Wednesday, October 8, 2008

Changi Airport Corporatisation: from the hand that swipes the ass to the hand that digs the nose

It was recently announced that Changi Airport will be ‘corporatised’ by July next year in a bid to boost its status as a leading aviation hub. In this move, “a new company will undertake the operational functions of managing Singapore's airport, including its emergency services and investments in foreign airports.”

These functions are currently handled by entities that are wholly-owned subsidiaries of the Civil Aviation Authority of Singapore (CAAS). CAAS, the regulator of the aviation industry, is a statutory board under the Ministry of Transport.

In this ‘corporatisation’, we will see the creation of two entities – a regulator and an airport operations company.

Notice I keep using air quotes for the term corporatisation. I do this because this development seems more like governmental restructuring rather than corporatisation as is generally understood (the transfer of the running of state apparatuses to the private sector). I say this because:

a) This “new company” is in fact a segment of the business that has changed ownership from a statboard (CAAS) to a sovereign wealth fund (Temasek) whose sole shareholder is the Minister for Finance.

b) Soon, the company that manages the airport and invests in foreign airports will be fully owned by a company (Temasek) that is the parent company of Singapore Airlines.

c) The current chairman of CAAS (Mr Liew Mun Leong ) will move across to helm this “new company”.

d) Taking his place will at CAAS will be Mr Lee Hsien Yang (brother of our Prime Minister who recently stepped down from his post at Singtel). He is also the brother-in-law of Temasek head, Ho Ching, who now owns the company that has split from the regulator.

e) The Government assures all that these steps are not part of a cost-cutting measure. “Instead of lay-offs, the combined entities will be hiring more staff. Furthermore, one key reason for corporatisation is to allow the company greater flexibility in paying its top talents more.”

So all-in-all what really has changed?

The company was moved from the left to the right hand of the government. Perhaps there are more conflicts of interests now, not to mention nepotism rearing its ugly head again. Oh and of course, potentially million dollar salaries for these million dollar talents.

Can someone tell me how are these moves going to improve our status as a leading aviation hub?

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