Singapore Changi Airport: Development, Challenges, and Strategies

This report provides a comprehensive analysis of Singapore Changi Airport, examining the factors that have influenced its development over the past few years and those likely to shape its future. It delves into environmental, political, economic, social, technological, and managerial factors, highlighting the airport's strengths and challenges. The report also explores the plans of action implemented by local authorities to address capacity issues and maintain the airport's leading position in the face of global crises and structural instabilities. Furthermore, it evaluates capacity constraints, identifies scheduled and charter flights, frequent airlines, and marketing strategies that contribute to the airport's popularity. The report concludes with a discussion of the best practice market strategies that have achieved financial benefits for the airport, providing insights into its continued success.

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by Student’s Name
Code + Course Name
Professor’s Name
University Name
City, State
Date

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Introduction
Singapore Changi Airport is a major civilian airport found in Singapore. The airport serves
Singapore and other areas throughout Asia and the world. It is one of the largest air transport hub
in the Asian continent. For seven consecutive years since 2013, it has been rated by skytrax as
the world’s best airport.
Thesis: The factors that has contributed to the development of the airport in the past 3-4 years,
those possibly that will improve it in the next decade amidst the global crises, structural
capabilities, capacity constraints, and the plan of action that the local authorities have to put in
place to overcome turbulent issues will be looked into precisely.
Factors influencing development
There are a couple of factors that have influenced the development of Singapore Changi Airport
in the last 4 years and will probably influence it in the next decade amidst global crises,
structural instabilities and capacity constraints. Each of the factors is precisely discussed below.
a) Environmental factors
Singapore Changi airport serves as the major transit hub for all major airlines in Asia. It is also
the gateway for all individuals and visitors who would like to visit other Asian countries via the
Airports. It is also a major Cargo center for goods which are either destined for Singapore or
other Asian countries. Recently, the airport was rated for the seventh time by Skytrax as the best
Airport in the world. The Airport has 5 ecological friendly features which are so appealing to
customers. The foliage of green welcomes individuals even before setting foot into the airport.
The serene environment with limited carbon emissions to atmosphere courtesy of the trees and
flowers planted all over is soothing to the soul and health wise appealing. The buildings are well

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lit with natural lights especially terminal 3 which is fitted with translucent iron sheets. Movement
of luggage in Changi airport is modernized such that limited effort is required to move them.
Minimal waste can be seen in the airport as food waste is recycled to pure water and recycled
concrete has been used all through to build pavements.
b) Political factors
The government of Singapore is directly involved in the development of the aviation sector. The
government has been directly mitigating conditions and events that have got any adverse effect
on the aviation system. Just as the 2003 SARS outbreak paralyzed every activity in the aviation
sector, so was the 2008 financial crises which shook the entire globe. To prevent such
occurrences in the future, the Singapore parliament came up with a rule that the airport will have
to bank half of its profit in a bid to pull resources to deal with aviation crises and support
expansion plans. The reserve fund will have to contributed annually by the Changi airport group
and has to be maintained annually. Lin, 2018 p. 81 says in 2015 a streamlined contribution
Changi Airport Development Fund was set up to ensure there is always ready cash to support
expansion of the airport and combat any rising needs. By now the government only has
contributed close to $4 billion to the kitty and currently the 4th terminal was built with a higher
capacity than the other existing terminals. The construction of the 5th terminal which will be
bigger than terminal 1,2 and 3 combined is already set out to be built. In a month the airport
handles around 5 million passengers and the aim of the government is to ensure the airport
handles more than 10 million passengers within a month and more than 120 million annually.

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c) Economic factors
The economy of Singapore has been stable and at the same time growing drastically. The GDP
of Singapore in 2017 was US$ 54,530 per capita an aspect that makes the country a high-income
economy. It is ranked as one of the world’s countries with the most competitive economies and
Singapore stands out in that it provides the best business-friendly environment for investors. The
stability aspect in the past 4 years has enabled the Singapore Changi Airport to run its errands
smoothly thus obtaining surplus income which is used for development. Due to the laid down
measures, the economy will continue to boost the development of airport given that the GDP is
projected to be US$ 88 billion in the next 15 years according to International Air Transport
Association (IATA). With the projected growth of Air travel in Asian countries, Singapore is
investing billions on modern infrastructure to remain relevant and at the top by the time other
countries are developing. Currently with 3 terminals, the airport handles 66 million passengers
per annum. The 4th terminal will be opened this year and numbers are expected to rise to about
90 million a year. The fifth terminal construction is already underway and by completion the
airpoert will be holding 135 million customers annually. The jobs in the air travel sector are also
expected to triple up by the finish of terminal 5 since new investment in aircraft repair and
maintenance is slowly taking shape in the country.
d) Social factors
Singapore is naturally a peaceful nation with hospitable citizens. 3 decades ago, Singapore was a
third world country but at the moment it is among the first. The transformation was realized
when the authorities came together in a unitedly with the locals and pulled together resources to
transform the old Changi Airbase into an Airport. Other nations had advised the then leadership

