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Home » Aviation » It was the best of times, it was the worst of times…

It was the best of times, it was the worst of times…

Changi T2 retail

Changi Airport Terminal 2. Pic/Shukor Yusof

When we ran briefly into Lee Siow Hiang, the CEO of Changi Airport Group and his team in Dublin mid-2016, they were courteous, polite and unassuming.

If you didn’t know them, you probably wouldn’t have guessed it was the core team behind the success of Changi Airport – voted this week by Skytrax as the World’s Best Airport for the 5th consecutive year.

The award isn’t a surprise to anyone who’s been to Changi – either as a passenger or just as a person who takes pleasure in functionality, in things that work, day in, day out.

Flying ought to be a pleasant experience and that starts almost always when one arrives at Changi. Getting there is easy, too, depending on your pocket. For less than USD3 one can reach any of Changi’s three terminals from pretty much any MRT station on the island, with spare change left.

To be sure, Changi isn’t an architectural marvel, unlike Beijing Capital Airport (designed by Sir Norman Foster) or its next-door neighbour KLIA (Airport in the Forest, Forest in the Airport – maybe a good place for someone who has problem seeing the forest for the trees).

One word that best describes Changi is efficiency. Just about everything works at this airport, and works very well, too. Washrooms are clean and hygienic, check-in super easy (and fast), security processes not intimidating, ample choice of wifi networks, good and inexpensive food, and the list goes on.

Changi T2 fast checkin

fast check-in at changi… pic/shukor yusof

Sure, it hasn’t quite got the artistic class and panache of Incheon – once while waiting for a flight out of Seoul we were entertained for over an hour by a delightful classical quartet – for free!

But unlike Incheon, Changi isn’t just a place for people going somewhere. It’s a nice place to just hang out, shop, eat, and where parents with children (usually during school holidays) can hop from one terminal to another effortlessly on the monorail or just walk leisurely around the departure halls and marvel at over 100 flights flying to some 380 cities in about 90 countries. In 2016 alone Changi handled close to 59 million passengers…

So there you have it: Changi is great at making you feel good, even if you’re about to fly on cattle class for 13 hours to Europe. Get a foot massage from a machine or charge your smartphones for free or surf (yes, free) on many of the available computers. The choice is yours.

In fact people might even be tempted to make Changi their permanent home, like this woman. Changi looks set to have the best of times in many years to come.

“Be not afraid of growing slowly, be afraid only of standing still” – Chinese proverb

Cathay Pacific Airways is in a bit of a bother. It just registered its first loss since 2008 and only its third since 1946. Net loss amounted HKD575 million while sales fell 9.4% to HKD92.8 billion.

Once again, Cathay’s fuel hedging losses were quite significant, HKD8.46 billion in 2016, versus HKD8.47 billion in 2015. The airline is expecting hedging losses in 2017, too, but less than last year.

Hedging losses aside (quite unforgivable really, that this happens so often, at such scale), the main problem in our view is structural. Read our comments on Bloomberg here.

Apart from intense competition from Chinese carriers, Cathay is becoming less relevant as a gateway to the mainland. Instead of using HK as a transit point, passengers can now fly between China and Taiwan directly. Indeed, there is going to be less and less feed from HK on Cathay, meaning fewer stopovers at Chek Lap Kok.

Expect to see mainland Chinese carriers make Cathay’s life more difficult in the coming years when they open up more second tier cities in the mainland that fly direct to North America and Europe. Nothing the Swire boys can do about it…

In fact, the Swire Group – Cathay’s parent company – is as much an obstacle as are the mainland’s aggressive airlines. It would appear the Swire conglomerate, still with its base in Westminster, has lost its mojo, at least with Cathay.

cx-a350-naia

nice plane, but can cx innovate? pic/shukor yusof

The airline is encountering similar issues with many of Europe’s flag carriers, with unexciting products, decline in premium revenue, very powerful unions, and overall a significant decline in quality.

Cathay needs to be creative and innovative, but can it? The company constantly speaks of change but is probably loath to make the most effective change of all – at the highest level and at the core of it all is its parent.

A case might be made for having less Swire control and influence over the carrier; surely Cathay’s (and Hong Kong’s) future lies with its ability to amalgamate with the mainland, structurally and even operationally?

All things being equal, things aren’t all that bleak for Cathay as it has deep pockets and a good pedigree. There’s been a paradigm shift on the mainland and Cathay has to act soon. As another Chinese proverb goes: “The best time to plant a tree was 20 years ago. The second best time is now.”

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