Despite a record number of passengers and flights, operating profits at Changi Airport dipped almost 14% for the financial year ended March 2008, their second consecutive annual drop.
Official figures released yesterday show that while revenues rose, higher expenditure - partly from the opening of Terminal 3 in January - had cut into profits.
They reached $317 million for the 12 months ended March. The previous year, profits dropped about 8% to $368 million.
Experts, meanwhile, are warning of tougher times ahead.
The global financial turmoil, which has led to a softening in demand for air travel, has only just started to hit Changi Airport.
Last month, the airport handled fewer passengers than during the same month last year. A total of 2.89 million travellers went through Changi, a 0.4% year-on-year dip, the first contraction since February 2004.
If the downturn is prolonged, the industry could be plunged into a crisis worse than during the Sars outbreak in 2003 and the Sept 11, 2001 terrorist attacks in the United States.
In its financial statement for 2007/2008, the Civil Aviation Authority of Singapore (CAAS) reported that revenues increased 9% to $1.2 billion.
This was mainly due to higher collections from airport retail and dining outlets. Such income accounted for about 60% of the airport's total collections. The remaining 40% is from airlines' landing, parking and other charges, as well as from passenger airport taxes.
Those takings were partially offset by Terminal 3, which cost $1.75 billion to build.
While the $317 million surplus was 'within expectations', Changi is well aware of challenging times ahead, said CAAS chairman Liew Mun Leong and chief executive Lim Kim Choon in the annual report.
Key to Changi's future well-being is its connectivity, they said.
Singapore expanded its air links with 20 countries last year. A landmark deal was signed with Britain which removed all restrictions on air services for carriers of both countries. An open-skies deal between Singapore and Kuwait was also made yesterday.
By July next year, the CAAS will be split into two.
One part will remain under government control and regulate the industry, while a separate corporate entity owned by Temasek Holdings will run the airport.
Senior Minister of State for Transport Lim Hwee Hua said at a media briefing last month that under Temasek, Changi will have more 'flexibility to innovate, to be responsive and to be nimble to changing industry conditions'.
karam@sph.com.sg
This article was first published in The Straits Times on Nov 5, 2008.
