The contrast could not be more stark. An incredible increase in passenger numbers at Changi Airport, yet flat revenues at Singapore Airport Terminal Services (SATS).

Changi passenger numbers rose almost 5% in 2007 to 36.7 million people. There is still lots of excess capacity. All three terminals can handle 70 million people per year. But still, 36.7 million is an incredible statistic when you consider our island state has less than five million residents.

By contrast, SATS' numbers were uninspiring. Passengers handled grew 6.4% in the third quarter, yet revenue rose just 1.2% to S$244.5 mln and profit was flat at around S$50 mln.

Clearly, there are pricing and competition issues here. SATS has two competitors, CIAS and Swissport. The other competitors are not publicly listed in Singapore.

The scenario reminds me of the relationship between gold mining companies and the price of gold: to draw the parallel, the price of gold keeps rising but the profits at the gold mining company are not keeping pace because of the inherent risks in companies.

So, what's an investor to do to get in on the high growth at Changi?

Here are my two suggestions:

1. Buy shares in Changi airport. That would be ideal. Except, Changi Airport is not publicly listed. Perhaps it should be.

2. Create a Changi Airport futures contract. Just like trading gold futures for pure, unadulterated exposure to the price of gold without the execution risk of the gold mining company, being able to trade on passenger numbers would be a fabulous financial product.

Separate products for passenger and cargo numbers could be created.

Any takers?


Mark Laudi, who is slightly perturbed that Bangkok and Kuala Lumpur airports all seem to be busier than Changi these days

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Labels: Changi Airport, CIAS, futures contracts, SATS, Swissport