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SINGAPORE: Changi Airport will be corporatised next year in a bid to boost its status as a leading aviation hub. The move will see the creation of two entities – a regulator and an airport operations company.
In an increasingly competitive global market, Changi Airport said it must corporatise to stay flexible, expand overseas and boost its standing as an aviation hub.
Next July, a new company will undertake the operational functions of managing Singapore's airport, including its emergency services and investments in foreign airports.
The company will be wholly owned by Temasek Holdings, which is paying an as-yet- undisclosed sum for Changi's assets. The new company will also pick up the construction bill for Terminal 4.
When asked about the expected returns on investment, Mr Ng Yat Chung, managing director of Corporate Development, Portfolio Management & Systems, Temasek Holdings, said: "The priority now is to get the corporatisation exercise going. We will help the company by assembling a good board and we will hold the board accountable for the proper running of the company. We expect the company to be able to earn its cost of capital."
Helming it will be Mr Liew Mun Leong, the current chairman of the Civil Aviation Authority, and president of CapitaLand Group.
Transport Minister Raymond Lim said: "There are potential risks involved in the corporatisation exercise – in particular, we need to ensure that the positive externalities of the airport will continue even if the benefits are not accrued to the airport company.
"To address such concerns, we have designed a regulatory framework to align the interests of the new airport company with those of the state. This will guard against monopolistic pricing behaviour by the airport company, which may hurt our position as an air hub."
The restructured Civil Aviation Authority, which will be headed by Mr Lee Hsien Yang, will implement this framework. It will also oversee strategic and regulatory functions such as air traffic services, air services negotiations, safety and customer service.
Singapore is the only country in the world where customer service at an airport is to be regulated.
Senior Minister of State for Transport, Mrs Lim Hwee Hua, said: "The industry itself is changing dramatically in terms of the kind of players... competitive challenges will require us to be a lot more responsible and nimble.
"We think that a separation of roles will allow that to be better defined and will enable Changi (Airport) to be a lot sharper."
The Transport Ministry stresses that corporatisation is not a cost-cutting measure. Instead of lay-offs, the combined entities will be hiring more staff. Furthermore, one key reason for corporatisation is to allow the company greater flexibility in paying its top talents more.
With the corporatisation exercise, about one third of the current 1,800 staff will go to the Civil Aviation Authority, while two thirds will go to the new company. An assurance has been made by Changi Airport that no employee will be worse off in the new entities.
The Transport Ministry said Changi Airport will continue to offer top-notch service at reasonable prices. It was announced earlier this month that the passenger service charge at the airport will increase by some 30 per cent in January, from S$21 to S$28.
Changi Airport said it has been 15 years since an increase in service charge has been made and this hike does not cover its costs sufficiently.
As for Changi Airport's business partners, the Transport Ministry said competitive aeronautical pricing such as landing charges and security charges will be policed, so that the airport retains its competitiveness.
The new company and Civil Aviation Authority will continue to work closely together as they are jointly responsible for Seletar Airport, Singapore's air hub development, and any airport infrastructure master planning.
- CNA/so
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