Deputy Prime Minister and Minister for Finance Mr Heng Swee Keat opens the Singapore Airshow at Marina Bay Sands Convention Centre in Singapore this week, touching on tech advancement and growth of the aviation sector against a backdrop of global uncertainties on travel, trade and tourism.
By Mr Heng Swee Keat, MP
We start the decade on an uncertain note. Global economic growth is projected to be modest. The IMF indicated last month that the economy is showing tentative signs of stabilization, but recovery is likely to be sluggish. The global order is undergoing significant shifts. Global trade, the rule of law, and multilateralism have all come under pressure. Oil prices have also been volatile, partly as a result of the ongoing geopolitical tensions in the Middle East, adding to cost uncertainty for air travel.
In recent weeks, the novel coronavirus outbreak has created a new source of uncertainty and apprehension. Governments across the world are rushing against time to contain the spread of the virus. This new coronavirus has infected many more people than SARS, although it appears to be much less lethal. But the situation is very fluid, and we do not fully know the nature of the new virus at this point.
Until we overcome the outbreak, we have to brace ourselves for its impact. Globally, air passenger numbers are coming down. Airlines are feeling the immediate impact. Some airlines have been particularly hard hit, and have resorted to substantive cost reduction measures, including putting staff on unpaid leave and even laying off some of their workers. There could be a knock-on impact on the wider aviation sector in terms of aircraft orders and also maintenance, repair and overhaul (MRO) activities.
The virus outbreak has also cast fresh uncertainties on the near-term prospects for the global economy. Consumer confidence has dampened, and many supply chains have been temporarily disrupted. With the situation still rapidly evolving, it is difficult to gauge the full impact at present. However, if SARS is a reference point to go by, it will be many months before the situation returns to normal.
I am glad that in this period of great uncertainty, countries are working hard and working together to contain this outbreak. China has taken firm and decisive measures to contain the spread of the virus. Singapore and other countries have also stepped up our safeguards. Together, countries are working with the World Health Organisation to contain the contagion.
We live in a highly inter-connected world, with integrated global supply chains and good people mobility, which has been accelerated by air travel. As countries step up safeguards, we should all do so based on data and scientific evidence as well as the specific context of each country.
This way, we also do our best to sustain the flow of goods and commerce, even as we are united in our objective to protect the well-being of our people. With close cooperation, I am confident that China, Singapore and the rest of the international community can overcome this challenge. I am similarly confident that the global aviation sector will weather this coronavirus outbreak. We must also set our sights on the long term, for the future of the aviation sector remains bright.
Future of Aviation
The number of air travellers in the world is expected to double in the next 20 years, from 4 billion to 8 billion. Half of all new air travellers will be from the Asia-Pacific region.
The growth potential in Asia-Pacific is strong, as this region is home to the fastest growing middle class population, and Southeast Asia in particular has a youthful population, who are keen to explore and travel the world. Hence, it is no surprise that the Asia Pacific is projected to become the largest aviation market in the world, accounting for more than 40% of new aircraft deliveries in the next two decades.
I am also happy to see Singapore’s aviation sector contributing to the region’s growth. Passenger traffic at Changi airport grew by about 5% per annum over the last decade. During the same period, the total output for the aerospace industry also grew at the same rate, surpassing S$11 billion in 2018, and our companies have made significant investments in anticipation of the growth in regional demand.
To continue growing the global aviation industry, and to take full advantage of its potential, we need to invest in innovation, skills and infrastructure. Let me elaborate on each of these, in Singapore’s context.
Innovation, education as a key growth driver
Innovation has opened up many possibilities in the aviation sector. Additive manufacturing, big data, and automation are transforming how aircrafts are built, operated and maintained. For example, just last year, SIA avoided more than 500 minutes worth of flight delays through predictive maintenance.
Innovation has also disrupted business models in ways we would never have imagined. Over the last decade, budget airlines made air travel more affordable and accessible. In the future, the concept of air taxis or urban air mobility can dramatically change how people travel and how we design our cities, just as how the invention of automobiles created the suburbs.
Singapore is therefore committed to building a strong ecosystem of academics, businesses and other partners, locally, with the region, and beyond, to promote research, innovation and enterprise, to encourage the cross-pollination of ideas and translation of ideas into action. Especially in addressing issues common to the global aviation industry, such as reducing the environmental impact of aviation and improving travel efficiency.
I am encouraged by the growing collaborations between international industry players and our public sector and research institutes, such as the corporate lab between Rolls-Royce, and NTU, one of our universities, and the Aviation Innovation Research Lab between the Civil Aviation Authority of Singapore and Thales.
To support the many new areas of innovation, we must have a skilled work force. Industry partners have a strong role to play. They must work closely with schools and institutions of higher learning to ensure that the curriculum is up-to-date, and the skills imparted are relevant.
In Singapore, our education institutions have also worked closely with the aviation sector to develop courses, including work-study programmes, such as the SkillsFuture Work-Study diploma in Aircraft Engine Maintenance that was developed by our Institute of Technical Education in partnership with engine MRO companies. Applied pathways to university, such as the Aircraft Systems Engineering degree, developed by the Singapore Institute of Technology in partnership with the SIA Engineering Company.
The close involvement of industry in education also applies to capability building. For example, our National Additive Manufacturing Innovation Cluster and the Association of Aerospace Industries (Singapore) partnered our government agencies to develop new additive manufacturing capabilities for the aerospace industry.
Infrastructure underpins industry growth
Lastly, we need sustained investment in infrastructure to support a widening global air transport network, and an increasing volume of air travel. If innovation is the engine of an aircraft, and a skilled workforce are the pilots; infrastructure is the fuselage – the body of the aircraft: it is the structure that makes flight possible.
Singapore has made significant investments over the past decade. For example, we have developed and are expanding the Seletar Aerospace Park. Last year, we expanded Terminal 1 and opened Jewel Changi Airport. This was the culmination of years of planning and Jewel is now an international icon.
This decade will be a new chapter for Changi Airport. Terminal 5 will be the centerpiece. When completed in the early 2030s, Terminal 5 will allow us to handle 50 million more passengers a year. This will be an increase of more than 50% compared to our current capacity. More importantly, we will design Terminal 5 to deliver an even better Changi Experience for all travellers.
As a major air transport node, the additional capacity provided by Terminal 5 will enable Singapore to contribute to increased connectivity in the region and beyond.
The demand for infrastructure and connectivity will continue to grow in Asia. Therefore, as a major financial and connectivity node in the Asia Pacific, Singapore’s Infrastructure Asia office can contribute to regional connectivity and integration. By connecting the demand and supply side for infrastructure projects and in ensuring that these projects are structurally robust, financially sound, and environmentally sustainable.
The future of aviation is bustling, dynamic and filled with opportunities. And this industry has been resilient to setbacks and surprises that have come your way. We must make adjustments to our business plans and step-up our safeguards in response to the coronavirus outbreak. At the same time, we must continue to invest in innovation, skills and infrastructure, to harness the opportunities and realise the growth potential of this sector.
(Ed. This speech has been edited for editorial purposes from the original transcript provided courtesy of The Ministry of Communications and Information, Singapore.)