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Suvarnabhumi » Asian airport investment vital for regional growth: analysts

Sunday, July 20th, 2008

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A glitzy new airport that opened recently in Thailand reflects Asia’s need for investment to cope with a fast-growing aviation sector, industry analysts say.

While the opening of Suvarnabhumi international airport has intensified rivalry within Asia for market share, analysts say an expanding aviation sector means there is enough business for everybody.

“We are not worried about over-investing,” said Paul Behnke, director of economics at Airports Council International (ACI). There is under-investment in some of the key countries and frankly, airport capacity is in short supply.”

Passenger traffic in the Asian region is projected to grow 8.0 percent in 2006 and 7.8 percent next year, faster than the global average of 5.1 percent for the same period, according to ACI.

Air freight traffic in Asia is expected to grow an average 6.9 percent in the 2004-2020 period against the global average of 5.4 percent, said the Geneva-based body whose 557 members operate more than 1,530 airports globally.

“The reality is the region needs new international capacity and we welcome new capacity,” he said. I don’t see many airports out there that are terribly under-utilised.”

Bangkok’s new airport, which cost 3.0 billion US dollars, has a capacity of 45 million passengers a year, well ahead of its rivals in Singapore and Malaysia.

That capacity is expected to more than double when it becomes fully operational, but for now it is on par with the eight-year-old Hong Kong International Airport which received 40.3 million passengers last year.

An additional 15.8 million dollars has been allocated for a budget airline terminal to open there next year.

Suvarnabhumi, which opened on September 28, replaces Bangkok’s creaking Don Muang which was straining under an annual load of 39 million passengers, two million more than it was designed for.

“In the case of the Bangkok airport, it definitely was a rational investment… Don Muang was for years operating well above its design capacity and the resultant bottlenecks were keeping Thailand’s aviation sector below its natural level,” said Richard Pinkham, a Singapore-based analyst with the Centre for Asia Pacific Aviation (CAPA).

“In order to keep things moving forward, investment in upgrading infrastructure was necessary,” he said.

Asia needs to continue developing its key airports if the region’s economies, especially the tourism sector, are to blossom, analysts said.

“Asia’s major hubs will continue to have to invest in new airport capacity, to meet expected trade and tourism growth,” said Peter Harbison, executive chairman of CAPA, a Sydney-based independent aviation consultancy.

“The capacity shortages run the risk of undermining hub competitiveness, not to mention inconvenience to passengers, while airport congestion can also lead to financial loss for airlines,” he said.

John Koldowski, director for strategic intelligence at the Bangkok-based Pacific Asia Travel Association, said airport investment places the region in a strong position to cater to Asians’ rising affluence.

“The near-term future for air travellers particularly is very, very strong. Asia is the place to be, period. You have a good-sized population and they are becoming richer… that is a good combination,” Koldowski said.

Key airports in the region are taking the competition posed by Bangkok’s Suvarnabhumi in stride, saying they will also enjoy a boost as it draws more travellers to Asia.

“When tourists fly to Bangkok and Singapore, there is a spinoff with some coming to Malaysia. Similarly when they come to Malaysia, they also fly to other countries in the region. We always get a spinoff,” said Bashir Ahmad, managing director of Malaysia Airports Holdings Bhd, which runs the Kuala Lumpur International Airport.

“It will not pose a rivalry to Kuala Lumpur International Airport. All the airports in the region including KLIA and Changi in Singapore are doing well. Our aim is to ensure that Changi Airport’s ‘hardware’ is on par, if not superior to other airports,” said the Civil Aviation Authority of Singapore which manages Changi.

A third terminal costing 1.75 billion dollars is scheduled to open in 2008, boosting the airport’s capacity to 64 million.

Just before Suvarnabhumi opened, Changi Airport completed a 240-million Singapore dollar (153 million US) upgrade of its second terminal. — AFP

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