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Singapore will benefit more from High-Speed Rail link

The High-Speed Rail link between KL and Singapore has never stopped to interest us. In the last several days, local papers and the Internet media seemed focussed on this topic as if it has become a piece of infrastructure that we needed yesterday.

This is a high-cost project, very likely to be government-funded, (read: taxpayers’ money), using foreign-owned technology and most likely to be given to some foreign contractors to build (on the same excuse that local contractors do not have the experience), thus an outflow of Malaysian capital. Irrespective of the funding mechanism and trade deals between Malaysia and the contracting country, for sure local Malaysians will stand to lose out.

The bottom line is that Malaysians will also end up paying for the cost. An equally important question is; will Malaysians benefit from this expensive project? Or will it benefit non-Malaysians more than us? The High-Speed Rail link has another twist; once ready it will likely ruin other established Malaysian-owned entities such as KLIA, Air Asia and Malaysia Airlines (if it still exists by that time).

At the moment, KL-Singapore passenger traffic is served by three modes of transport; by air, road and rail. Rail has the least market share in terms of passenger numbers due to poor services running over old tracks with long journey time which attract no one, let alone Singaporeans. With an average travelling time of eight hours or more over 400 km, the low average train speed of 50kph is considered archaic by today’s standards.

The presence of our tolled North-South Expressway means that road travel has and will dominate in some categories of travel purpose, partly due to shorter travel time as compared to rail. Road journey is also cheaper when compared to air, especially when a group is travelling together in a car.

But despite a good tolled highway connection between KL and Singapore, air travel is still a preferred mode of choice as it cuts down journey time to only about a fifth (slightly over an hour) as compared to six hours or more by car or express bus journey. Delays at the border points between Malaysia and Singapore are a big turn off to many road users, thus their choice to go by air.  

Air travel is relatively cheap when booked in advance, more convenient and less cumbersome too. Taking a car into Singapore, a city which is known to impose all sorts of prohibitive measures against car users, is definitely not a good option.

So all in all, air mode appears to have an upper hand when it comes to modal choice. With the services of low-cost airlines such as AirAsia and Tiger Airways, offered on a very frequent basis, one can get to Singapore from KLIA for as low as RM100 or about RM0.32 per km of air distance.

This cost factor plus short journey time has made air travel between KL and Singapore attractive and very popular. In fact, for many decades now many non-Malaysian owned airlines have been using the strategy of attracting Malaysian passengers as well as Malaysia-bound passengers to connect with their services from Singapore airport.

This brings us to the fundamental issue; who gets more passengers from the travel market between Malaysia and Singapore.

Singapore airport (Changi) is a much larger and a well-established airport in this part of the world as compared to KLIA. The airport is very well planned and is probably one of the best in the world. It handles more airlines, aircraft and passengers as compared to KLIA. It has far superior infrastructure, services and meet the demand of international airlines.

Foreign airliners view Singapore brand name as synonymous with quality. These airlines call only at Singapore and use Changi as a hub for the region. Similarly, foreigners travelling into the region (including KL and other towns and cities in Malaysia) prefer to fly into Changi first and get their onward connections to the regional destinations from there.

Hub and spoke concept

In a bigger scheme of air travel, Malaysia (and Indonesia) is part of Singapore’s enlarged market base. This is achieved through the hub and spoke concept where Changi acts a hub and other cities around it (such as KL, Jakarta, Surabaya, Bali, Penang, Medan, Kota Kinabalu, Kuching, etc.) act as its spoke airports, meaning the ones that feed the passengers into Changi.

Airlines business is about strategy and this business strategy have been operating successfully in this manner for many years until an unknown tiny airline from Malaysia came into the picture in December 2001.

AirAsia, first registered in 1993, was bought over by Tony Fernandez and he relaunched it as a low fare airline that offers advance Internet-based booking that flies directly from point to point. AirAsia’s business model, that has already been proven in Europe, notably by EasyJets and RyanAir, eventually became the No1 low cost airline in Asia in 2008 and world’s best low-cost airline in 2012. The rest, as a cliché goes, is history.

