EXECUTIVE SUMMARY

(background) Singapore Changi Airport, awarded as the world’s best airport according to
Skytrax, is one of the major air hubs in Asia Pacific. Occupying 715.8 square kilometres of land, Changi
Airport has 3 passenger terminals and 2 under-construction terminals to be open in 2017 and 2019.
Changi Airport established many partnership with airlines and airports globally to ensure sustainable
success being a developed air hub.
(history)The airport began operating on July 1st, 1981 and later was corporatized on July 1st,
2009, managed by Changi Airport Group (CAG). The location selection of Changi Airport, replacing the
former Paya Lebar Airport, has been through reasonable and scientific considerations which contains
customer accessibility, availability adequate labour skills, and triple bottom line concept.
(Supply Chain) Corporatization of Changi Airport enables the application of SCOR model which
consists of five steps. The paper focuses on the execution process.
(key milestone passenger transformation) The increasing passengers for all terminals motivates
Changi Airport to optimize the passengers’ transformation in the processing operation. The starting point
of inbound passengers is in the departure kerb in the process of check-in, and ending the journey as the
outbound passenger in the arrival kerbside.

(changi future) An expansion of Changi Airport has been planned in terms of the constructions of
the new Terminal 5 (T5). This paper analyzes the forecasting of demand planning to achieve the objective
of the airport. It is found that improvement in airport’s capacity will increase the cargos volume, hence,
affecting the economics of the country and it will bring more benefits to the local business.

INTRODUCTION
Changi Airport
 1. BACKGROUND AND HISTORY OF CHANGI

Singapore Changi Airport, or best known as Changi Airport, is the primary airport
serving as a gateway to Singapore and is the largest air hub in Southeast Asia. Named after the
location of the airport, Changi, the airport is managed by Changi Airport Group Pte Ltd (CAG).
The airport occupies 715.8 square kilometres of land and currently has 3 passenger terminals and
2 other terminals under construction which to be open in 2017 and 2019. Being the world’s best
airport according to Skytrax for the past 5 consecutive years, Changi is the 6th busiest
international airport, handling more than 54 million passenger movements and serving about 100
airlines flying to more than 320 cities in over 70 countries and territories worldwide (CAG
Annual Report, 2015)
In the interest of creating value for passenger, CAG has continued developing Changi
Airport as one of the major air hub in Asia by establishing partnership with many airlines and
airports internationally. In 2015, CAG’s recognition of the importance of partnerships to ensure
the sustainable success of the Singapore air hub has brought in partnership with Air New
Zealand, Jetstar Pacific, Malindo Air, Oman Air, Tigerair Taiwan, Uzbekistan Airways and
Vietjet Air; moreover, a Memorandum of Understanding (MOU) with Okinawa Prefectural
Government was signed with the intention of promoting tourism and air cargo traffic between the
two cities.
According to Singapore Tourism Board (2015), Singapore’s International Visitor Arrivals
in 2015 increased to 15.2 million. Singapore has experienced an increase in international visitor
arrivals from year to year. Airport infrastructures are the first contact point for tourists when they
arrive at a country, therefore airport facilities give the tourists the first impression about the
expected quality of their holiday time or business experience (Yuan, et. al., 2010).
By offering the passenger a great experience at the air hub while waiting for their next
flight, Changi creates opportunity for Singapore to enjoy influx of tourist in the future that will
result in economy enhancement. Providing the tourists transportation service such as Mass Rapid
Transportation (MRT) and public busses that connect Changi Airport to the city, Changi Airport
performs its role as a gateway to Singapore well.

