Airports in Southeast Asia take off-
The airports in Southeast Asia are diverse not just in physical size and operational parameters, but also in their governance structures and business models. As this region comprises some of the fastest growing economies globally, it is also witnessing rising air traffic. As a result, several of the airports are operating beyond their optimal capacities. Consequently, almost all the countries in the region have put investment plans in place to expand their aviation infrastructure.
Southeast Asia Infrastructure presents a review of the regional airports and their outlooks.
Airports – Big and small
The region is home to over 430 airports across the 10 countries of which 40 are classified as international airports. Among them, Indonesia has the maximum number of operational airports, while Singapore and Brunei have one each. However, Singapore’s Changi Airport operates as a regional hub, serving more than 100 international airlines, and connecting some 220 cities in 60 countries and territories worldwide.
Currently, Jakarta’s Soekarno-Hatta International Airport (SHIA) handles the most traffic in the region, while the Phnom Penh International Airport in Cambodia occupies the other end of the spectrum. A comparison of the region’s busiest airports reveals that Indonesia, Singapore, and Thailand are at the pole position.
Given the rapid expansion of the economies in the region, most of the airports are operating beyond their capacities. To give an example, SHIA, the busiest airport in the region with a maximum capacity of 38 million passengers per annum, recorded a footfall of 53.67 million passengers in 2011–12. To overcome these capacity constraints, almost all countries in Southeast Asia have launched airport expansion plans to varying degrees.
Strong government imprint
Most of the airports in the region operate under the control of their respective governments. Exceptions to this rule are the airports in Cambodia, Malaysia, Thailand, and Singapore.
In Indonesia, the Transportation Ministry’s technical operation units and the state-owned PT Angkasa Pura I and II operate the airports. All airports in the Philippines are government owned; they are classified by the Civil Aviation Authority of the Philippines into international airports, class 1 principal airports (domestic), class 2 principal airports (domestic), and community airports (for general aviation) based on infrastructural specifications.
As for Vietnam, the Airports Corporation of Vietnam, a state-owned company, is responsible for the management and operation of all airports. The Brunei Department of Civil Aviation is in charge of Brunei airport, while the Military of Laos handles the operations at Wattay International Airport – the largest and busiest airport in Laos.
The government imprint is present even among the corporate operators. In Thailand, the publicly listed Airports of Thailand Public Limited (AOT) manages the airports, while the Changi Airport Group (CAG) operates the Changi International Airport in Singapore. In Thailand and Singapore, the airports were previously operated by their respective government airport authorities, before they were corporatised in 2002 and 2009 respectively.
The Malaysia Airports Holdings Berhad, the Malaysian airport operator that runs 19 of the biggest airports in the country, including the Kuala Lumpur International Airport (KLIA), was also carved out from the Malaysian civil aviation department in 1992.
Therefore, Cambodia is the true exception in this region. Cambodia Airport Management Services Limited (CAMS), a private concessionaire, manages airport operations.
Changing dynamics
As of now, Changi Airport is the most established international hub for Asia. Among the primary reasons for Changi’s success as a hub is its favourable geographic location that offers easy connectivity to major cities and countries in Asia. With the recent opening of the third terminal, it now has an annual handling capacity of 64 million passengers.
Geography, though, is no guarantee of success. KLIA has been struggling to establish itself as an alternative hub airport in the region. However, airlines prefer established routes via Changi, which have a proven track record of profitability. Consequently, KLIA has shifted gears by positioning itself as a hub for low-cost airlines: its new terminal that is dedicated to low-cost carriers is slated to become operational later this year.
In the future, competition to Changi and KLIA will also come from SHIA. SHIA is converting its Terminal 3 into an aerotropolis and the process is expected to be completed by 2016. This will boost the airport’s annual capacity to 62 million passengers. With the three airports within a 1,000 km radius of each other, the dynamics of airport operations in the region look set to change.
Another development that will impact the airports in the region is the opening up of new economies such as Myanmar. The country’s aviation market is poised to enter a major period of growth. In fact, both the domestic and international markets have shown rapid growth since 2008: international passenger numbers have nearly doubled at the Yangon International Airport over the last three years. These figures are expected to increase even further considering the huge potential that the country offers.
In addition, the Myanmar government is planning to partially privatise its two existing international airports; according to an April 2012 study by the Center for Aviation (CAPA), the provider of independent aviation market intelligence, major international airport operators are eager to participate in the tenders.
