He added: "The corporatised Changi Airport Group must have the drive and initiative to capitalise on the new opportunities and meet the increasing competition. As a corporation, it is better able to aggressively pursue overseas business ventures and investment opportunities.

"It has the advantage of Changi as a brand name to enlarge its international presence. This will give greater flexibility to respond quickly to changes in the industry and in the global business environment. It will also attract and retain top talent to compete with global airport operators."

The government said last year that it would be negotiating the sale of Changi Airport Group to investment firm Temasek Holdings.


- CNA/so