Friday, 2 March 2018

Travellers using Changi Airport to pay higher fees and charges from 1 July 2018 to help fund major expansion plans

Higher fees for airport users to fund Changi's expansion
New rates kick in on July 1; funds collected to help pay for growth, which includes Terminal 5
By Karamjit Kaur, Senior Aviation Correspondent, The Straits Times, 1 Mar 2018

Passengers and airlines using Changi Airport will have to partly fund its major expansion plans by paying higher fees from July 1.

The Government sees the massive investment in the airport as key to cementing Singapore's status as an aviation hub. However, industry players such as the International Air Transport Association (IATA) yesterday again opposed the model of getting users to pre-fund facilities before they utilise them.

From July 1, passengers who now pay $34 to fly out of Changi will have to fork out an extra $13.30.

Transit passengers will have to pay $3 more for each flight, with all hikes to be included in their fares.

Airlines will also have to pay more in aircraft parking and landing fees, the Ministry of Transport, Civil Aviation Authority of Singapore (CAAS) and Changi Airport Group (CAG) said yesterday.

The fees will rise each year until 2024, the authorities said. By April 1, 2024, the total departure fee for passengers departing from Changi Airport will climb to $62.30.

The total bill for the Changi East development, which includes Terminal 5, is expected to run into tens of billions, the Government said. Even the possibility of borrowing from the capital markets for such projects has been flagged. So far, the Government has committed more than $9 billion to the project, and CAG another $3.6 billion.

The extra fees to be collected from airlines and passengers from July are expected to yield more than $4 billion.

It is not clear if the fees will be cut when T5 opens around 2030.

The total fee is made up of a passenger service and security fee, an aviation levy charge and the new airport development levy.

The Sunday Times had reported in January that passenger fees will increase by between $10 and $15 to help pay for the works, which include a third runway.

T5 is expected to eventually handle up to 70 million passengers a year - more than Terminals 1, 2 and 3 combined. Changi Airport, which handled a record number of 62.2 million passengers last year, expects its current capacity of 85 million passengers per annum to be fully utilised by the late 2020s.

CAAS director-general Kevin Shum told journalists: "Changi East is our investment to secure Singapore's future... That is why we are doing all of these to ensure that Singapore remains the premier air hub for the region."

Transport Minister Khaw Boon Wan stressed in a Facebook post that the Government will be the main funder through grants, while CAAS and CAG will dip into their reserves and future surpluses to help fund T5.

"Having the Government and the airport community contribute towards the project is a fair way to finance the project, which will bring benefits to our people, businesses and the Singapore economy," Mr Khaw said.

Other airports have introduced user charges to support growth plans. In 2016, Hong Kong International Airport, which is building a third runway, started collecting between HK$70 (S$12) and HK$180 from each traveller. But IATA - the global voice of airlines - repeated its opposition to airlines pre-funding projects before using them.

Its regional vice-president (Asia Pacific) Conrad Clifford told The Straits Times: "While we recognise that the (Singapore) Government will be bearing the majority of the costs for the development of Changi East and Terminal 5, we are still disappointed with the decision to proceed with the pre-funding model despite the feedback provided by the industry."

Aviation analysts, however, do not expect the higher charges to significantly hurt Singapore's aviation hub status.

Some travellers put off by higher taxes at Changi Airport
Global airline body expresses concern over fee hike plan to help fund Changi's expansion
By Karamjit Kaur, Senior Aviation Correspondent and Rachel Au-Yong, Housing Correspondent, The Straits Times, 1 Mar 2018

While the higher departure and airline fees at Changi Airport will go towards funding the Changi East development which includes Terminal 5, not everyone is a fan of the move.

Budget travellers, airlines and the International Air Transport Association (IATA) yesterday expressed their misgivings about the plan to raise fees from July 1. Business and luxury travellers seemed less bothered, if a quick check with those passing through Changi Airport yesterday was any indication.

Indonesian entrepreneur Edward Sojono, 35, who visits Singapore four times a year, mainly to shop, noted that the increase in departure fees by $13.30 could translate into a 10 per cent jump in his airfare.

"I would either have to shop less or come less often," he said.

Sales operation manager Alaina Jenkinson, a 32-year-old American based in Hong Kong, also found the move off-putting, and said she was unlikely to pick Singapore for leisure trips.

Others, like steward Philip Ong, 61, worried that the higher tax could discourage transit travellers from coming through Singapore.

With the hike that will help to partly fund the development of Changi East, including the gigantic Terminal 5, passengers departing from Changi Airport will pay a total of $47.30, up from $34 now.

For transit passengers, the total fee will increase from $6 to $9.

Some travellers, however, had no issue with the new fees. Risk manager Kim Thomson, 42, who flies from Perth to Singapore for work regularly, said his company would continue to absorb the costs.