History of Changi
The airport commenced its operation on July 1st, 1981 under the control of Civil Aviation
Authority of Singapore. Changi Airport was the fourth civil airport built by the government;
specifically, it was built to replace the overcapacity Paya Lebar Airport. Changi Airport Group
Pte Ltd (CAG) was established on June 19, 2009 and on July 1st 2009, Changi Airport was
corporatized as CAG’s company.
The planning and construction of transport airports may have impacts on economic society
development and the strategic requirements of opening to the outside world (Yang, 2014). It was
a key procedure that the selected location of airport has been through scientific and reasonable
consideration; alternatives should be considered from different aspects which contained customer
accessibility, availability of adequate labour skills, and triple bottom line concept. It is viewed
that the location selection of Changi Airport is evaluated and decided to serve the highest
potential of these aspects.
In terms of customer accessibility, Changi Airport that is located at the eastern tip of the
main land is considered relatively far from the city; however, government provides effective and
efficient transportation that ease people to travel to the airport. Providing customer convenient
way to travel to the airport also has impact in attracting and retaining labour force in Changi
Airport. Located far from the city, Changi offers cost-efficient housing which could increase the
population and human resources availability. From the economic point of view of triple bottom
line concept, the decision to relocate the former Paya Lebar Airport to Changi gives the country
opportunity to experience the highest potential urban growth as it will cancel the height
restriction of the area. Moreover, not only giving economic benefit to the area of Paya Lebar,
with growth in passenger flow and enhancement such as Project Jewel (this will be discussed
later in the paper), Changi may become airport-based economic zones, or will further develop
into airport city (Wang & Hong, 2011). Socially and environmentally, location selection of
Changi Airport results in mitigation of noise and air pollution.
2. INTERNATIONAL OPERATION OF CHANGI AIRPORT

2.1 VALUE CHAIN

2.2
KEY MILESTONES OF PASSENGERS’ TRANSFORMATION

Singapore Changi International Airport has developed into a global leader in the airport
industry. It is valued as the airport that committed in delivering constant improvements on its
operational performance procedures and constant upgrading of its facilities, so as to keep up
with the changing consumer demand and trends (Lee, 2013). The major factor of Changi
Aiport’s success is based on its concern in creating efficient operations and a responsive
environment that give good travel experience to all customers. Pushing the airport management
to pay much attention on operational efficiency and service quality to increase satisfaction of the
passengers significantly.

The increasing passengers for all terminals motivates Changi Airport to optimize the
passengers’ transformation for both inbound and outbound passengers which includes the
processing operation. It is vital for airports to provide ease and convenience procedures for both
inbound and outbound passengers.

1. Inbound Passengers

a. Arriving in the departure kerbside and Check-in

In the departure hall, check-in is usually the first procedure for the inbound passengers. All
aircrafts have their own service counters to process the confirmation of the passengers’
presence for the certain flight. Changi Airport provides some methods of checking-in, such as
online check-in (OCI) systems, self-service check-in (SSCI) booths, and short messaging
services check-in (SMSCI) systems as opposed to traditional check-in (TCI) over the counter.
The airline check-in's main function is to accept luggage that is to go in the aircraft's cargo hold
and issue boarding passes. In order to maximize the baggage handling system, Changi Airport
has the inter-terminal transfer system that is located underground the airport, this system will
scan the luggage through the common check-in system and separate them by flight. 14
racetracks completed with tilt tray sorter are used to ensure the baggage get into the right flight.

b. Departure Immigration

After check-in, before being able to get into the gate of the airline, all visitors need to go through

the immigration desk when they depart from Singapore to ensure the passport is valid for at
least months before departure and to do the checking of any travel document. When the

process is finished, to spend the waiting time of the departure, Changi Airport provides many

services that will give a memorable and enjoyable visits to all passengers. It includes duty-free

shopping, soothing nature trail in form of gardens, entertaining activities for all family members,

etc.

c. Security Screening and Departure Waiting Area

Once the aircraft has arrived, baggage handling crews will come to unload the baggage and the

aircraft crews are preparing to welcome the next boarding passengers. The gate crews of the

airport will allow all passengers to get into the departure waiting area. Before getting in, security

screening is done to prevent any prohibited items and others threats from entering the

transportation security so that all passengers can get safely to each destination. To improve

efficiency at screening checkpoints and reduce waiting times for passengers, Changi Airports is

conducting the new Computed Technology (CT) security screening equipment (Channels News

Asia, 2016). In the mean time, all the checked in baggage’s of the passengers have to be

loaded to the aircraft cargo. After reassuring if there is any passenger has special needs on

board and getting the report that the aircraft is ready, then the gate agents may proceed to the

next process of inbound.

d. Boarding

Boarding starts with passengers entering the aircraft and ends with the seating of each

passenger and closure of the doors. A boarding call will be made by the gate crews to announce

that the passenger may proceed to the exit gate and board the aircraft by showing the boarding

passes and identification cards. After all the passengers have embarked, the aircraft will do all

the flying procedure and ready to take-off.

