The world's best airport is building a mega terminal to ride the travel boom in Asia

CNBC

15-05-2025

Asia is set to see a travel boom, and countries in the region are gearing up to exploit this surge in demand.
Singapore's Changi Airport on Wednesday broke ground on its fifth terminal, which is expected to be operational in the mid-2030s.
The new terminal, which sits on a plot of land 1,080 hectares large, will almost double the size of Changi Airport's existing area.
This will allow the airport to handle 140 million passengers per year from its current capacity of 90 million passengers. Changi, which was most recently awarded Skytrax's "World's Best Airport" in 2025 for the 13th time, welcomed 67.7 million passengers in 2024.
Airports that can handle more than 100 million passengers annually are classified as mega airports, and three out of the 10 existing ones are in Asia, according to airport industry body Airport Council International. These are in Beijing, Tokyo and Shanghai.
ACI projects that air travel will grow nearly 7% over the next 25 years. To cope with the demand, airports in the Asia-Pacific and Middle East regions are poised to undergo extensive development, with combined investments of $240 billion for upgrading existing facilities and building new airports between 2025 and 2035.
Speaking at the groundbreaking event, Singapore Prime Minister Lawrence Wong said the decision to build Terminal 5 was because "over the longer term, air travel is on a rising trajectory, and the bulk of the growth will take place here in the Asia-Pacific region."
Wong also said that with Terminal 5, Changi will aim to connect with 200 cities, up from the current 170 city links it has now.
"[Changi] has connected our small island nation to the world, and brought the world to Singapore. And this connectivity has powered our growth as an air hub, driving industries like tourism, aerospace and logistics," Wong said, pointing out that the aviation ecosystem now contributes 5% of Singapore's GDP.
Competition in the region is also intensifying, Wong noted. For example, airports in Asia are investing significantly in modernizing their infrastructure and adjacent facilities like entertainment and retail spaces.
Hong Kong International Airport commissioned a third runway in November and is expanding the airport's Terminal 2. The airport's goal, it said, is to serve 120 million passengers and handle 10 million tonnes of cargo annually from 2035.
Bangkok's Suvarnabhumi Airport opened a third runway in September 2024, boosting the airport's capacity to handle more flights, following the completion of a new satellite terminal a year earlier.Thailand's airport operator also revealed a further "East Expansion" plan to increase the airport's capacity by 2027.
In South Korea, Seoul's Incheon International Airport completed its "Phase 4 expansion" in December, allowing it to handle an annual passenger capacity of up to 106 million from 77 million, and making it the world's third-largest airport.
Thomas Pellegrin, Transportation, Hospitality and Services Sector Leader from Deloitte Southeast Asia, told CNBC that Asia has become the "barycenter" of air travel growth after the Covid-19 pandemic. This growth in air travel is due to the expansion of the middle class, whose propensity to fly increases faster than income growth, as well as the high urbanization rate in the region, which connects people to air transport infrastructure, he noted.
"The regional increase in passenger demand is now forecast at 7.9% in the near term and 5.1% in the long term, which is the highest worldwide and well above mature markets," Pellegrin added.
This means that Asian airports will need to accommodate roughly twice as many passengers and aircraft by 2043, creating tremendous pressure on the existing infrastructure, he said.
Terminal 5 will also feed into Singapore's plan to increase tourism revenue in the city-state from a record-breaking $29.8 billion in 2024 to $47 billion-$50 billion in the next 15 years.
Its "Tourism 2040" strategy centers on increasing demand from two distinct groups — business and stopover travelers, Grace Fu, Singapore's minister for sustainability and the environment, said in April.
In particular, officials aim to triple tourism revenue from business travelers attending meetings, incentives, conventions and exhibitions, Fu said.
According to Singapore Tourism Board CEO Melissa Ow, transit and transfer passengers currently make up a third of Changi Airport's overall traffic.
Terminal 5, as well as the broader Changi East development — which also includes a third runway and an industrial zone — will allow Singapore to retain and grow its market share as an air hub, increase connectivity and solidify Changi's standing as the best airport in the world, Deloitte's Pellegrin said.
"All these effects combine to give Singapore outsized 'soft power' internationally."