DPM Tharman Shanmugaratnam at the Singapore Airshow Aviation Leadership Summit Opening Dinner on 14 February 2016

Dr Olumuyiwa Benard Aliu, President of the Council, International Civil Aviation Organization,
Mr Tony Tyler, Director-General and CEO, International Air Transport Association,
Mr Khaw Boon Wan, my Cabinet colleague,
Excellencies,
Ladies and Gentlemen,

It is a real pleasure to join you here this evening. To our many foreign guests, welcome to Singapore.

Aviation: challenges and opportunities

Aviation plays a special role in our economic future, globally.

Confidence in the future is weak – both in developed and developing economies. There is diminishing belief in central banks’ ability to reflate economies. Private investment remains weak, almost everywhere. Trade has slowed. And government initiatives to reform and liberalise their economies to spur private investment and job creation have in most countries been slow, and in some instances have taken us backwards.

The politics has not been helping. Slow growth and high unemployment has weakened the political will to embark on needed structural reforms, even where the benefits that each population can gain from reforms are much larger than the costs they face.

We have to find ways out of this economic and political funk we’ve caught ourselves in around the world. We have to build confidence in the future – invest in needed public infrastructure, invest in people, and liberalise rules to support private investment. And wherever we are in the world, we must address the challenge of sharing the gains from growth fairly among our people.

Aviation is a real opportunity, a bright spot in this future.  It is a sector that even by conservative projections has the potential to grow substantially in the next decade and beyond.

Asia especially should see substantial growth in aviation in the next decade, exceeding the growth of the Asian economies. The reason for this has to do with the changing face of Asia. Rising affluence and the rapid expansion of the middle-class is growing the demand for travel exponentially. It is not surprising that China has made aviation links a key part of its One Belt, One Road initiative.

However, aviation also faces major challenges, as we all know. Margins remain tight and risks are high in the highly competitive airline industry. There is growing competition for skilled manpower, particularly pilots and maintenance crew. Security threats are now a serious reality everywhere, and becoming more complex. And there is increased concern over the environmental impact of aviation that we all have to address together.

The lower price of oil is a boon to airlines, although it will not last forever. The industry has to make use of this opportunity – to capitalise on new technologies in every segment of the aviation value chain, to reshape our businesses and develop new competencies. For example, big data can be harnessed for predictive maintenance – spotting and acting on problems before they emerge, and hence lowering costs. Technology also allows for better analysis of customer habits, and better relationships with customers by personalising air travel. There is also much scope to use technology to improve productivity - in airports, in aerospace and in airlines – going beyond the significant advances of the last two decades.

We must also make use of this opportunity of lower oil prices and rising demand for travel to open the skies further. If we do this right, we can maximise the spillovers to growth in our own economies and globally. Every country can benefit over the next decade and beyond. If we stick with the status quo, or worse drift into further protection, we will not only hamper the growth of aviation but weaken its potential to stimulate economic growth.

Singapore’s strategy in aviation

Aviation is a key sector in Singapore’s economic future. It contributes a sizable 6% of our GDP, more than in most economies.  Virtually every other sector of our economy depends on an efficient and advanced aviation sector. Importantly too, aviation is a relatively high productivity sector, and creates quality jobs for our future. And it has the potential to spur the growth of more enterprises, including smaller players in every segment of the value chain, besides large players like Singapore Airlines, Changi Airport Group and ST Aerospace.

Let me share some of Singapore’s philosophy and our strategies in supporting the future growth of aviation.

Prioritising aviation safety

First and foremost, the safety of aviation is paramount. Governments have to devote substantial resources and effort to this area of our work. Air mishaps are not just costly in terms of human lives, but spectacular in a negative way – they severely dent public confidence. We have witnessed this following a string of unfortunate accidents around the world, and in particular in Southeast Asia, in just the last two years. Aviation safety must continue to take top priority in both domestic and international policy making, and we should certainly not let politics lead us to decisions that compromise safety.

Deploying technology across the value chain

Second, we are promoting the use of technology across the value chain. We believe this will enable Singapore, as an air hub, to continue to deliver seamless and customer-centred service.

