This article that I have written is an opinion piece. It might not be factually accurate, although I’ll try my best to make it so. These are my observations with regard to restricted air travel during the COVID-19 situation. I hope you do enjoy this article, as it is a slight deviation from my usual property investment/review articles!
Restricted Flights In/Out of Singapore
Based on the IATA Travel Centre COVID-19 Travel Regulations Map, passengers are not allowed to travel and transit to/through Singapore. These restrictions are relaxed towards some countries, should the citizens have the relevant travel or a safe travel approval pass.
Even so, there might be a requirement to serve the Stay-Home Notice and/or COVID-19 Swab Test.
This means that the passengers entering Singapore have dropped by a large margin.
From this point, two questions come to mind;
How will Singapore airlines cope with reduced revenue?
How will retail businesses be impacted by reduced tourism?
I feel that these two points are somewhat linked, which I’ll elaborate further. Airline passengers will contribute to Singapore’s economy when they spend their foreign dollars in our retail businesses. This impact can be immediately noticed by Changi Airport’s Group (CAG) newest venture, Changi Jewel.
How Diversifying Revenue Streams Might be a Saving Grace
I went down to Changi Jewel just a few days earlier and I was shocked. There were huge crowds of Singaporean families out shopping there. It wasn’t a public holiday either, but most likely it was the start of the school holidays, and parents took some time off with their children.
Apparently, the reduced volume of tourists to Singapore did little to impact the overall crowds.
This has got me thinking, how does the efficiency of the airport malls defray the ongoing expenses of the airlines?
Changi Jewel is a joint venture between Changi Airport Group and CapitaLand. It first started construction on 5th December 2014 and officially opened on 18th October 2019.
I’ve conducted some research online in regard to the relation of CAG and the Singapore Airlines (SIA) group, but I am unable to find any links outside of airport hub services. (Aviation industry experts/enthusiasts, please clarify.)
Still, I do postulate that the ongoing revenue generated by CAG and CapitaLand will assist the SIA Group to reduce losses for now.
Strange Phenomenon of the Circuit Breaker Phase 2 Situation
As we are returning to the new normal, it seems to be that the crowds are returning to the shopping malls. Yesterday, I visited Ion Orchard, and traffic seems to be back prior to pre-COVID days.
Yet, I noticed a significant difference. There were fewer foreign faces in the crowds, and the majority of them were Singaporeans! Where did all these Singaporeans come from?
Importance of a Strong Brand
Singaporeans love their food, and any return of their beloved brands will sure bring plenty of news. Such an example is the return of A&W after it closed its last woodlands outlet in 2003.
Shake Shack, a popular fast-food chain from the United States, opened its first outlet in Changi Jewel too.
After almost 10 months from Changi Jewel’s grand opening, long snaking queues can still be seen from these establishments. I’m sure that other smaller brands are sure to profit from the traffic that these F&B brands bring.
Was the success of Changi Jewel the result of the marketing might of big brands or simply “good” location?
Does this observation still prove true during the COVID-19 situation? This will be explained in the later paragraphs.
Protecting the Singaporean Core
Recent talks in regards to the Ministry of Manpower reviews about protecting the “Singaporean core” for workplaces.
This brings to my mind another point, how can we ensure as a nation that at the same time, we can protect the “Singapore core” in terms of domestic spending?
Although we should not encourage reckless spending, domestic spending is important. We will need to make up for the lack of tourist dollars, right?
What This Means from a Real Estate Sense
We are starting to see flights resumed in the aviation industry, and this will improve overtime as we learn to handle the COVID-19 situation. By November, passenger capacity is proposed to hit 11% of pre-COVID levels.
It makes me wonder if the development of Changi Jewel was planned strategically in order to provide some sense of stability to the aviation industry.
After all, there is little loyalty for customers towards any particular airline, with them often going for the cheapest flights. The introduction of flight search engines furthermore makes the search for cheap flights even easier.
Changi Jewel might be a huge drain on existing resources during Phase 1 of the Circuit Breaker program, but it seems that its quick recovery during Phase 2 will prove to instead be its strongest link during the COVID-19 situation.
At the moment, Changi Jewel seems to be a horrendous location for retail businesses. It is located in the extreme east of Singapore, which makes traveling inconvenient for many people. In addition, reduced air travel results in poor footfall for these retail businesses.
Yet, Changi Jewel does not seem to be affected, and footfall looks no different from any of the central or neighborhood malls
Summary
This article was initially intended to focus more on Changi Jewel as a revenue-driving powerhouse for CAG, but I got carried away and it led to an expansion of my different notions.
The reduction in tourists coming into Singapore might have impacted the revenue streams of the aviation industry. The launch of Changi Jewel in a sense might have helped the SIA group cope with a reduction in losses if the two entities are synergistic.
The loss of tourist dollars also means that our country will need to encourage domestic spending.
Further on, I explored the idea of how businesses with strong branding can override the negatives of a poor location. These businesses will in turn generate good footfall for smaller businesses.
The views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily to the author’s employer, organization, committee, or other group or individual. The author does not accept any responsibility whatsoever for any harm or loss arising from accessing or relying on information contained in this blog post.
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