In fact, the recovery of Singapore’s aviation and tourism sectors was predicted to be heavily slow.
But, the market will fully recover and Singapore could become an even stronger hub in the long term, by strong government support.
Singapore aviation would be double down
Singapore’s aviation and its group of airlines were doubling down, as it believes that with appropriate policies, strategies, and support, its role as an aviation hub can be maintained and strengthened.
However, Singapore remains committed to the Mega terminal 5 project, which will be completed around 2030 and will increase Changi’s capacity to 150 million passengers per year.
In the long term, the SIA Group (Singapore Airlines Group) would create a stronger hub over the next several years, helping justify Singapore’s massive investments in additional capacity at Changi.
In addition, Temasek Holdings and SIA announced a rights issue that will raise S$8.8 billion to S$15 billion. The rights issue includes S$5.3 billion in new shares and S$3.5 billion in mandatory convertible bonds plus an option to issue another S$6.2 billion in convertible bonds.
But in the short-term, the obstacles for SIA is extremely challenging and even bleaker than other airlines group due to the lack of a domestic market but the staggering amount of cash it has raised will enable SIA to ride out the storm and be ready to pounce when it is time to come out of hibernation.
Singapore opening for international markets?
The recovery of international markets will allow Changi a higher throughput of passengers than the current dismal figures.
However, this start-up depends on the reopening of borders and the success of efforts to contain viruses.
Even though the Singapore circuit breaker measures, which have been extended until June 1, are effective enough for Singapore to consider reopening, there must be enough confidence that the virus is contained elsewhere.
Top 10 inbound markets for Singapore Changi Airport in 2019 (Source: Singapore Tourism Board visitor arrival data and Sobie Aviation)
Singapore may focus on domestic travel
A domestic travel recovery could help some major airports in Asia-Pacific limit traffic declines to as little as 10% or 20% while Changi’s traffic could remain down by over 90%.
But, domestic travel will not result in any major airport’s overall traffic returning to pre-crisis levels.
For the last week of March, Changi had reported a 98% drop in passenger traffic, causing a 71% drop for the full month to 1.7 million and a 33% drop for the first quarter to 11.0 million.
For at least a few months, we could expect a slight increase with Changi passenger traffic remaining at around 2% of normal levels.