1. The Civil Aviation Authority of Singapore has launched Aviation Challenges to crowd-source for ideas on how technology such as robotics and Autonomous Guided Vehicles can be applied. Countries like Australia and some in Europe are pioneers in their extensive use of passenger self-service, and technologies such as automated aircraft pushback, and we are keenly exploring how we can adopt these and other innovations in our own context.

2. We are also supporting R&D in new technologies for the aerospace industry. Last year for example we launched the National Additive Manufacturing Innovation Cluster.  Aerospace companies can work with us in this initiative, to see how 3D printing can be developed into commercial applications.

Promoting liberal market access

Third, governments should seek to harness the benefits of greater competition among airlines. Limiting air traffic rights, and implementing ownership and control restrictions, hurt the traveller by limiting choice and also hamper innovation among our own airlines. In short, it prevents economies from performing at their full potential.

This is why IATA has called on governments to give airlines greater commercial flexibility by lifting such restrictions. It is also why Singapore has consistently taken a liberal approach towards competition and market access. Our end-goal is not the success of Singapore Airlines, but the vibrance of the Singapore air hub.

Our policies are therefore aimed at maximising our connectivity to both traditional and emerging markets, and providing travellers the benefits of competition and greater choice. We pursue liberal air rights regimes, bilaterally and at the multilateral level. And we welcome foreign and new carriers to operate in Singapore alongside local ones. Today, a good number of the routes out of Changi are served only by foreign airlines.

Ensuring infrastructure capacity in time for the future

Fourth, we all want to avoid congestion in the air and on the ground. It hurts growth, and is a negative for both passengers and the environment. Many countries are therefore planning for new and expanded airports. Some others, most notably the EU with its Single European Sky, are also embarking on initiatives to tackle airspace congestion and inefficiencies.

In Singapore, we are investing in a major expansion of our airport capacity. Many of you would be aware of our ongoing plans to expand Changi Airport with a fourth and fifth passenger terminal and a three-runway system. We have also recently commissioned a next-generation air traffic management system, much more sophisticated in capabilities and able to handle a much greater volume of traffic.

Developing talent and skills for the future

A fifth priority must be to develop the human capital for the aviation sector.

ICAO has worked tirelessly, through technical cooperation programmes such as its No Country Left Behind initiative, to promote capability development, particularly among regulatory agencies, to facilitate implementation of ICAO’s Standards and Recommended Practices. But each of us, as governments, must also work with the industry to ensure that our aviation workforces are suitably-skilled to meet current and future needs.

Skills have special importance for us in Singapore, given the sharply diminishing growth in the size of our workforce. The Government is working with our tripartite partners to develop talent for the aviation sector through our national SkillsFuture initiative.

We know we cannot rely only on the education that people get before they get into a job. The skill requirements will keep changing while they are on the job, including the need for new competencies that help us make the most of new technologies. This is clear in the aviation sector. We are therefore anticipating new skill requirements, and must keep investing in the aviation skills of the future, whichever the job.  We must also find ways to enlarge responsibilities and improve the quality of individual jobs, and improving the working environment for every individual.

As an example of how the Government is supporting the development of new skills in aviation, and at every stage of a person’s career, we are presenting SkillsFuture Study Awards to an inaugural batch of 20 mid-career individuals. They are a diverse group, with an average age of 41, some with no previous tertiary education and some with degrees. They will attend a range of aviation-related courses, at the diploma, degree or masters’ levels, to develop deep skills. It illustrates the approach we will take in granting SkillsFuture Study Awards in each of our growth industries. Wherever you start from, we will help you advance, and keep re-investing in your skills.

Since we launched the scheme late last year, and including the awards this year, we would be giving over 1,000 Study Awards in various growth industries in our economy in 2015-16.

Conclusion

Aviation is an opportunity, for each of our economies and as an enabler and catalyst for global growth.

But there is much work to be done to ensure that aviation can indeed achieve its potential as an enabler for growth, and I hope that I have shared some food for thought from Singapore’s perspective ahead of the more comprehensive discussions at your Aviation Leadership Summit. I wish you lively and productive discussions. Thank you.