Singapore's Changi Airport: Economic Contributions and Challenges

This report provides a comprehensive analysis of Changi Airport's economic contributions to Singapore's economy. It details the airport's role in job creation, GDP contribution, and facilitation of trade and commerce. The report also examines the competitive landscape, highlighting challenges from other Asian air hubs and strategies for staying ahead. Furthermore, it discusses the airport's present and future role in development, including diversification into social and entertainment spaces, and potential for further expansion in education and skill building. The report concludes by emphasizing the airport's significance as a driver of economic growth and the need for strategic planning to maintain its position as a leading international air hub.

Running head: GLOBAL ECONOMIC POLICIES
Global Economic Policies
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction......................................................................................................................................2
Changi Airport and its economic contribution................................................................................2
Competition faced by Changi Airport.............................................................................................3
Role of Changi Airport in development: Present and Future..........................................................5
Conclusion.......................................................................................................................................6
References........................................................................................................................................7

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Introduction
In the contemporary global economic scenario, several countries have emerged as the
new economic giants, showing highly impressive trends in aspects of economic growth,
productivity, employability, industrial growth and overall increased welfare of their residents.
One of such economically growing countries in the recent periods is that of Singapore
(Tremewan, 2016). The economy of Singapore is the most open economy in the world and is one
of the least corrupt ones in the international scenario. The country, over the years, have shown
significant growth in economic and welfare terms, much of which can be attributed to the robust
strategic framework and the economic policies taken by the governing authorities of the country
(Rodan, 2016).
One of the most outstanding as well as economically contributing aspects of this country
is the Changi Airport, which stands as the centre of attraction of the populous and commercially
busy economy of the country and is one of the biggest facilitator and contributor to the economic
progress of the country in the recent years. The airport, has been evolving and modifying since
its establishment and has been winning the title of the World Airport of the Year, for five
consecutive years, including 2017 (Hwang & Low, 2012).
The report tries to discuss the unique characteristics of the Changi Airport and sheds light
on its contributions, not only in facilitating business and progress of the economy, but also in
creating new sources of employment and industrial linkages of the same with aviation related
sectors, thereby contributing to the progress of the country (Bok, 2015). In light of economic
theories and conceptual frameworks, the report also tries to highlight the competitions, which the
airport faces in the cotemporary commercial scenario and tries to recommend ways in which it
can stay ahead and contribute in the overall economic development of the country.
Changi Airport and its economic contribution
Since its establishment in 1981, the Changi Airport has expanded its domain of
operations significantly with time and has grown at par with the progress and economic and
commercial growth of the country. The airport served to more than 100 airlines, flying to and
from 270 cities across the world, thereby establishing commercial relationships with above 60

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countries across the globe. The flights are inclusive of both domestic and international transport
of not only passengers as well as cargos. In the previous year, the airport facilitated nearly 54.1
million domestic and international passengers, which is its highest in the history of the airport
(Tsui et al., 2014).
In terms of contributions to the economic growth also, the airport plays a significant role.
This is unique and highly subjective to the Changi Airport and Singapore only. The airport single
handedly created around 163,000 jobs (both in the facility itself as well as in airport and aviation
related industry) in 2013, with the scopes increasing further in the coming years with the
commercial expansion of the country (Teo & Chang, 2012). The airport also contributed to
almost 6% of the Gross Domestic Product of the country in the recent years, which is huge given
the fact that the country experiences tremendously high. This in turn, indicates towards the fact
that the airport has capabilities of contributing significantly to the economic development and the
overall welfare of the residents the country.
From the time of its opening, the airport has received immense limelight from the local
residents and over the years has become one of the international attractions as well as it
facilitates both businessmen as well as pleasure travelers in the country as well as from all over
the world. The huge number of employments created by the airport in the country, in the recent
periods, has also increased the income in the hands of people in the country, which in turn has
resulted in increase in their aggregate demand, thereby increasing the productivity in the
economy (Burghouwt & Redondi, 2013). On the other hand, by facilitating worldwide transport
of passengers as well as cargos all over the world, the airport has been facilitating trade and
commerce significantly, which in turn has resulted in convenience for the producers in the
country as they can import raw materials as well as export their products with convenience. For
the foreign investors as well as entrepreneurs also, this facility has proved to be helpful, which
has increased the inflow of capital and businesses from all over the world to the country.
Competition faced by Changi Airport
In the recent years, with the economic development of the Asian countries, especially the
Four Asian Tigers, Taiwan, Singapore, South Korea and Honk Kong, commercial activities have
increased significantly in these nations and their international relations have strengthened