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of Singapore to renovate and improve infrastructure of Paya Lebar Airport but the Singaporeans
knew what they wanted and they went for building Changi Airport. The aspect of resilience,
discipline, self-drive and aggressiveness has led to the development of the World class airport
that stands today. Singapore is a united nation that pursues its goals single handedly with
minimal opposition and it’s evident in the recent mobilization of resources to be used in the
building of the 5th terminal which is already afoot. Under the Civil Aviation Authority of
Singapore, the airport services are smoothly and in a friendly but steady manner to ensure
customers are well impressed.
e) Technological factors
Singapore Changi Airport has an average of 148,000 passengers per day. With this numbers,
technological advancements are a necessity to assist these customers. The airport has got kiosks
where passenger can access services under minimal supervision. Passengers are able to check-in
to the flight, choose seats according to their personal interests and print boarding passes and bag
tags. Also installed are Instant Feedback Systems in all the areas in the airport to help the
authorities follow up on customer experience throughout their time in the airport (Lee, and
Taezoon, 2014 p. 6) The responses collected are then used either to control, improve or stop a
particular service in the airport. A service workforce empowerment aimed at enhancing
communication amongst the Airport staff is also in place. The staff can coordinate activities in
the airport without necessarily being close to a computer. Courtesy of the technology in place,
the airport has been providing the best services to its customers an aspect that has led to
tremendous growth and exceptional results thus the ranking as the best world’s Airport.

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f) Managerial factors
The management of the Airport is solely controlled by the Singapore government an aspect that
mitigates any corruption activities. With this kind of close supervision, the Airport’s efficiency is
enhanced. Proper leadership is bestowed to ensure all activities are running smoothly. For
instance, the technological advancements in the airport can freely monitor the input of each and
every staff member. The customer’s feedback is seriously taken into consideration and used to
improve the services in the airport an aspect that has made it remain at the top. The nature of
Singaporeans too is hilarious since most of them are loyal to their country thus self-driven in
their jobs. Singapore Changi Airport being the pride of the country and the region is closely
monitored by the authorities to keep the standard high.
Plan of action to overcome capacity issues
To combat capacity crisis in the airport, the Civil Aviation Authority of Singapore alongside the
government are coming up with solutions to ensure the Airport continues to maintain the high
status bar as it has been for the last seven years. Among the plans of action underway are;
a) Building the 4th and 5th terminals
The 4th terminal is already in place and bigger than any of the existing terminal. Terminal 1,2 and
3 have been handling 66 million passengers per annum but with terminal 4 commencing
operations the numbers are expected to around 90 million. The 5th terminal is projected to be
bigger than terminals 1,2 and 3 combined and its construction is already afoot. The authorities
are in full control and operation to ensure the building of the terminal which will be done 1.6
kilometers away from the existing airport is built in a perfect modern way. This is evident by the

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contribution which already stands at US$ 4 billion. There is adequate land allocated for the
airport’s expansion and operations.
b) Aircraft Maintenance
Recently the authorities governing the operations of the Airport came up with a perfect idea
aimed at repairing and maintaining aircrafts. The idea signifies that the airport will be dealing
with spare parts of aircrafts an aspect that will increase the number of jobs, number of customers,
amount of cargo received and dispatched and the number of operations that will be taking place
in the airport per hour (Henderson, 2017 p. 45)
Development Obstacles facing Singapore Changi Airport
a) Capacity crunch
The Airport has been operating 3 terminals which only handle 66 million people and certainly
the airport has been receiving more passengers than the indicated number. With the ability to
hold over-haul aircrafts such as A380 which carries a capacity of 550 passengers the airport has
been struggling to cope with the challenge. The authorities under the leadership of the Civil
Aviation Authority of Singapore then resulted to expansion to be able to adjust to the fast
growing aviation sector in the country and the region in general.
b) Aviation insecurity
Aviation insecurity has remained a global challenge even to Airports in the world class levels.
With heavy presence of terrorists in the region, it has always proved to be an uphill task to
combat insecurity. The disappearance of a Malaysia bound plane carrying close to 200
passengers caused alarm in the region leading to drastic decrease of passengers in the various