Another traveller, German office worker Claudia W., 52, said the higher tax would not deter her from exploring Singapore. She had spent €4,000 (S$6,500) on a two week luxury cruise around South-east Asia.

Analysts noted, though, that as the higher charges will be included in the airfare, airlines could end up absorbing some of it instead of passing on the entire sum to consumers.

Some airlines are also concerned about the higher charges that will apply to aircraft landing and parking fees that they pay.

Changi Airport Group said yesterday that from July 1, airline fees will rise by 1 per cent every year for the next six years. This means an airline flying an Airbus 380, for example, will pay $6,830 per flight, $64 more than now - in the first year. At the current fee, this difference may increase to around $490 in 2024.

A spokesman for Australian carrier Qantas said that while it supports Changi's expansion plans, "we are disappointed with the introduction of the Airport Development Levy to fund Changi Airport's development of Terminal 5, as this will put pressure on costs and ultimately the fares that passengers pay".

Mr Conrad Clifford, regional vice-president (Asia-Pacific) of IATA, which represents global carriers, said the higher fees could affect the financial viability of airline operations here. "The airline industry is against pre-funding for infrastructure projects. It is unfair to expect passengers and airlines to pay in advance for a facility they may or may not use in the future when the facility is ready," he said.

What other airports charge
By Rachel Au-Yong, The Straits Times, 1 Mar 2018


Since 2016, Hong Kong International Airport - which is building a third runway - has been collecting between HK$70 and HK$180 (S$12 and S$31) per traveller, depending on the class of travel and flight duration. Seven out of 10 passengers can expect to pay HK$90 or less, said a spokesman, adding that the fee has not affected the airport's competitiveness.


To fund its various expansion projects and reach its target of 100 million passengers by 2023, the city in the United Arab Emirates levied a 35 dirham (S$12.60) tax on passengers leaving any of its airports on international flights in 2016.


The United Kingdom has charged air passenger duty since 1994. It is divided into short-haul (3,200km or less) and long-haul flights, and further divided by class of service.

Passengers on short-haul economy flights are charged £13 (S$24), and those on business flights must pay £26 - much to the chagrin of budget operators.

Those on long-haul economy flights are taxed £75, and those on premium flights £150.

These rates are expected to continue rising.


Since 1995, Australia has imposed a passenger movement charge on people leaving the country. The fee is currently A$60 (S$62).

There are some exemptions, including for children under 12, transit passengers and crew members of an aircraft or ship.


* Parliament: Fair for all travellers to pay the same fees when flying out of Changi Airport: Second Minister for Transport Ng Chee Meng

Whether on short or long flights, they use same facilities in airport, says Ng Chee Meng
By Karamjit Kaur, Senior Aviation Correspondent, The Straits Times, 8 Mar 2018

All travellers, whether they take short or long-haul flights, use the same facilities at Changi Airport and should pay the same departure fees, said Second Minister for Transport Ng Chee Meng.

"It is only fair," said Mr Ng, who was responding to a suggestion by Mr Zaqy Mohamad (Chua Chu Kang GRC) on Tuesday for long-haul travellers to pay a higher rate.

This is to ensure that Singapore does not lose its competitive edge as a regional hub, said Mr Zaqy who raised the matter following an announcement last week that from July 1, all travellers will have to pay $13.30 more when flying out of Changi Airport.

The extra - on top of $34 which travellers now pay - is to help fund the development of Changi East, a massive expansion masterplan which includes the construction of Terminal 5 (T5).

Mr Ng said that the Government had considered a tiered pricing system, but decided against it and was using the same principle that guides current charges at Changi Airport.

Speaking in Parliament yesterday during the debate on the Transport Ministry's budget, Mr Ng also addressed Mr Zaqy's point that while airports in Hong Kong, Dubai and Qatar are also collecting from users to fund future expansion, South Korea's Incheon airport is not doing so.

Mr Ng pointed out that while the Incheon airport expansion added extra capacity of 18 million passengers a year - about the size of T4 - the Changi East project is tantamount to building a brand new airport development.

Slated to be completed around 2030, T5 will eventually be able to handle up to 70 million passengers a year, which is more than T1, T2 and T3 combined.

On the need to impose user charges ahead of T5's completion - something that airlines and some travellers have objected to - Mr Ng pointed out that airport users will benefit even before the new terminal opens.

A third runway being built as part of the Changi East project will allow the airport to handle a growing number of flights when all three runways are operational in the early 2020s, almost 10 years before T5 opens.

"Having users start paying earlier also avoids having large spikes in the amount they must pay later on," said Mr Ng.


He added that the Government will bear a significant portion of the Changi East development costs, expected to run into tens of billions, while Changi Airport Group will also commit significant resources.