Widespread proliferation of airports
Overall, the Southeast Asian aviation sector has tremendous potential for growth. Traffic to several countries has increased significantly, with the trend expected to be maintained in the near future. Singapore has been the regional leader in maintenance, repair, and overhaul (MRO) services, boasting of an average growth rate of 13 per cent in the aerospace industry since 1992. The aviation industry in the Philippines is also growing rapidly, driven by a thriving tourism and services industry. Even Vietnam’s relatively small aviation industry has expanded significantly in recent years.
The growth of aviation in the Southeast Asia region has resulted in a wide range of current as well as planned investments in all sectors of the industry by governments, airlines, and other aviation companies. Travel has increased in tandem with the growing number of local and international destinations offered by low-cost carriers. To cope with the rising demand, most Southeast Asian countries have sought to expand their airport infrastructure.
Indonesia is one of the countries that has embarked on a massive endeavour to expand the operations of its airports. According to B. Susantono, Deputy Transportation Minister of Indonesia, “Expansion projects of several major commercial airports across Indonesia will be completed by 2014.” The projects comprise six airports operated by the state-owned airport operator Angkasa Pura I, including Ngurah Rai International Airport in Bali; Sepinggan Airport in Balikpapan, East Kalimantan; and Juanda International Airport in Surabaya, East Java. Also slated for completion are the eight airports operated by Angkasa Pura II, including Sultan Syarif Kasim II Airport in Riau, Sultan Thaha Airport in Jambi, and Supadio Airport in Pontianak, West Kalimantan.
Suvarnabhumi airport in Thailand is also undergoing expansion to augment its capacity. Airports of Thailand Public Company Limited is investing 62.5 billion baht in the project, which will boost the airport’s capacity to 60 million passengers per annum from the current 45 million.
The Department of Transportation and Communications in the Philippines announced in July 2012 that it is planning to rehabilitate and expand seven airports in order to accommodate the rapid trade and tourism growth. The seven airports will be situated in San Vicente, Palawan; Pagadian City in Zamboangadel Sur; Butuan City in Agusandel Norte; Dipolog City in Zamboanga del Norte; Sanga-Sanga in Bongao, Tawi-Tawi; Cotabato City in North Cotabato; and Maasin in Southern Leyte.
In Vietnam, the government is aiming to increase the airports’ passenger handling capacity to 32.5 million by 2015 and 63 million by 2020. A new airport – Long Thanh International Airport – has been approved; it will replace the current airport that serves Ho Chi Minh City, whose capabilities have been constrained by its surroundings. The master plan for the new airport comprises four parallel runways and terminals with an annual handling capacity of 100 million passengers. The construction of the first phase of the airport is expected to begin in 2015 and be completed by 2020, taking the passenger handling capacity to 25 million passengers a year. Once the first phase is completed, the airport will handle most of the international flights in the metropolitan area, while the Tan Son Nhat International Airport will cater to some international and all domestic flights.
To handle the steep increase in traffic, Myanmar is upgrading two of its airports to handle international traffic – the Hanthawaddy International Airport in the central Bago region, about 80 km from Yangon, and the Dawei International Airport at the Dawei deep-sea port in the southern Tanintharyi region. Both are expected to be completed by 2016.
Meanwhile, CAMS will be investing $400 million in the extension of the international terminal at Phnom Penh airport, the upgrading of Siem Reap airport, and improvements to Sihanoukville airport over the next eight years. As Khek, Communications and PR Director at the Phnom Penh International Airport, explained: “The first phase of the works will be launched by early 2013 for the Phnom Penh and Siem Reap airports. When the upgrades are completed, capacity at the terminals at both airports will double to 5 million passengers a year each.”
Exciting yet uncertain times ahead
To conclude, airport traffic in Southeast Asia is set to expand, driven by rapidly growing economies. According to the Boeing Company’s market outlook for 2012–31, South Asian air travel is expected to grow by 8.4 per cent per year over the next 20 years, thus outpacing all other regions in the long-term forecast. While countries such as Indonesia and Singapore have experienced a stable traffic flow, these dynamics may change, considering the new strategic direction of some of the airports in the region. Further, emerging countries such as Myanmar are witnessing steep growth in international traffic due to economic development and open sky policies. Based on the plans to further augment their airport capacities, it is evident that the countries in the region are aware of the growth opportunities and have plans afoot to further augment their capacities. However, timely completion of projects, along with the strengthening of the respective national carriers as customers of the airports, will be a true test of their success.
