Well what do you know, the reason why Swissport got hoodwinked by our gahment & then lost money to finally close shop was all down to Temasek's dirty tricks of wanting it all for themselves, and guess who was in charge of CAAS, a certain Lee.
Read all about it here folks http://wikileaks.org/cable/2009/07/09SINGAPORE704.html
C O N F I D E N T I A L SECTION 01 OF 03 SINGAPORE 000704
SIPDIS
STATE PASS USTR FOR AUSTR BWEISEL
EAP/MTS FOR MCOPPOLA
E.O. 12958: DECL: 07/24/2019
TAGS: EAIR EINV ETRD PGOV ECON SN
SUBJECT: SINGAPORE AIRPORT "CORPORATIZED"; LEE FAMILY AND
TEMASEK INFLUENCE STRENGTHENED
REF: A. SINGAPORE 165
¶B. SINGAPORE 128
¶C. SINGAPORE 695
SINGAPORE 00000704 001.2 OF 003
Classified By: CDA Daniel L. Shields for reasons 1.4 (b) and (d)
¶1. (C) SUMMARY: Singapore has "corporatized" Changi
International Airport in a move that will consolidate control
of the domestic aviation sector in the hands of sovereign
wealth fund Temasek and the Lee family. Aviation regulator,
the Civil Aviation Authority of Singapore (CAAS) has split
off from a newly created airport operator, owned by Temasek
Holdings, called Changi Airport Group (CAG), which will run
the airport and attempt to expand the Changi Airport model
into new markets. Prime Minister Lee Hsien Loong's brother
Lee Hsien Yang is the new chairman of CAAS, while the PM's
wife, Ho Ching, remains as CEO of Temasek, the owner of CAG.
Temasek also owns a majority position in Singapore Airlines,
which in turn owns a majority stake in the dominant
ground-services handler Singapore Airport Terminal Services,
which appeared to force out a foreign competitor earlier this
year. Temasek may be consolidating its domestic airport
services businesses to create a platform from which to export
the Changi Airport model into other markets, but such control
also provides latitude to protect local market share and
jobs, which has political implications. Even as the GOS
trumpeted the benefits of corporatization, bloggers wrote
that the restructuring of Changi Airport is just a
reshuffling of assets between the Lee family and Temasek.
End Summary.
Changi Airport "Corporatized" Effective July 1
--------------------------------------------- -
¶2. (SBU) On July 1, Singapore followed through on previously
announced plans to "corporatize" Changi International Airport
by launching a restructured Civil Aviation Authority of
Singapore (CAAS), which will continue to have regulatory
authority over the aviation sector. The move creates a new
subsidiary of sovereign wealth fund Temasek Holdings called
Changi Airport Group (CAG), which will now manage airport
operations and attempt to expand the Changi airport model
into markets outside Singapore. Prime Minister Lee Hsien
Loong's brother and former CEO of Temasek-owned SingTel, Lee
Hsien Yang, took charge as chairman of the new CAAS. Lee
Seow Hiang, a Singapore airforce veteran and former Principal
Private Secretary to Minister Mentor Lee Kuan Yew was named
Chief Executive Officer of CAG. The Ministry of Transport
(MOT) officially announced details regarding the
corporatization and executive appointments in October 2008,
but press reports indicated that the GOS had begun preparing
for the restructuring as early as 2007. Minister for
Transport Raymond Lim, and Lim Hwee Hua, who was promoted in
April to Minister in the Prime Minister's Office and Second
Minister for Finance and Second Minister for Transport, led
the steering committee responsible for the restructuring
effort.
Positioning Changi Airport Group for Global Expansion
--------------------------------------------- --------
¶3. (SBU) Minister Lim and MM Lee both publicly hailed the
corporatization of Changi International as important for
maintaining Singapore's position as a leading global air hub.
The restructuring will allow CAAS to focus more on
regulatory issues and advancing Singapore's strategic
aviation interests, while CAG will be able to aggressively
pursue overseas business ventures and investment
opportunities, they said. As part of that change, Changi
Airports International (CAI), formerly the arm of CAAS
responsible for investing and managing airports overseas, was
absorbed by CAG and is now considered a wholly-owned
subsidiary of CAG. CAI contacts told Econoff that CAI will
continue to use its own funds to invest in projects overseas
and that Temasek will only be involved with CAI investments
as the parent of CAG. However, both expressed hope that
Temasek would more actively partner in CAI's investments and
suggested that the shape of the relationship between CAI, CAG
and Temasek is still evolving.
