SINGAPORE: Travellers flying out of Changi Airport will have to pay up to S$13.30 more from Jul 1 with an increase in passenger fees and a new levy to fund a major expansion for the airport, including the building of Terminal 5 (T5).
The bulk of the charge comes from a new Airport Development Levy to fund the expansion project. For passengers who begin their trips from Changi Airport, they will pay a levy of S$10.80, the Transport Ministry and Civil Aviation Authority of Singapore (CAAS) said on Wednesday (Feb 28).
The Passenger Service and Security Fee – a combination of the current service charge and a security charge – will increase by S$2.50 from Jul 1. From Apr 1, 2019, this fee will again increase by S$2.50 and will do so every year until 2024, which marks the mid-point of the construction phase of the Changi East project. The fee will then be reviewed.
Transit passengers will also be charged an Airport Development Levy of S$3. The new levy will be reflected on passengers’ air tickets and will form part of the ticket price.
Currently, travellers departing from Changi Airport have to pay a S$34 departure charge. The charge includes the Passenger Service and Security Fee, as well as a CAAS levy.
With the new charges, passengers will have to pay a total of S$47.30 in airport fees from Jul 1 until further increases kick in on Apr 1, 2019.
Those transiting through the airport will pay a total of S$9 – including the development levy of S$3 and S$6 in a service and security fee, unchanged from currently.
Airlines will also see increased costs. Landing, parking and aerobridge fees, which are applicable to all flights at Changi Airport, will increase by 1 per cent from Jul 1. It will be further increased by 1 per cent a year until 2024, when a review will be conducted.
NEW TERMINAL, NEW RUNWAY
This is not the first time Changi Airport has increased fees to help fund expansion projects. In April 2013, when the passenger service fee was last raised, two projects were in the pipeline – the development of the new T4 and the expansion of T1.
This time, the higher fees will go towards paying for the Changi East project, which includes the new T5 as well as a three-runway system which started construction in 2016.
When completed in 2030, T5 will handle 50 million passengers a year initially and up to 70 million if needed – more than T1, T2 and T3 combined – bringing the airport’s total handling capacity to 135 million from 82 million currently.
T5 will also enable carriers such as Singapore Airlines to add links and routes to enhance the nation’s connectivity. Singapore Airlines CEO Goh Choon Phong has said that the carrier is already facing difficulties adding more flights during peak hours.
Changi Airport has said that the need for a third runway is “more urgent” than T5, as the airport’s current two runways will soon reach full capacity.
The third runway, a new 4km-long airstrip, will be ready for civil aviation use in 2020, and the three-runway system will start operating in the early 2020s.
The fund will also go to the construction of tunnels and systems that will help move passengers, baggage and airside vehicles within Changi East and also between Changi East and the other terminals.
In addition to these, extensive land preparation and drainage works at Changi East which are needed to prepare the site for construction, have been ongoing since 2014.
CAAS director-general Kevin Shum said the Changi East investment will help secure Singapore’s future. “We need to cater to increasing air traffic as Singaporeans travel more. At the same time, we want to plug into the growth of the region. That is why we are doing all of these to ensure that Singapore remains the premier air hub for the region.”
INCREASED CHARGES NOT EXPECTED TO AFFECT COMPETITIVENESS
The Transport Ministry and CAAS said the Airport Development Levy was set at a level "competitive against other hub airports which have implemented similar charges for airport expansion/development".
In deciding the final rates, the authorities took into account the industry's views as well as their strategies and considerations for competitiveness, they said.
"In addition, the value proposition of Changi Airport is its safety, connectivity, efficiency and the excellent passenger experience it offers, which cannot be quantified by cost alone," the authorities said in a reply to the media.
"If Changi Airport does not expand, it will soon reach its full capacity, and there will be a degradation in service and efficiency. Airlines and passengers would have to deal with longer queues, tighter circulation space, more plane delays and less connectivity, as Changi would be limited by the number of aircraft movements it can safely handle.
"Even if airlines wish to grow their services to and from Changi, there would be insufficient airport capacity to meet their needs. For businesses and the travelling public, this means fewer choices in terms of airlines, flight frequencies and destinations."
CAG also said it did not expect the 1 per cent increase in landing, parking and aerobridge fees to have an impact on the cargo passing through the airport.
"Cargo airlines contribute towards the Changi East project through the payment of Landing and Parking charges to Changi Airport Group, but they will also benefit from the increased capacity at Changi East," it said.
The project includes the Changi East Industrial Zone which will increase the cargo handling capacity from three million tonnes per annum to 5.4 million tonnes per annum, providing cargo carriers the capacity for further growth, it added.
FUNDING TO COME FROM THREE PARTIES
The Changi East project is expected to cost tens of billions of dollars, comparable to planned airport expansions in London and Hong Kong, and will be funded through joint contributions by the Government, Changi Airport Group and airport users.
The Government will cover the bulk of the costs, and has already contributed more than S$9 billion to the project. Changi Airport Group has committed S$3.6 billion to date and will commit its reserves and future surpluses, as well as take on substantial borrowing to fund the project, the Transport Ministry and CAAS said.
They added that due to the significant scale and complexity of Changi East, it is not possible for borrowing to fund the cost of the entire development.
"More borrowing would incur additional interest charges, and airport users would have to bear an even larger share of the repayment of the principal and interest amount in the later years," the authorities said.
CAAS' Mr Shum added that airport users will foot a "small part" of the cost. "We have consulted the airlines and will be keeping the charges to the minimum necessary,” he said.
With 62.2 million passengers passing through its terminals in 2017, Singapore’s Changi Airport is the seventh busiest international airport in the world. Passenger traffic at the airport is forecast to grow 3 to 4 per cent a year over the next 20 years.
T5 "ACTUALLY OUR SECOND AIRPORT": KHAW
In a Facebook post on Wednesday, Transport Minister Khaw Boon Wan said having the Government and the airport community contribute towards the new developments is a "fair way to finance the project", which will bring benefits to Singapore's people, businesses and economy.
He said even though T4 has just opened, authorities are already in "advanced planning" stages for Terminal 5.
"Actually T5 is not an adequate description of the project. T5 is actually our second airport, of which a new terminal is only a part of," he wrote, adding that it comes complete with its own runway, underground network of tunnels and a sophisticated baggage handling system. "T5 will almost double our current capacity," he said.