Through a number of different business units set up in different countries in Asia, but using the same brand name, AirAsia, has not only managed to chip away a sizeable portion of the conventional air travel market but created and satisfy the long-awaited latent passenger demand that was previously ignored by full-service airlines.

This successful airline has somewhat altered the air travel market by providing not only low fares but it moved away from the hub and spoke arrangement by offering direct point to point services within South-East Asia. Singapore, being a big aviation player, detested this new move and was reluctant to allow AirAsia to fly into Singapore until such time that their own low-cost carrier was set up and established.

Now, under a more or less stabilised market environment and a market clearly separated between regional and long haul services, both low cost and full service airlines exist side by side. Whilst the regional market is dominated by airlines such as AirAsia, Tiger Airways, Malindo and a few others, the long-haul service sector continued to be provided by the traditional full-service airlines such as SIA, Emirates, BA, Cathay Pacific, to name but a few.

The market has changed or shifted somewhat but not the airport. The long-haul airline service sector continues to be dominated by Changi. Almost all the major full-service airlines call at Singapore. Some of these long-haul airlines rely on local low-cost airlines to feed them with passengers to and from Changi. So despite the presence of the low cost airlines, the traditional hub and spoke concept is still much alive.

This is the fact of the air travel market. The situation is lop-sided towards Singapore and it continues to favour Changi airport. The number of travellers between KL and Singapore, the number of airlines in operation at each airports, the low fares, seamless travel arrangements, etc. exist not through pure coincidence but rather by design.

Changi’s ‘hub and spoke’ system was purposely designed to dictate the market. It will only get strengthened if the high-speed train, another spoke that bring passengers to Changi, goes into Singapore from KL.  

Singapore’s benefit

A spoke can be serviced by any mode; air, road or rail. But under the present travel infrastructure between KL and Singapore only the air mode is feasible. Building a High-Speed Rail link is like providing a second spoke from KL and also the intermediate stops for places (like Seremban, Malacca, Segamat, etc.) which have no airport connection with Changi, but with the advent of high-speed rail, they will get connected directly.

This will be a huge pull factor for Changi. But it will not be for KLIA. KLIA (and certainly not KLIA2) was not designed to operate as a hub and spoke airport. But AirAsia and now in combination with AirAsia X have this ambition and despite all the shortcomings, have been trying to do it out of KLIA2. But the high-speed rail to Singapore will kill off this ambition.

The high-speed rail between KL-Singapore will result in the followings situations:

  • Enlarge market base for SIA and Changi airport.
  • Malaysia Airlines (ever since MAS days) has always lost out to SIA due to lesser network of services so the new MAB will stand to lose out, too, as passengers would chose the cheaper airline option via Changi rather than KLIA.
  • Changi is a much bigger airport and has many more airlines; so more variety, choice of airlines and cheaper fares than airlines from KLIA.
  • If not because of AirAsia, KLIA would not have been known and became so popular. High-speed rail will reverse what AirAsia has achieved thus far.
  • AirAsia and AirAsia X have both played a big role in promoting air travel via KLIA but high-speed rail will ruin their future plans and ambitions.
  • Sadly, KLIA2 was poorly-designed and located. Thus, it has failed to support the hub and spoke concept that AirAsia and AirAsia X had in mind.
  • Once high-speed rail is established, the Malaysian air travel market to Singapore will shift to rail; it will dampen the air and airport market; passenger volume through KLIA will definitely decline.
  • More passengers means more market opportunities would be available at Changi but not KLIA as passenger volume will decline.
  • Changi will not only grow but it will have a market boom. A high-speed connection from KL to Singapore will turn Changi into a super-class airport.

Obviously, the above situations will benefit Singapore more than Malaysia.

ROSLI KHAN, a regular low cost airline user, is a practising transport and logistics consultant who prefers to be based in KL rather than any other city.

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