SINGAPORE 00000704 002.2 OF 003
¶4. (SBU) CAG is positioning itself as a partner that will
help airlines expand route networks into new markets and grow
traffic volumes. Under the old Changi Airport structure,
CAAS administered the S$130 million (US$87 million) Air Hub
Development Fund (AHDF), which aimed to help expand the
businesses of foreign and domestic airlines and "airport
partners" (e.g., airport terminal retailers) operating in
Singapore (Ref A). CAG will now administer the AHDF under
the new corporatized structure, CAAS Director for
International Relations Eileen Poh told Econoff. CAG is open
to co-investing with airlines on facilities and services that
would improve Changi Airport and develop links between
foreign cities and Changi Airport.
Consolidating Control Under Temasek
-----------------------------------
¶5. (C) The creation of CAG helps consolidate and formalize
Temasek's control of the aviation sector in Singapore.
Temasek was already the majority owner of Singapore Airlines,
which in turn owns Singapore Airport Terminal Services (Sats)
the ground-handling services provider and in-flight caterer
that enjoys almost 80 percent market share in Singapore.
Sats leadership was quoted in the press saying that Sats
expects the corporatization to "give rise to closer
cooperation and more vibrant exchange of ideas between Changi
Airport Group and service providers like Sats." (Comment:
This remark suggests closer ties between CAG and Sats, which
could indicate an effort by Temasek to consolidate its
various aviation service providers in order to build a
platform from which it can export the Changi Airport model
overseas. At the very least, such consolidation provides
Temasek latitude to protect market share in the strategically
important domestic aviation sector. That in turn helps
protect local jobs and salaries, which is critical to the
GOS. End Comment.)
Setting the Stage - Force out Foreign Competitors
--------------------------------------------- ----
¶6. (C) Earlier this year, it appeared that Sats succeeded in
muscling out the first new entrant into the ground-handling
services sector in 30 years when Swissport, a subsidiary of
Spanish firm Ferrovial, announced in January that it would
close its Singapore operations and depart Changi Airport.
Swissport decided to leave Singapore only four years after
winning a ten-year license to be the third airport ground
handler in Singapore. At the time, trade publications quoted
Swissport's spokesman Stephan Beerli saying that Changi
Airport may be open but it is "not truly deregulated or
liberalized." Beerli noted that established systems at
Changi Airport "made it impossible to compete with the
incumbent firms": Sats, established in 1972, and Changi
International Airport Services (CIAS), which was established
in 1977 and was majority-owned by Temasek until Dubai-based
Dnata acquired CIAS in 2004. CIAS's CEO is a Singaporean who
has been with the company since 1978.
¶7. (C) CAAS had credited Swissport's entry into Changi with
bringing down handling costs by about 15 percent. Swissport
and some press reports alleged that Sats and CIAS began
charging airlines 30 percent more after Swissport announced
its departure. Sats and CIAS took over Swissport's customers
and absorbed about half of Swissport's employees. Following
Swissport's departure announcement, one blogger wrote,
"...isn't that good for us? Airlines have to pay more so that
local handlers can earn profit and retain their workforce."
¶8. (C) On their departure, Swissport Singapore's leadership
alluded to unfair competition that Emboffs have seen signs of
before in other sectors dominated by Temasek companies (Ref
B). However, the Swissport contacts declined to elaborate.
The Vice President of Swissport's Commercial operations
initially told Econoff that he would like to discuss what he
viewed to be anti-competitive behavior on the part of Sats
and CIAS, saying he would be "glad to talk if it would help
other companies." However, he later recanted and said he
could not meet because Swissport was given a very good deal
"to get out of Singapore" and he did not want to say anything
that would "come back to bite him." Without more detail it
SINGAPORE 00000704 003.2 OF 003
is difficult to assess what Swissport was up against, but
Swissport's experience in Singapore follows a familiar
pattern. Other foreign firms, particularly in strategic
industries that are dominated by Temasek subsidiaries, like
energy and telecom, have been welcomed into Singapore with
the GOS heralding the benefits of greater competition and
market liberalization. However, some foreign firms are
driven out of business as a result of predatory pricing
and/or opaque and endless regulatory foot-dragging by GOS
statutory boards that are powerless in the face of Temasek's
considerable political influence.
