*This article is four of five in our Singapore Budget 2022 series. Links to the other articles can be found at the bottom of this page.
In light of a protracted recovery from the Covid-19 pandemic, the aviation support package will be extended with more details to be announced at the Committee of Supply Debate (CSD) by the Minister for Transport. Cost relief measures including rebates on aircraft landing and parking charges, salary support measures, etc. could potentially be extended for a short period of time to aid the recovery of the sector, but likely to be in lower quantum, in our view.
Measures are likely to shift towards a smooth and safe reopening in Singapore, and digital transformation to preserve Singapore’s status as an Air Hub. The Covid-19 pandemic has inevitably accelerated the technology improvements and digital transformation such as enhanced mobile self-serviced capabilities, contactless technology and digital health passports etc. We believe this trend would continue and aviation companies which can innovate and adapt quickly to the regulatory requirements and passenger needs will emerge stronger post-Covid-19.
Budget 2022 also outlined various climate change initiatives to make Singapore the “go-to location in Asia for expertise in carbon services” and “frontrunner in the development of sustainable aviation and marine fuel”. The aviation industry has been under increasing pressure and scrutiny due to the lack of effective actions to combat climate change. While the aviation sector still faces headwinds from the Covid-19 pandemic, ESG would also be a priority for airlines as they recover gradually from the pandemic. We believe that companies with good ESG scores are poised to benefit from improved efficiency and service quality, and will be looked upon favourably by ESG-minded investors due to the companies’ long-term sustainability.
Links to other articles in the Singapore Budget 2022 series:
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