Changi Airport's T5 will be 10 times as big as VivoCity

Talks under way to decide how to fund building of multibillion-dollar facility
By Karamjit Kaur, Aviation Correspondent, The Straits Times, 1 Jul 2015

Coming your way soon - one of the largest man-made structures you have seen in Singapore.

It is difficult to conceive, but imagine this: Changi Airport's future Terminal 5 will be about 10 times as big as Singapore's largest shopping mall, VivoCity.

Talks are already afoot on how this multibillion-dollar facility should be funded.

Current plans, based on air traffic projections, are for a five-storey-high, 10 million sq ft terminal, revealed Changi Airport Group's (CAG) chairman Liew Mun Leong in an exclusive interview with The Straits Times.

"As it is conceived today, we are looking at 2 million sq ft per floor. If you collapse VivoCity and spread it out, you need to double that to make up one level of T5," he said.

"That's very big," added Mr Liew, who is also former president and chief executive officer of CapitaLand, which built VivoCity, the shopping mall with which he draws the comparison.

T5, slated to open in 10 years, is expected to handle up to 50 million passengers a year. Not only is that more than T1 and T2 combined, but it also almost matches the total number of passengers that passed through Changi Airport last year.

The idea is to have a game-changer that seals Singapore's position as a key hub for air travel within Asia and across the world.

Depending on how traffic grows, the facility could open in phases.

When completed, T5 is likely to be the third largest passenger terminal in the world, after facilities in Dubai and Beijing.

Changi's new passenger terminal and related facilities, including a third runway, taxiways, underground tunnels to move people and bags between the existing and new airport premises, and air cargo facilities, are expected to cost tens of billions of dollars.

Given the scale of the development in Changi East, now separated from the airport by a major road, who will foot the final bill is still "a big discussion", said Mr Liew.

"There is no way, from the capital management point of view, that we (CAG) can finance this," he said, adding that his own view is that such huge infrastructure projects should be the Government's responsibility. "A possible model is for the state to own the assets and for us to run it," he said.

And what if the Government does not agree with the airport's thinking?

Mr Liew said: "The fact is that the Government knows that the airport is such an important part of the country's economy... All over the world, big airports are building big terminals. So if you want to compete, you cannot not build T5."

Dubai Airport has plans to increase its annual handling capacity from 80 million to 250 million passengers while South Korea's Incheon Airport is ramping up from 80 million to 145 million passengers.

T5 will take Changi to 140 million passengers a year.

Despite the slowdown in passenger traffic at Changi Airport in the last one to two years, Mr Liew is confident the numbers will pick up, given strong projections for air travel in the Asia-Pacific region.

He said: "Singapore needs air connectivity and that's what we've been saying all the time. If we don't have the money as a company, somebody must pay," he said, adding that CAG has about $3 billion in the bank.

Mr Subhranshu Sekhar Das, an aviation analyst at industry consultancy Frost & Sullivan, said there are no hard and fast rules about who should pay for airport expansion and development works.

In many cases, it is a public-private partnership, though in Singa-pore's case, he expects the Government to bear the bulk, if not all, of the costs, given the importance of the airport to the overall economy.

Associate Professor Terence Fan, a transport specialist from the Singapore Management University, said: "Perhaps Changi can consider opening itself to retail investors so that there is some private investment, either in terms of bonds issued to the public or shares to retail investors, or both, with the Government retaining an important say on strategic decisions."

Even as discussions continue, Mr Liew stressed that works will proceed as planned, for the sake of the Singapore air hub.

With the demand for air travel in the Asia-Pacific region growing faster than the global average, Changi must ensure it has enough capacity to meet future needs.

Not catching this growth would jeopardise the air hub, he stressed.

Fund to support push into global market
By Karamjit Kaur, The Straits Times, 1 Jul 2015

Having decided that its future growth could lie beyond Singapore's borders, Changi Airport is setting up a fund of up to $1 billion to support its ambitions and is seeking investors.

An American finance firm has been roped in to look for partners. The funds will be used to invest in airport projects globally, said Changi Airport Group chairman Liew Mun Leong.

