In Singapore, the inbound segment’s recovery has lagged significantly compared to the others.
For the month of December 2023, outbound and transit passenger traffic at Changi Airport were both fully recovered while inbound was only 75 per cent recovered compared to 2019 levels.
For the full year, inbound traffic was 76 per cent recovered, while outbound was 92 per cent recovered and transit was nearly fully recovered.
In the last few months of 2023, the outbound and transit segments continued to strengthen while inbound went in the opposite direction, thwarting STB’s aspirations for a full recovery in 2024.
In the third quarter of 2023, visitor arrivals at Changi Airport were at 81 per cent of 2019 levels — up from 77 per cent in the second quarter and 67 per cent in the first quarter. But in the fourth quarter, visitor arrivals at Changi Airport dipped to 76 per cent of 2019 levels.
The dip in the fourth quarter was driven by declines in two of Singapore’s largest source markets for tourism, China and Japan.
Chinese visitor arrivals at Changi were at 65 per cent of 2019 levels in the third quarter of 2023, but dropped to 54 per cent in the fourth quarter.
Japanese visitor arrivals at Changi were at 61 per cent of 2019 levels in the third quarter of 2023 but fell to 52 per cent levels in the fourth quarter.
On the other hand, outbound demand to China and Japan continued to strengthen in the fourth quarter.
A record 591,000 Singaporeans visited Japan in 2023, based on Japan National Tourism Organization data, up 20 per cent from the prior high of 492,000 in 2019.
December 2023 was an all-time monthly record with 114,000 Singaporeans visiting Japan. In the same month, Japanese visitor arrivals at Changi numbered just 62,000 — down by 52 per cent compared to 2019.
Overall Singapore-Japan passenger traffic in December 2023 was only 6 per cent lower than 2019 levels, with the stronger outbound demand not quite offsetting the weaker inbound demand.
Similarly, Singapore-China passenger traffic in December 2023 was down 17 per cent from 2019 levels. Stronger outbound demand, including from Chinese citizens working in Singapore, offset some but not all the weaker inbound demand.
Weak inbound traffic is expected to continue in 2024, leading to the less bullish STB forecast. This is partially due to residents of China and Japan travelling overseas less frequently.
However, the high cost of Singapore also has become an issue in attracting visitors, impacting all source markets.
Stronger outbound demand is likely to continue and the number of Singapore residents departing Changi Airport in 2024 should roughly equal the 8.6 million from 2019.
However, this will not be sufficient to offset weaker inbound traffic, which is crucial for Singapore’s tourism industry but also for Changi Airport as visitors or the inbound sector accounted for 44 per cent of Changi’s total traffic in 2019.
AIRLINE CAPACITIES
The other side of the equation is supply or airline capacity, which continues to increase but not to the extent that it can facilitate a full recovery.
Singapore Airlines Group, which has a slightly more than 50 per cent share of traffic at Changi Airport, is close to fully recovering and its capacity should reach 2019 levels later this year. Foreign airline capacity should also reach 2019 levels later this year.
