The Singapore Strategy – An Aerospace Hub

The first impression of Dubai is, it is very similar to Singapore in many ways – its multi-culturalism, the skyline with its high rise buildings, the wide highways and its traffic jams, the many shopping malls and the range of dining eateries.  But this is not surprising.  Changi Airports International (CAI), a fully owned subsidiary of the Changi Airport Group (CAG) had a six-year management contract to operate King Fahd International Airport in Saudi Arabia since 2008, as well as an 18-month operations management contract with Abu Dhabi Airports Company in 2006 – 2008 to help the local management towards improving operational standards and customer service quality.  UAE government officials were also known to visit the Singapore government agencies for knowledge learning. 

There is one key difference though – Singapore is a tropical garden city and Dubai is in the desert.  Perhaps that is why Middle East visitors especially love our gardens; Botanic Gardens (newly minted UNESCO site since July 2015), Gardens by the Bay (Cloud Forest, Flower Dome).

However, we will never be as aggressive as Dubai in rolling out their plans because of the different ways our governments work. The UAE consists of seven emirates: Abu Dhabi, Dubai, Sharjah, Ras Al Khaimah, Ajman, Umm Al Quwain and Fujairah, and they are rich in oil. The President is the Ruler of Abu Dhabi, and the Vice President and Prime Minister is the Ruler of Dubai.

In Singapore, the government is always wanting the private sector to take the lead in its business decisions, unless it is one of strategic importance.  This was the case in January 2014 when Singapore investment company Temasek decided to partner the Singapore government to rejuvenate the Mandai wildlife and nature heritage precinct in Singapore. 

An example of a private sector partnership sees on 19 April 2016 reported in The Straits Times, SIA and Airbus teamed up to open a pilot training school here. When fully operational by 2019, the training facility in Seletar Aerospace Hub will be Airbus’ fourth and largest training centre.  SIA owns 45% of the Airbus Asia Training Centre and sees this as a key investment for the airline, as well as being in line with the carrier's "transformative strategy to go beyond the core business into adjacent areas" said its chief executive Goh Choon Phong. He said this is necessary with strong competition from full-service and low-cost carriers.

In its aviation industry, the Emirates Group is wholly owned by the government of Dubai.  In contrast, CAG was formed in 2009 to focus on airport operations and management, and air hub development of the corporatized Singapore Changi Airport, while the Civil Aviation Authority of Singapore (CAAS) continues its role as regulatory authority for civil aviation in Singapore, and has a role in the growth and development of the air hub and aviation industry.  A close look reveals that there could be an overlap in the air hub role by both CAG and CAAS.

The strategy, it seems, is for CAG to expand its CAI to invest in and manage foreign airports.  CAAS on the other hand, looks to expand Singapore’s aerospace industry and has seen its maintenance, repair and overhaul (MRO) cluster grown to over 100 companies (20% of the Asia-Pacific MRO market). This is an average growth of 13% since 1990, the aerospace industry now an integral economic driver of Singapore.   ST Aerospace and SIA Engineering Company, both home-grown companies, are world-class leaders in heavy aircraft maintenance, ranked first and fourth respectively in 2008, in terms of total man hours expended. 

According to the CAAS, the Singapore air hub strategy is thus to expand the Singapore aerospace industry, for companies to move up the value chain by taking on work in areas such as research and development (R&D), design, and manufacturing, as well as more advanced MRO work.  Right now, Singapore is home to the research centres of major companies in the aviation industry and the aerospace companies in Singapore are moving into new repair development, innovating existing processes and technologies to obtain more cost-effective and productive outcomes, and reducing the scrap rate of incoming aircraft components.  We are also looking beyond MRO, where there is the potential to become a design think-tank for aerospace original equipment manufacturers (OEM).

Will this aerospace hub strategy, to move the aviation industry up the value chain work, and work timely enough, to compete with the emerging Middle East air hubs? 

The Dubai skyline

The  Dubai desert