Changi Airport will provide about 20 per cent to 30 per cent of the total amount required and manage the fund, which is likely to be launched some time this year, he told The Straits Times.

Citing tremendous opportunities in China and other growing aviation markets, he said financial constraints have so far kept Changi from moving more aggressively in the global airport market.

Driven by its foreign investment arm Changi Airports International, Changi's foreign forays have been limited mainly to helping airports plan, develop and operate existing and new facilities

A breakthrough came in May when Changi celebrated the opening of Kazi Nazrul Islam Airport in West Bengal, India - the first overseas airport it partly owns through a 36 per cent stake in Bengal Aerotropolis Projects Limited (BAPL).

Changi's ambitions are similar to that of PSA International, which corporatised in 1997 and now operates about 40 container terminals, many of which it partly owns, in 16 countries.

With the airport's countless accolades and sterling reputation, Changi is well placed to cash in on the growth in the airport development sector, aviation experts said.

Globally, the value of airport expansion and development projects is expected to hit an estimated US$520 billion (S$701 billion) this year, said Frost & Sullivan's aviation analyst Subhranshu Sekhar Das. China and India, for example, with populations at least four times larger than that of the US, have only about 400 airports each while the US has more than 5,000.

While there are other players in the field like Malaysia Airports, Germany's Fraport, Schiphol in the Netherlands and Turkey's TAV, Mr Liew is confident Changi will outshine its rivals.

BAPL managing director Partha Ghosh said ahead of the opening of the West Bengal airport that the Indian airport was keen to tap Changi's valuable experience across many functional areas such as masterplanning and terminal design, capacity improvement, traffic development, airport operations and management, and commercial development.

Mr Liew said: "Our reputation is the best... Every other day we have people knocking on our doors, which is why I'm so bullish."

"From a business perspective, investing in airports is going to be the next big thing... The potential in China alone is fantastic."

Corporatised airport still soaring high
By Karamjit Kaur, The Straits Times, 1 Jul 2015

Six years after Changi Airport went from government to corporate entity, fears that it would lead to a focus on profits at the expense of service standards have proven unfounded, said the airport's chairman.

Passenger traffic grew strongly by 47 per cent during this time, despite a recent slowdown he is confident will pass, said Mr Liew Mun Leong, chairman of Changi Airport Group (CAG).

Since July 1, 2009, when CAG was created after the Civil Aviation Authority of Singapore was split into two, Changi has won about 150 best airport awards.

The strong numbers have come even as the airport remains financially viable, Mr Liew told The Straits Times. He said: "I think everybody would agree that our retail is very successful."

In the 12 months to the end of March last year, Changi's profits hit almost $900 million, a 19 per cent jump from the year before that. Mr Liew said: "The money is used to finance and reinvest in our infrastructure; in T4, in Jewel, in the T1 expansion, in Changi East."

T4, being built where the former Budget Terminal was located, and Jewel - a $1.7 billion retail-cum-airport structure coming up in front of T1, where an open-air carpark now sits - will open by 2018.

Mr Liew credited a strong team at CAG, led by chief executive officer Lee Seow Hiang who was principal private secretary to the late founding Prime Minister Lee Kuan Yew before he joined the airport, for Changi's success so far.

When the Government announced the decision to corporatise, the rationale was to give the airport more flexibility to innovate, to be responsive and to be nimble to changing industry conditions and new competitive challenges.

For example, Changi could decide on overseas investments and acquisitions, without having to consult the Transport Ministry, and also pay staff better as rival airports were poaching talent.

But not everyone was convinced, Mr Liew said.

Apart from fears that service levels would slip, civil servants were concerned about job security.

He said: "I had to convince and knock some heads."

Six years on, the concerns are allayed. What still remains to be settled is the airport's ownership, which was to have been transferred from the Ministry of Finance to investment firm Temasek Holdings. This has not happened due to uncertainty over how future airport expansion and other projects would be funded.

Mr Liew said: "My personal view is that it's always better to have a commercial body manage a commercial body... The Government's role is to govern."

When will this happen?

"I can't read politicians' minds. I'm only chairman of the board," Mr Liew said.