Mr Ng did not reveal the total projected cost for the expansion, a question Mr Zaqy had raised.

The minister, however, reiterated that with the demand for air travel in the Asia-Pacific expected to grow strongly in the coming decades and with the aviation sector a cornerstone of the economy, Changi's expansion is much needed.


** Parliament: Aviation (Miscellaneous Amendments) Bill passed

Changi Airport to put part of profits into government funds to support expansion, deal with crises
Reserve fund will serve as buffer against industry shocks; second fund will support expansion work
By Karamjit Kaur, Senior Aviation Correspondent, The Straits Times, 20 Mar 2018

Changi Airport will soon have to park part of its annual profits in two funds, as part of the Government's plans to ensure enough resources to deal with aviation crises and support future expansion.

Changi Airport Group (CAG) will have to set up and maintain a reserve fund with annual undisclosed contributions, under the Aviation (Miscellaneous Amendments) Bill passed in Parliament yesterday.

Second Minister for Transport Ng Chee Meng said: "The reserve fund will act as a buffer against significant shocks to the aviation system, such as a downturn in the economy or a pandemic like Sars which may cause a sudden decrease in public confidence in air travel."

In such situations, the reserve fund can be tapped to provide temporary assistance to tide the industry through, he added.

Separately, Changi Airport will also have to make annual contributions - from its surplus - to the Changi Airport Development Fund (CADF), which was set up in 2015 to support airport expansion projects.

So far, the Government has injected about $4 billion into the kitty.

The fund will support the expansion of Changi Airport and ensure the long-term financial sustainability of the aviation system, Mr Ng said.

The proposals come as Singapore embarks on a massive expansion plan that will almost double the size of Changi Airport. This is to ensure that the airport has adequate capacity to cater to the demand for air travel in the Asia-Pacific region, which is expected to triple in the next two decades.

The Changi East development plan includes massive infrastructure works, building a third runway and constructing a mega passenger terminal, Terminal 5 (T5), that will eventually be bigger than T1, T2 and T3 combined.

T5 is slated to open around 2030.

The Government has already announced that from July 1, charges and fees for passengers and airlines at Changi Airport will be increased to help fund the expansion, which is expected to cost tens of billions of dollars. Departing passengers will have to pay $47.30, an increase of $13.30. The sum will be collected as part of the airfare. The increase comprises a new $10.80 levy which will also go into the CADF.

The Aviation (Miscellaneous Amendments) Bill passed by Parliament yesterday also allows Singapore to put in place provisions to comply with a global market-based scheme for airlines to offset their aviation emissions growth with carbon credits.

From Jan 1 next year, the International Civil Aviation Organisation (ICAO) - a United Nations agency that oversees global commercial aviation - will require all member countries to comply with new monitoring and reporting rules.

The eventual aim is carbon-neutral growth from 2020.

Responding to Non-Constituency MP Dennis Tan, who expressed concerns about noise and air pollution as Changi expands, Mr Ng said that apart from the global emissions scheme, new aircraft, which many carriers including Singapore Airlines now operate, are cleaner and less noisy than older planes.

Original plan was to levy higher charges for airport users
By Karamjit Kaur, Senior Aviation Correspondent, The Straits Times, 20 Mar 2018

The initial plan was to charge each traveller departing from Changi Airport $12 and half the amount for those in transit, as part of a new tax to help fund a massive airport expansion project. But after listening to industry feedback, the Government decided to reduce the fee to $10.80 and $3, respectively.

Second Minister for Transport Ng Chee Meng disclosed this in Parliament yesterday in reply to Mr Zaqy Mohamad (Chua Chu Kang GRC), who had asked if the Government received any feedback after announcing the higher charges last month.

The new airport development levy for travellers will start from July 1, and will be collected by airlines as part of the total air fare. Those departing from Changi Airport will have to pay $13.30 more, which includes a $2.50 increase in the airport's passenger service and security fee.

For airlines, aircraft landing, parking and aerobridge fees will increase by 1 per cent on July 1. The charges will again increase by 1 per cent annually on April 1 for the next six years, with the last on April 1, 2024.

Airlines have expressed concerns about the impending increases at Changi Airport. Other airports, for example in Hong Kong and Dubai, have introduced similar charges to fund expansion projects.

Mr Ng stressed that the Government will bear the majority of the costs for the Changi East development and had carefully considered the impact to Changi's competitiveness from the higher charges.

Joint Media Release: New Airport Development Levy from 1 July 2018
Changi Airport Terminal 5: Decades of groundwork for T5 to take flight
Why Singapore needs to build big: National Development Minister Lawrence Wong
Opening Speech by Second Minister Ng Chee Meng on Aviation (Miscellaneous Amendments) Bill Second Reading -19 Mar 2018

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