SINGAPORE- Singapore will be able to withstand rising competition from Malaysia for a slice of the lucrative aviation market, Transport Minister Yeo Cheow Tong said today.

Yeo said Singapore was watching plans by Malaysian tycoon Syed Mokhtar Albukhary ( right ) to develop the Sultan Ismail Airport in Senai in Johor into a regional aviation centre.

Johor is just across a causeway from Singapore's northern border.

"We will see what the plans are and how they operationalise the plans," Yeo told reporters on the sides of a maritime conference here.

"But the market is here. The airlines serving Singapore will continue to be here for the long term.

"We have spoken to them and the message they have given us is a very clear one: Singapore is an important market. They will be here as long as there are people in Singapore who are flying."

Air and cargo hub

Syed Mokhtar hopes to complete a RM80 million deal this month to buy the Senai airport from Malaysia Airports Holdings Bhd (MAHB).

Senai airport has one runway measuring some 3,350 metres and can handle 2.5 million passengers annually.

In 2002, the airport handled 874,278 passengers, 28,759 aircraft movements and 3,849 tonnes in cargo.

Syed Mokhtar's company, Senai Airport Terminal Services Sdn Bhd (SATS), plans to develop Senai into a regional air and cargo hub to complement the nearby Port of Tanjung Pelepas (PTP), which the businessman also controls.

PTP has emerged as a serious challenger to Singapore's position as a global shipping hub. It has already attracted two of Singapore's top shipping clients, Maersk Sealand and Taiwan's Evergreen, to transfer their operations there.

Singapore's Changi Airport handles 20 million passengers a year, many of them transiting to and from the region to the United States, Middle East and Europe.

No-frills services

The rise of budget airlines in Asia could challenge flag-carrier Singapore Airlines and lead to the emergence of other regional airports offering cheaper rates, according to industry players and analysts.

Malaysian discount carrier AirAsia has already said it will start direct flights this month from Kuala Lumpur to Senai.

This would enable Singaporeans to fly to the Malaysian capital for only RM20 - less than a second-class train ticket.

AirAsia chief executive Tony Fernandes said last week the airline was in talks with Changi Airport officials in a bid to get lower charges so it can also fly out of Singapore.

Fernandes said this would open Singapore's doors to the 23-million strong Malaysian tourism market but Yeo indicated Tuesday there would be no concessions.

"The business is here. They (the airlines) have 20 million passengers a year coming to Singapore. We have a very high-yielding market," he said.

"If you want the market, please come here. If not, other airlines will build the business." - AFP