Lee Family and Temasek - From One Hand to the Other
--------------------------------------------- ------
¶9. (C) While the GOS trumpeted the corporatization, several
members of the public expressed their skepticism about the
change through blogs that pointed out that, in fact, the
"corporatization" does not mean "privatization" or signal
greater liberalization of the market because it is a
government restructuring that moves airport operations from a
GOS statutory board to a GOS sovereign wealth fund. Ho
Ching, the Prime Minister's wife and CEO of Temasek, has
decided not to step down from Temasek after announcing she
would do so in March (Ref C), and will therefore remain the
head of CAG's parent while the Prime Minister's brother
serves as the chairman of the aviation regulatory authority.
One blogger summed up his thoughts on the corporatization
saying it is a move "from the left to the right hand of the
government. Perhaps there are more conflicts of interest
now...and of course, potentially million dollar salaries for
these million dollar talents."
The Higher Salaries Factor
--------------------------
¶10. (C) A senior Singapore business leader told CDA that one
of the key reasons the GOS decided to corporatize Changi
Airport is that this opened the door for airport executive
leadership to collect significantly higher salaries, which
would no longer be capped at the level of the salary of a
Permanent Secretary in the GOS. For salary-related reason,
Singapore has been losing top Changi Airport talent to other
airports around the world. The GOS is concerned that Changi
Airport could lose competitiveness to other state-of-the-art
airports around the region. In the long term, the biggest
competitive challenge to Changi Airport may come from
Bangkok's Suvarnabhumi Airport, which is even more
strategically located than Changi. Many international
travelers could shave an hour off their travel times, and
airlines could make commensurate fuel savings, if their
flights connected through Bangkok rather than Singapore, the
source said.
Visit Embassy Singapore's Classified website:
http://www.state.sgov.gov/p/eap/singapore/ind ex.cfm
Read all about it here folks http://wikileaks.org/cable/2009/07/09SINGAPORE704.html
C O N F I D E N T I A L SECTION 01 OF 03 SINGAPORE 000704
SIPDIS
STATE PASS USTR FOR AUSTR BWEISEL
EAP/MTS FOR MCOPPOLA
E.O. 12958: DECL: 07/24/2019
TAGS: EAIR EINV ETRD PGOV ECON SN
SUBJECT: SINGAPORE AIRPORT "CORPORATIZED"; LEE FAMILY AND
TEMASEK INFLUENCE STRENGTHENED
REF: A. SINGAPORE 165
¶B. SINGAPORE 128
¶C. SINGAPORE 695
SINGAPORE 00000704 001.2 OF 003
Classified By: CDA Daniel L. Shields for reasons 1.4 (b) and (d)
¶1. (C) SUMMARY: Singapore has "corporatized" Changi
International Airport in a move that will consolidate control
of the domestic aviation sector in the hands of sovereign
wealth fund Temasek and the Lee family. Aviation regulator,
the Civil Aviation Authority of Singapore (CAAS) has split
off from a newly created airport operator, owned by Temasek
Holdings, called Changi Airport Group (CAG), which will run
the airport and attempt to expand the Changi Airport model
into new markets. Prime Minister Lee Hsien Loong's brother
Lee Hsien Yang is the new chairman of CAAS, while the PM's
wife, Ho Ching, remains as CEO of Temasek, the owner of CAG.
Temasek also owns a majority position in Singapore Airlines,
which in turn owns a majority stake in the dominant
ground-services handler Singapore Airport Terminal Services,
which appeared to force out a foreign competitor earlier this
year. Temasek may be consolidating its domestic airport
services businesses to create a platform from which to export
the Changi Airport model into other markets, but such control
also provides latitude to protect local market share and
jobs, which has political implications. Even as the GOS
trumpeted the benefits of corporatization, bloggers wrote
that the restructuring of Changi Airport is just a
reshuffling of assets between the Lee family and Temasek.
