Not even the “world’s best airport” can escape the fallout of COVID-19.
On Friday, Changi Airport Group—operators of the Changi International Airport in Singapore, known for its indoor waterfall and lush vegetation—announced a 36% decline in profit for the financial year ended March 31 and warned that “the battle with COVID-19 has only just begun.”
According to its report—which covers the year from April 2019 to March 2020—the Singapore airport operator saw revenue increase 2.6% over the previous year to $2.28 billion. But most of those earnings came in the first 10 months of the fiscal year—April to January. The airport’s initial “strong performance,” the group says, was “severely negated by the collapse in air travel” in February and March.
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On Feb. 1, Singapore became the first country in Southeast Asia to ban arrivals from mainland China, where the coronavirus outbreak was spreading rapidly. The hit to Changi was immediate, since Chinese tourists account for roughly 20% of its arrivals. In March, the government went further and banned all “short term” arrivals—meaning tourists and those in transit couldn’t use Changi Airport.
Passenger numbers at the Asia transit hub plummeted 33% and 71% in February and March, the last two months of the reported year, compared with the year before. In a bid to consolidate operations, the group suspended them at Terminal 2 for 18 months, beginning May 1. Terminal 4 operations have been placed “on standby” until air demand returns—but the future of air travel remains hazy.
In July, Singapore’s Ministry of Transport halted construction at a $10 billion fifth terminal for at least two years, while the government reviews the need for another terminal in a post-pandemic world. (Changi Airport is government-owned; the group manages the airport’s operations as a licensee.)
“We have decided to take a pause for two years. Let us complete this study of the future of aviation,” Transport Minister Khaw Boon Wan said. “The key words there are ‘this study of the future of aviation,’ not just ‘a reassessment of local demand.’”
Changi Airport Group is exposed to the global downturn in aviation in a way besides the obvious. Roughly half the group’s profit decline this year came from a write-down on its assets in Rio de Janeiro’s Tom Jobim Airport. The group has a 51% stake in Tom Jobim, which was performing poorly before Brazil recorded the third-highest number of COVID-19 cases in the world.
The pandemic has only worsened after the fiscal year ended in March, with Singapore imposing mandatory stay-at-home orders in April. So the group predicts revenue will be “materially and adversely impacted” for the year ahead, too, “with travel recovery highly dependent on how countries around the world manage border controls, the relaxation of air travel requirements, and the development of viable medical treatments for the virus,” the group said.
“The future does appear daunting, with the situation showing no signs of abatement.”
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