2. Outbound Passengers

a. Arrival of the aircraft

After a safe landing of the pleasant flight, a number of gate crews has prepared the the arrival

gate for the aircraft. In the same time, Air Traffic Control establish a service to support safe,

orderly and expeditious flow of air traffic by ensuring an aircraft may be cleared for landing when

there is reasonable assurance declared by Air Traffic Service (ATS) authority. Once th aircraft is

parked well, a passenger loading bridge is provided to allow passengers to off the board.

b. Arrival Immigration

Passengers then have to go through the immigration clearance to confirm their arrival and

complete the travel document. The ground hounding may unload the baggage from the cargo

and track it through the inter terminal transfer system to be soon loaded into the baggage claim

hall.

c. Baggage Claim and Customs Inspection

Inter-terminal transfer system that Changi Airport has provided creates the expressway to

handle all the luggage. As it is done underground without any interruption, the baggage claim

can be done in at least 12 minutes after all passengers disembarked from the aircraft.
 2.3 LIST ENHANCEMENTS OF CHANGI AIRPORT’S CORE BUSINESS OF MOVING
PASSENGERS AND THEN VALUE ADDING TO CUSTOMERS

The statistics show an upward trend of passenger movement each year of Changi
Airport. Constant improvements in operating procedures and constant upgrading of facilities, so
as to keep up with the ever changing consumer demand and trends, and to maintain Changi
Airport position as the top in the industry. Leisure and entertainments are make available to
make spending time in Changi Airport more enjoyable. Moreover, latest facilities with improved
technologies is offered to shorten the time for passenger’s administrative works before they
board the plane. Value adding helps increase Changi Airport competitiveness in which value
added refers to service offered will have additional value to the user compared with more basic
services (Collins, 1986).
Among the things that people dislike about travelling, queuing up at airports is arguably
the most common. Introduced in 2014, Fast And Seamless Travel (FAST) Check-in is a
technological development that could give the solution to minimize the queue at the counters.
An exclusive separate lane act to promote passengers to self-check-in by handing convenience
for self-check-in users (Lee et al., 2013). Therefore, reducing number of passengers joining the
counters que.
Additionally, Early Check-in allows passenger to check in check-in of 12 hours or more
before their scheduled flight departures (Changi Airport, n.d.). Advocating early check-in assists
to optimise operational efficiency and productivity through better use of check-in resources
(Straits Time, 2016). It reduces the load to be processed during peak periods. Therefore,
resulting in a shorter queue and a better travel experience for passengers.
Shorter time spent in queues means passengers will have more time to spend in retail
outlets. Enhancing airport retailing helps to make spending time at Changi Airport more
pleasant. Changi Airport has the first in the world concepts such as duplex stores and the
Changi Millionaire promotion (CAG Annual Report, 2016). Innovative shopping concept brings a
fresher shopping experience and the promotion encourage people to spend more. Moreover,
the development project Jewel is a mixed-use complex featuring play attractions, retail offerings,
and airport operations facilities (Jewel Changi Airport, n.d.). It offers distinctive experience which
set Changi Airport apart from its rivals with the fuse of lush greenery with attractions and
facilities under the same building.
Arts and nature are thriving components of Changi Airport. A collection of specially
commissioned art pieces and installations includes the world's largest kinetic art sculpture,
comprising 1,216 bronze droplets that transform into 16 different shapes (Changi Airport, n.d.)
Moreover, the airport whose prevalent to be the greenest airport offers indoor and outdoor
gardens. The 5 different themed gardens changed a traditional view of airport as cold and stony
and suits Singapore concept as “tropical city”.