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considerably. This has led to immense expansion of activities of the international air hubs in
these Asian countries (Jimenez, Claro & de Sousa, 2014). Changi Airport of Singapore, thus,
experiences considerable competition from similar air hubs, especially those present in Hong
Kong, Taiwan and others. In this highly competitive scenario, to remain as the foremost airport
and air hub of Southeast Asia, each of these air hubs have engaged in immense competitive and
expansive behavior. While the air hub in Hong Kong is expected to get a third runway, costing
nearly 18.2 billion USD, the strategic plans for Changi airport is also similar. Changi airport, in
the near future is expected to get a fifth terminal connected to the third runway (Bush & Starkie,
2014). For the same, the governing authorities have allocated a first installment of 2.15 billion
USD and the project, if succeeds, is expected to increase the annual passenger capacity of the
airport to 150 million by 2025.
Figure 1: Annual growth of passenger catering of Changi Airport over the years
(Source: Ryerson & Kim, 2013)

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As can be seen from the above figure, though the number of passengers catered by the
Changi airport has increased over the years, the annual growth rate of the same has consistently
decreased moderately over the last few years. Much of which can be attributed to the presence of
other competing and able international air hubs in the other Southeast Asian countries.
Thus, from the above discussion it can be asserted that it is of utmost importance for the
concerned airport to take the presence of high competition into consideration. To stay ahead of
the competition and to increase the passenger growth rate in the coming years, Changi airport
needs to develop and execute their strategies in such a way that the airport remains as the
primary international air hub in the Southeast Asian zone and one of the main facilitator of
international travel and transit.
Role of Changi Airport in development: Present and Future
As can be seen from the above discussion, the Changi airport in Singapore has been, over
the years, has remained one of the primary facilitators of international as well as domestic
transport across the world. The airport has contributed significantly in building up the industrial
as well as commercial sector of the country and has also created employment for a huge number
of workers in the airport and aviation related sectors in the country. However, with the increase
in the commercial activities and integration of the same across the globe the scopes of Changi
airport is also expected to increase. However, with the considerable amount of competition in
this sector, the need for expansion as well as diversification is felt in case of Changi airport
(Graham, 2013).
The airport has already diversified to a huge extent from being a mere transport facility to
much more for the travelers as well as the residents of the country. Apart from the efficient
managements of flights and the comfort and convenience of the in transit passengers, the airport
has developed into a social space and entertainment destination for family outings as well as for
the travelers. In the recent years, the airport has developed a unique complex of indoor gardens,
which has gained immense attention globally. This Jewel Changi Airport not only serves the
purpose of airport but also has the importance in the aspect of tourism and environment
preservation (Halpern & Graham, 2013).

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However, the airport still has scopes of expanding its operations in educational and skill
building purposes, which may increase the employability of greater sections of population
thereby contributing to the economic development. On the other hand, the new developments
and beautification of Changi airport has been gaining huge amount of attraction from pleasure
travelers as well as local residents. This is expected to create considerable revenue generation
and inflow of cash, which is expected to contribute in the economic development of the country.
Conclusion
The above discussion asserts that Changi airport has developed significantly in the last
few decades and is currently one of the busiest as well as most popular international air hubs in
the county. The airport also has significant contributions in the economic and commercial growth
of Singapore due to its contribution in the GDP of the country as well as its employment
generations capabilities. However, in the contemporary competitive scenario, there still scopes of
expansion and revenue generation of the facility, which can help, in transforming the same as a
sustainable source of economic development in the country.

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References
Bok, R. (2015). Airports on the move? The policy mobilities of Singapore Changi Airport at
home and abroad. Urban Studies, 52(14), 2724-2740.
Burghouwt, G., & Redondi, R. (2013). Connectivity in air transport networks: an assessment of
models and applications. Journal of Transport Economics and Policy (JTEP), 47(1), 35-
53.
Bush, H., & Starkie, D. (2014). Competitive drivers towards improved airport/airline
relationships. Journal of Air Transport Management, 41, 45-49.
Graham, A. (2013). Managing Airports 4th edition: An international perspective. Routledge.
Halpern, N., & Graham, A. (2013). Airport marketing. Routledge.
Hwang, B. G., & Low, L. K. (2012). Construction project change management in Singapore:
Status, importance and impact. International Journal of Project Management, 30(7), 817-
826.
Jimenez, E., Claro, J., & de Sousa, J. P. (2014). The airport business in a competitive
environment. Procedia-Social and Behavioral Sciences, 111, 947-954.
Rodan, G. (2016). The political economy of Singapore's industrialization: national state and
international capital. Springer.
Ryerson, M. S., & Kim, H. (2013). Integrating airline operational practices into passenger airline
hub definition. Journal of Transport Geography, 31, 84-93.
Teo, P., & Chang, T. C. (2012). Singapore: tourism development in. Tourism in south and
southeast Asia, 117.
Tremewan, C. (2016). The political economy of social control in Singapore. Springer.

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Tsui, W. H. K., Balli, H. O., Gilbey, A., & Gow, H. (2014). Operational efficiency of Asia–
Pacific airports. Journal of Air Transport Management, 40, 16-24.