End Summary.
Changi Airport "Corporatized" Effective July 1
--------------------------------------------- -
¶2. (SBU) On July 1, Singapore followed through on previously
announced plans to "corporatize" Changi International Airport
by launching a restructured Civil Aviation Authority of
Singapore (CAAS), which will continue to have regulatory
authority over the aviation sector. The move creates a new
subsidiary of sovereign wealth fund Temasek Holdings called
Changi Airport Group (CAG), which will now manage airport
operations and attempt to expand the Changi airport model
into markets outside Singapore. Prime Minister Lee Hsien
Loong's brother and former CEO of Temasek-owned SingTel, Lee
Hsien Yang, took charge as chairman of the new CAAS. Lee
Seow Hiang, a Singapore airforce veteran and former Principal
Private Secretary to Minister Mentor Lee Kuan Yew was named
Chief Executive Officer of CAG. The Ministry of Transport
(MOT) officially announced details regarding the
corporatization and executive appointments in October 2008,
but press reports indicated that the GOS had begun preparing
for the restructuring as early as 2007. Minister for
Transport Raymond Lim, and Lim Hwee Hua, who was promoted in
April to Minister in the Prime Minister's Office and Second
Minister for Finance and Second Minister for Transport, led
the steering committee responsible for the restructuring
effort.
Positioning Changi Airport Group for Global Expansion
--------------------------------------------- --------
¶3. (SBU) Minister Lim and MM Lee both publicly hailed the
corporatization of Changi International as important for
maintaining Singapore's position as a leading global air hub.
The restructuring will allow CAAS to focus more on
regulatory issues and advancing Singapore's strategic
aviation interests, while CAG will be able to aggressively
pursue overseas business ventures and investment
opportunities, they said. As part of that change, Changi
Airports International (CAI), formerly the arm of CAAS
responsible for investing and managing airports overseas, was
absorbed by CAG and is now considered a wholly-owned
subsidiary of CAG. CAI contacts told Econoff that CAI will
continue to use its own funds to invest in projects overseas
and that Temasek will only be involved with CAI investments
as the parent of CAG. However, both expressed hope that
Temasek would more actively partner in CAI's investments and
suggested that the shape of the relationship between CAI, CAG
and Temasek is still evolving.
SINGAPORE 00000704 002.2 OF 003
¶4. (SBU) CAG is positioning itself as a partner that will
help airlines expand route networks into new markets and grow
traffic volumes. Under the old Changi Airport structure,
CAAS administered the S$130 million (US$87 million) Air Hub
Development Fund (AHDF), which aimed to help expand the
businesses of foreign and domestic airlines and "airport
partners" (e.g., airport terminal retailers) operating in
Singapore (Ref A). CAG will now administer the AHDF under
the new corporatized structure, CAAS Director for
International Relations Eileen Poh told Econoff. CAG is open
to co-investing with airlines on facilities and services that
would improve Changi Airport and develop links between
foreign cities and Changi Airport.
Consolidating Control Under Temasek
-----------------------------------
¶5. (C) The creation of CAG helps consolidate and formalize
Temasek's control of the aviation sector in Singapore.
Temasek was already the majority owner of Singapore Airlines,
which in turn owns Singapore Airport Terminal Services (Sats)
the ground-handling services provider and in-flight caterer
that enjoys almost 80 percent market share in Singapore.
Sats leadership was quoted in the press saying that Sats
expects the corporatization to "give rise to closer
cooperation and more vibrant exchange of ideas between Changi
Airport Group and service providers like Sats." (Comment:
This remark suggests closer ties between CAG and Sats, which
could indicate an effort by Temasek to consolidate its
various aviation service providers in order to build a
platform from which it can export the Changi Airport model
overseas. At the very least, such consolidation provides
Temasek latitude to protect market share in the strategically
important domestic aviation sector. That in turn helps
protect local jobs and salaries, which is critical to the
GOS. End Comment.)
Setting the Stage - Force out Foreign Competitors
--------------------------------------------- ----
¶6. (C) Earlier this year, it appeared that Sats succeeded in
muscling out the first new entrant into the ground-handling
services sector in 30 years when Swissport, a subsidiary of
Spanish firm Ferrovial, announced in January that it would
close its Singapore operations and depart Changi Airport.