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airports Singapore Changi Airport being among them. Inability to highly take care of flight
routes has remained a challenge since high-tech terrorists are able to divert flights to unknown
destinations thus causing harm to those on board or even causing fatal crushes.
c) Competition from other Asian hubs
Asia is among the leading regions in the world with modern Airports. Singapore lies in the
region thus it is directly involved in the tug of war which is very stiff in the region. Other hubs in
the region operate heavy cargo flights, heavy passenger flights and the battle of numbers is
significantly very high. The following airports pose as the major competitors of Singapore
Changi Airport; Beijing Capital Airport, Hong Kong International Airport, Seoul Incheon
International Airport, Bangkok Suvarnabhumi International Airport, Shanghai Pudong
International Airport, Tokyo Narita Airport and Delhi Airport
Charter flights operating in Singapore Changi Airport
Chartered flights do not use a regular route but flexible departure times are allowed. Different
arrival locations are also catered for as these type of flights are privatized by wealthy merchants
who may be going on vacations, official duties or their own business meetings. Airlines at times
make the arrangement to charter a flight to cater for the needs of its customers. Examples of
chartered flights that operate at Changi Airport have these destinations; Orchard Road, Colonial
District, Marina Bay, The Quays, Bugis & Kampong Glam, Chinatown, Little India and Sentosa
Island.

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Scheduled flights
Scheduled flights that operate at Changi Airport serve over 380 cities in the entire globe. These
flights are operated by different Airlines which are allowed to operate via Singapore Changi
Airport. These airlines include Malaysia Airlines, Jetstar, Emirates, AirAsia, SilkAir, Scoot,
Etihad Airways, Singapore Airlines, Qatar Airways, Vietnam Airlines and many others. Each of
the Airlines is allocated a terminal to serve from within the Airport which has got four
operational terminals as per now.
Marketing Strategies
Marketing is an important tool for the success of any business or organization. Singapore Changi
Airport has been the best Airport in the World for the last seven consecutive years since 2013.
The rank has not just been arrived at by chance but by hard work in all the aspects of operation.
The Airport has invested in technology that provides instant feedback to the Civil Aviation
Authority of Singapore. The feedback then is highly considered in the implementation process
and improvement of services rendered to the customers. The following strategies have been
employed by the Singapore government alongside the management of the Airport to ensure the
Airport remains a world class Airport.
a) Understanding customer needs
At the Singapore Changi Airport, the needs of each and every customer are catered for regardless
of how odd they may seem to be. This strategy has therefore won the loyalty of many customers
who have ever used the Airport. The Airport emphasizes same standard of services rendered to
the various Airlines which are tightened not to relent in their services. In case an Airline is

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reluctant to take up the measures, then it can be expelled and replaced with immediate effect.
The Airlines therefore put more efforts to meet the standard or else loose the golden opportunity
to serve billions of people streaming to the world’s best Airport. Services rendered in the flights
are also exemplary with the cabin crew taking full charge and responsibility of the needs of those
on board.
b) Swaying prices of Air tickets
The management of the airport in conjunction with the airlines at times reduce prices of air
tickets when there are many individuals who are travelling. This aspect of slightly reducing the
prices has always been of great importance since customers mobilize each other to take
advantage of the offer hence the airport gains to the maximum (Wu and Tsui, 2020 p. 101742)
At times offers are also given based on how many times an individual has used the airport. Since
these offers can be offered in terms of cash, the customers get extrinsic motivation.
c) Social Media marketing
Social media is one of the major tools of marketing in this century. From the introduction of
platforms where millions of people can be reached by a single advert has been advantageous to
Singapore Changi Airport. The airport has also been able to create platforms where members can
rate the services of the airport immediately after using them ranging from the very simple
services e. g washrooms (Bok, 2014 p. 2730). The authorities use the feedback provided by
customers almost immediately by ensuring what is not right is corrected. With the use of kiosks,
members can check in to the flights under minimum supervision as the kiosks provide
individuals with an opportunity to choose preferred seats, choose time of departure and book

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flights in advance. The platforms are also managed very well with feedback provision
opportunities to allow each customer to express their views concerning the services.
Financial Analysis
Activity Ratios
Activity ratios are the metrics used by firm’s and stakeholders in determining the efficiency of a
firm relating to the use of assets and equity to generate profits and revenues. In analyzing JKIA,
the report utilizes the receivables turnover ratio, the fixed asset turnover, and the total asset
turnover.
2014 2015 2016
Activity / Operational Formula
Receivables turnover - times
per year
revenue/average receivables
13.03 13.21
12.15
2
Fixed asset turnover = times
per year
Revenues/Average Net Fixed Assets
0.75 0.68
0.520
7
Total asset turnover = times
per year
Revenue/Avg total assets
0.32 0.30
0.270
1
Receivables turnover
Accounts receivables turnover is a metric that indicates a firm’s effectiveness in the collection of
receivables or the money that its clients owes it (Cantaluppi, 2000). As per the computations

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above, the Changi Airport’s receivables turnover ratio has reduced from 13.03 to 12.15 times
indicating that the firm’s efficiency in collecting debts has reduced
Fixed asset turnover
The fixed asset turnover ratio is a metric used by analysts in measuring operating performance. It
compares the net sales with the fixed assets. It is a ratio that shows how well a firm uses its fixed
assets (Cantaluppi, 2000). From Changi Airport’s fixed asset turnover ratio, the ratio reduced
from 75% to 52% from 2014 to 2016. It indicates that for every dollar invested in the fixed
assets, the company generated 75 cents of sales in 2014, 68 cents in 2015, and 52 cents in 2016.
It has thus reduced the efficiency and effectiveness in the use of the fixed assets in 2016 relative
to 2014’s performance.
Total assets turnover
The total assets turnover is an efficiency metric that shows how well an entity uses its total assets
to generate revenues (Cantaluppi, 2000). For Changi Airport, the efficiency has reduced from
32% to 27%. It means that every dollar invested in the total assets generated 32 cents of sales in
2014 while in 2016, it reduced to 27 cents.

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Liquidity Ratios
2014 2015 2016
Liquidity Formula
Current ratio current assets/current liabilities 5.8 4.97 3.06
Quick ratio Cash + Cash equivalents + A/R/Current liabilities 5.67 4.89 2.97
Cash ratio Cash + Cash equivalents/Current liabilities 5.43 4.69 2.81
Current ratio
The current ratio is a liquidity ratio that compares the current assets to the current liabilities. The
higher the current ratio, the more liquid a firm is (James, 2015). For instance, Changi Airport’s
current ratio reduced from 5.8 to 3.06 from 2014 to 2016. For the period under consideration, the
entity’s current assets could manage to offset the current liabilities with ease as it has managed
more current assets than current liabilities throughout. In 2014, the entity could manage to cover
its current liabilities up to five times from the current assets while in 2016, its current assets can
cover three times its current liabilities. The firm thus has a strong liquidity although the current
ratio has been declining over the period.
Quick Ratio
The quick ratio addresses the deficiencies of the current ratio as the latter includes some assets
that cannot be quickly turned to cash, for instance, inventories and the assets held for sale. It only
includes the cash and cash equivalents and the accounts receivables. For Changi Airport, the
ratio has consistently reduced from 5.67 in 2014, to 4.89 in 2015 and then to 2.97 in 2016. The

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firm’s liquidity position is strong as it can comfortably raise adequate funds from the quick
assets to settle current liabilities. However, the ratio has been declining. Cash ratio 5.43 4.69
2.81
The cash ratio is a liquidity metric that compares the current liabilities to the cash elements
(Mulyawan, 2015). For Changi Airport, the cash ratio reduced from 5.43 to 4.69 from 2014 to
2015 and then declined to 2.81 in 2016. It indicates that the cash elements can comfortably raise
adequate funds to cover the current liabilities for the period under consideration despite the
ratio’s consistent decline.
Solvency Ratios
Solvency Equation 2014 2015 2016
Debt-to-assets ratio aka
Total debt ratio
Total debt/total assets 14.02% 19.05% 22.15%
Debt-to-capital ratio Debt/ equity + debt 14.02% 19.05% 22.15%
Debt-to-equity ratio total debt/total shareholder's
equity
16.31% 23.53% 28.46%
The solvency ratios, from the debt-to-assets ratio, has increased from 14% to 22% similar to
debt-to-capital ratio (Husna and Desiyanti, 2016). In the period from 2014 to 2016, the firm has
maintained more assets than liabilities although an increase in the debt relative to assets has been
consistent over the period. The debt-to-equity ratio also indicates that the firm has more
liabilities than the total shareholders’ equity. In this regard, the firm uses equity capital than debt

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capital to finance its operations and has a strong solvency position due to the huge equity and
assets held.
Profitability Ratios
Profitability Equation 2014 2015 2016
Pretax margin Income before taxes/revenues 51.23% 44.24% 44.08%
Net profit margin Net income/revenues 42.53% 36.36% 36.22%
In terms of profitability, Changi Airport has recorded net profits in the period under
consideration. For the pretax margin, the firm’s profitability has reduced from 51% to 44% from
2014 to 2016. It means that the firm yielded 51 cents pretax profits in 2014 while in 2016 it
yielded 44 cents. From the net margin, which has also seen a reduction, the firm’s ratio reduced
from 43% to 36% indicating that it reduced profitability from 43 cents to 36 cents under the
period. In summary, the firm’s profitability gas reduced owing to the increased government
regulations and the restriction of the airways to a single geographic region. The cost control is
another metric in which the firm undergoes challenges. The firm’s efficiency has reduced
relative to 2014 and so has its liquidity from the liquidity metrics. The solvency ratios indicate
that the entity has become riskier with the reduced profitability, increased debt, and reduced
assets.

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