2.4 SUPPLY CHAIN FOR PASSENGERS’ OPERATION

As mentioned before, Changi Airport is managed by Changi Aiport Group, a corporate

entity appointed by the government to run the airport on its behalf (The Strait Times, n.d.). Smith
(1997) suggests that airport deregulation has been prompted primarily by the government’s
desire to avoid the financial burdens associated with subsidising airport capital investment. The
increasing pressures associated with operating an airport arguably have led to a realization that
the air transport industry in a mature, competitive market which need to be run according to
commercial rather than legal principles (Freathy & O’Connell, 1998). Therefore, this paper
would like to apply the SCOR model on Changi Aiport operation to identify the supply chain for
passengers’ operation. The SCOR model provides a common process-oriented language for
communicating among supply-chain partners in the following five steps: plan, source, make,
deliver, and return (Liu, et. al., 2014). However, this paper focuses on the execution process
(source, make, and deliver).
Changi Aiport offers many facilities and entertainments to satisfy passengers’ expectation
during their arrival on Singapore or merely transit before the next flight. Sourcing from and
partnering with many companies, Changi Airport provides wide-range of products and services
within the terminals, which can be enjoy by the passenger as a shopping environment.
The introduction of the Common User Passenger Processing System (CUPPS) enable
CAG to optimise check-in counter capacity as airline are now able to use any counter for check
in. Moreover, the Fast and Seamless Travel (FAST) initiative offers passengers convenient self-
service options for check –in, bag-drop, border clearance and boarding. (annual report)
Known for its time-efficient service in terms of delivering luggage and packages to the
arrival carousel, Changi Airport has a complicated yet organized transfer system that allows the
bags to travel from terminal to terminal (Strait Times, 2015).
 3. SUSTAINABILITY ASPECTS OF CHANGI AIRPORT

Sustainability development refers to the ability to meet present demand without

comprising the ability of future generation to meet their own need (WCED, 1987). This achieved
by implementing the three pillars of sustainability which consists of economic, social, and
environmental aspects. After Singapore International Airport relocated to Changi in 1975,
Singapore has become a major international air and shipping hub in global transportation
network. Despite of making economic gains, Changi Airport is also accountable to
environmental and social impact in order to sustain in the long run. The attempts to balance the
trade-offs among the interrelated but often conflicting environmental, economic, and social goals
will create a sustainable transport (Kitamura, Sakamoto, & Waygood, 2008; Loo, 2008).
Based on the financial report from 2013-2016, Changi Airport generated good profit
although there is fluctuation. The highest profit was earned in 2014 by $895,942 with 53.9
million passengers (CAG Annual Report, 2014). Commercial and rental income was the major
contributor to total revenue (CAG Annual Report, 2016). Through the persistent innovation in
shopping experience, Changi Airport is in world’s top three airports for retail business
performance (Straits Time, 2016). This commercial revenue helps to offset the cost of
aeronautical operations and cover declining aeronautical revenue (CAG Annual Report, 2016).
With the strong financial position, surplus cash has been earmarked to development
projects including Terminal 4, Changi East, and Jewel (CAG Annual Report, 2016). These
projects will expand passenger capacity to meet long term demand and augment commercial
retailing. Given the growth in air traffic in Southeast Asia region, the airport uses capacity
expansion as a purposeful investment signaling strategy in order to capture new demand and tilt
the market share in the region towards Changi (Phang, 2003). Therefore, increase in future
profitability.
According to Upham (2001), airports with higher throughputs of material and people will
tend to be less sustainable than smaller-scale airports since all economic activity has an
adverse environmental impact. Current development projects to increase airport capacity by
building Terminal 4 and Changi East may result in the increase in large scale of environmental
impact including increase in waste, noise pollution, water and energy consumption.
To minimize negative environmental impact, Changi Airport committed to operate in
environmentally responsible manner based on ISO1400 standard (Straits Time, 2010). The
airport implement 4 environmental initiatives in their activity and incorporating eco-friendly
features to their infrastructure. Represented by yellow initiative, energy conservation is initiated
by 919 skylights allowing natural lightings, dimming the lights during off peak hours, and
installing motion sensors (NCCS, 2010). Regarding water conservation, the airport uses
recycled water from rainwater and NEWater product which is sewage water (Changi Airport,
n.d.). Additionally, water flow regulator is installed to increase efficiency by reducing 4 litres
water per minute. (Changi Airport, n.d.). Purple initiative represents waste management,
recycling is encourageed. Lastly, purple initiative is the attempt minimize noise pollution by land
use planning, operational measures, reporting and monitoring (Changi Airport, n.d.). In return,
rotecting the environment attracts tourism and the development of the tourism industry.
Changi Airport Group is also actively giving back to the community through social
programme called Changi Foundation targeted on youth. CAG employee do a weekly visit to
NorthLight school to read and undertake soccer programme with the students. Moreover,
numeracy coaching programme was intended for children that requires more assistance in
mathematics (Changi Airport Group, n.d.). Furthermore, they also prepare the students for job-
ready by organizing interview skills workshop to prepare for future job interview, while for
younger age children, they organize Youth Passport Programme to think early about their
capabilities and interests (Changi Airport Group, n.d.)

