Aviation in Singapore

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Aviation in Singapore is a key component of the Singaporean economy in its quest to be a transport hub of the Asian region. Besides currently the sixth busiest airport and the fourth busiest air cargo hub in Asia, the Singaporean aviation industry is also a significant aerospace maintenance, repair and overhaul centre.

A study conducted in 2001 showed the aviation industry contributing about 5.5%, or S$7.9 billion, to Singapore’s gross domestic product. It provided one in 20 jobs in the country, or one in 17 jobs if the indirect impact of the sector on the rest of the economy is taken into account. A different set of measures by the Economic Development Board showed the industry having an output of S$3.8 billion in 2003, contributing 1.2% to the GDP and employing over 11,000 people. In 2004, the industry grew 16% to hit a record high of S$4.5 billion.

1 History
2 Low-cost travel
3 Related links
4 External links

[edit] History

[edit] Low-cost travel

Partly in response from competition from AirAsia based in neighbouring Malaysia, Singapore-based low-cost airlines only began to operate from the year 2004 when Valuair launched its maiden flight on 5 May 2004. In rapid succession, two of the largest airlines operating out of Singapore Changi Airport began operating their competing carriers, namely Singapore Airlines' Tiger Airways and Qantas' Jetstar Asia, who began commercial flights on 15 September 2004 and 25 November 2004 respectively. A planned Singapore-affiliated airline by AirAsia was scuttled when it failed to obtain an air operator's certificate from the Singaporean authorities, possibly in retaliation to the Indonesian ban on all new low-cost flights into the country by non-Indonesian carriers [1].

The physical size of Singapore meant practically all low-cost air routes have to be international in nature, imposing greater risks on the airlines with the greater dependence on aviation negotiations between Singapore and its markets. With relatively limited air rights on offer in the Southeast Asian region, the three airlines had to contend with flying to a select number of destinations where air rights are available, resulting in intense, direct competition on specific routes. The Singapore-Bangkok sector, for example, saw all three Singapore-based carriers, as well as AirAsia flying the route prior to market consolidation. The airlines were able to take advantage of subsequent liberation of air rights between Singapore, Brunei and Thailand [2] in late 2004, although key destinations such as Kuala Lumpur remain closed to all low-cost airlines.

With soaring fuel prices, limited markets, and the impact from the 2004 Indian Ocean earthquake, the low-cost aviation industry went into a consolidation phase, with Valuair, the only low-cost airline without a major stakeholder, becoming the first casualty when it was merged with Jetstar Asia Airways on 24 July 2005. The airline was still operated like a separate airline, however, due to regulatory restrictions on its flights to Indonesia, where Jetstar Asia had no access after the Indonesian ban.

The fiscal fortunes of the two remaining players began to diverge, however, when it became apparent that Jetstar Asia was struggling, while Tiger Airways was doing relatively well.