Swissport decided to leave Singapore only four years after
winning a ten-year license to be the third airport ground
handler in Singapore. At the time, trade publications quoted
Swissport's spokesman Stephan Beerli saying that Changi
Airport may be open but it is "not truly deregulated or
liberalized." Beerli noted that established systems at
Changi Airport "made it impossible to compete with the
incumbent firms": Sats, established in 1972, and Changi
International Airport Services (CIAS), which was established
in 1977 and was majority-owned by Temasek until Dubai-based
Dnata acquired CIAS in 2004. CIAS's CEO is a Singaporean who
has been with the company since 1978.
¶7. (C) CAAS had credited Swissport's entry into Changi with
bringing down handling costs by about 15 percent. Swissport
and some press reports alleged that Sats and CIAS began
charging airlines 30 percent more after Swissport announced
its departure. Sats and CIAS took over Swissport's customers
and absorbed about half of Swissport's employees. Following
Swissport's departure announcement, one blogger wrote,
"...isn't that good for us? Airlines have to pay more so that
local handlers can earn profit and retain their workforce."
¶8. (C) On their departure, Swissport Singapore's leadership
alluded to unfair competition that Emboffs have seen signs of
before in other sectors dominated by Temasek companies (Ref
B). However, the Swissport contacts declined to elaborate.
The Vice President of Swissport's Commercial operations
initially told Econoff that he would like to discuss what he
viewed to be anti-competitive behavior on the part of Sats
and CIAS, saying he would be "glad to talk if it would help
other companies." However, he later recanted and said he
could not meet because Swissport was given a very good deal
"to get out of Singapore" and he did not want to say anything
that would "come back to bite him." Without more detail it
SINGAPORE 00000704 003.2 OF 003
is difficult to assess what Swissport was up against, but
Swissport's experience in Singapore follows a familiar
pattern. Other foreign firms, particularly in strategic
industries that are dominated by Temasek subsidiaries, like
energy and telecom, have been welcomed into Singapore with
the GOS heralding the benefits of greater competition and
market liberalization. However, some foreign firms are
driven out of business as a result of predatory pricing
and/or opaque and endless regulatory foot-dragging by GOS
statutory boards that are powerless in the face of Temasek's
considerable political influence.
Lee Family and Temasek - From One Hand to the Other
--------------------------------------------- ------
¶9. (C) While the GOS trumpeted the corporatization, several
members of the public expressed their skepticism about the
change through blogs that pointed out that, in fact, the
"corporatization" does not mean "privatization" or signal
greater liberalization of the market because it is a
government restructuring that moves airport operations from a
GOS statutory board to a GOS sovereign wealth fund. Ho
Ching, the Prime Minister's wife and CEO of Temasek, has
decided not to step down from Temasek after announcing she
would do so in March (Ref C), and will therefore remain the
head of CAG's parent while the Prime Minister's brother
serves as the chairman of the aviation regulatory authority.
One blogger summed up his thoughts on the corporatization
saying it is a move "from the left to the right hand of the
government. Perhaps there are more conflicts of interest
now...and of course, potentially million dollar salaries for
these million dollar talents."
The Higher Salaries Factor
--------------------------
¶10. (C) A senior Singapore business leader told CDA that one
of the key reasons the GOS decided to corporatize Changi
Airport is that this opened the door for airport executive
leadership to collect significantly higher salaries, which
would no longer be capped at the level of the salary of a
Permanent Secretary in the GOS. For salary-related reason,
Singapore has been losing top Changi Airport talent to other
airports around the world. The GOS is concerned that Changi
Airport could lose competitiveness to other state-of-the-art
airports around the region. In the long term, the biggest
competitive challenge to Changi Airport may come from
Bangkok's Suvarnabhumi Airport, which is even more
strategically located than Changi. Many international
travelers could shave an hour off their travel times, and
airlines could make commensurate fuel savings, if their
flights connected through Bangkok rather than Singapore, the
source said.
Visit Embassy Singapore's Classified website:
http://www.state.sgov.gov/p/eap/singapore/ind ex.cfm
Last edited:
