By Karamjit Kaur, Aviation Correspondent

THE fight to be the premier air hub is tough and Singapore's aviation sector must capitalise on new opportunities and growth areas to stay ahead of rivals.

Calling on key players, including the newly-corporatised Changi Airport Group and Singapore Airlines (SIA) to rise to the challenge, was Minister Mentor Lee Kuan Yew, one of the key architects of Singapore's aviation strategy and Changi airport's development.

He said yesterday that while the global economic downturn was hurting the industry, recovery will come, and when it does, Singapore's aviation sector must be ready to meet the new challenges.

He was speaking at the launch of the Changi Airport Group - to be owned by Temasek Holdings and which will run the airport - and the new Civil Aviation Authority of Singapore (CAAS), which will regulate the industry, including setting service standards and parameters for airport charges.

Plans to create the two new entities were announced two years ago.

The hope is that as a corporate entity, Changi Airport will have more flexibility to innovate, be nimble and responsive enough to changing industry conditions, as well as to new competitive challenges.

Speaking at the launch at Changi Airport's Terminal3, Mr Lee said Singapore must restructure and strengthen its airport operations and regulatory system.

He also noted that emerging economies in Asia and the Middle East will lead the next wave of demand for air travel.

'We have to be ready for this. As airport users become more discerning and demanding, our service excellence and know-how must enhance the Changi Experience,' he said.

While Changi has done well the last three decades, setting the benchmark for service excellence and operational efficiency internationally, he said past achievements did not guarantee continued success.

'Competition among air hubs is increasing with new mega-airports in the region, like Beijing Capital International Airport, Shanghai's Pudong Airport, Incheon International Airport and Dubai International Airport.

'Our competitors are catching up, and some are beginning to equal, if not outperform us in certain areas.'

To continue to fly high, not just Changi Airport but carriers like SIA, Tiger Airways and Jetstar Asia must improve operations so they can compete more effectively in the international premier leagues.

And with a proliferation of low-cost carriers in Asia, full-service airlines like SIA need to re-examine their business models and form new alliances.

SIA chief executive Chew Choon Seng said at the event that the current focus was on steering the carrier through what is a 'very severe downturn'.

As for tie-ups and partnerships with other carriers, he said: 'Unless the international aviation regulations change, which they have not, mergers and alliances are not for this industry.'

While the industry is all for consolidation, analysts and players say there has been little progress made because of restrictions imposed by countries on foreign ownership of national carriers.

As for Changi Airport, new chief executive officer Lee Seow Hiang is confident that the new structure will allow the company to grow its business both at home and abroad, as suggested by MM Lee.

Changi will continue working with airline partners and tourism authorities to stimulate demand. It will also push to expand its foothold beyond Singapore.

To date, Changi Airport, through its subsidiary Changi Airports International, has carried out consultancy work for more than 40 airports worldwide.

On whether rival airports worry him, Changi's Mr Lee said that while competition is 'cut-throat...it keeps everyone excited, on their toes, always innovating, always trying new things'.

-end of ST article