4. The Future of Changi Airport

For now, Changi Airport serves more than 100 airlines flying to some 380 cities in
about 90 countries and territories worldwide, with more than 58.7 million passengers
passing through the airport a year (Changi Airport, 2017). In order to maximize the
effectiveness of providing values to the customers and steadily increase the passenger
volume double in five to ten years, an expansion of Changi Airport has been planned in
terms of the constructions of the new Terminal 5 (T5). Set to be one of the largest terminals
in the world, T5 will have an initial capacity for 50 million passengers per annum and this
will affect Changi Airport’s total capacity to 135 million passengers per year (CAAS, 2016).

The planning of Terminal 5 is based on the Changi Airport’s objective which is to

build a quality portfolio of airport investments worldwide with strong markets and significant
development potential (Changi Airport Group, 2013). To achieve this, an accurate and
reliable method airport demand forecasting is required to assist the airport’s short and long-
term planning and decision making. Effective demand planning can guide users to improve
the accuracy of revenue forecasts, align inventory levels with peaks and throughs in
demand, and enhance profitability for a given channel or product (Rouse, 2010).

Good forecasting will give a detailed analysis on Changi’s growth prospects.

Forecasting is the process of projecting the values of one or more variables into the future
(Collier, 2012). Traffic forecasting estimates are needed for Planning and Project
Development and Environmental studies which provide guidelines and traffic parameters
required by project design (FDOT, 2002). For Changi, the forecast technique is based on
the market survey as it obtains primary data from source of airport demand such as past
annual traffic patterns, plans by home carrier Singapore Airlines (SIA) and structuring
developments in the region (CAAS, 2016). Moreover, to fulfill the facility requirements of
Changi Airport’s master plan, a three-runway system will be implemented, connecting
almost 40km of new taxiways. The terminal will also be connected to the Singapore’s Mass
Rapid Transit (MRT) network as an enhancement for the ground connectivity. A second control
tower also will be constructed to allow Terminal 5 to be operating as a single airfield.

(The Strait Times, 2016)

Based on the trend of Strait Times, an amount of 5.5% increase of passenger growth is
obtained in 10 years time. Assuming that passengers traffic growth increases by 5% every year
will lead into massive crowd in Singapore and require a new Terminal 6 that provides the
maximum airfreight operation where transshipment cargo is combined with minimal customs
formalities.
Forecasting is applied to positively affect the improvement of some factors. For instance, the
higher number of passengers will increase the cargos volume, hence, affecting the economics of the
country. As stated by Zhang (2002), there is an established relationship between air cargo growth and two
key economic development factors such as GDP and inward foreign direct investment. According to Asia
One (2016), Singapore Tourism Board tracks air, sea, and arrivals forecast growth for visitor arrivals is
increasing, with the Future Changi Airport, it will bring more benefits to the local business.
5. CONCLUSION AND RECOMMENDATIONS
.
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