New airport tax -- +$13.30 from July
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Travellers using Changi Airport to pay higher fees and charges from July 1
Passengers who now pay $34 to fly out of Changi will have to fork out an extra $13.30 from July 1, to help fund major expansion plans for the airport that aim to cement Singapore's status as a key aviation hub.
Transit passengers will have to pay $3 more for each flight, with the increases to be included in their air fares.
Airlines will also have to pay more in aircraft parking and landing fees, said the Ministry of Transport, Civil Aviation Authority of Singapore (CAAS) and Changi Airport Group on Wednesday (Feb 28).
By April 1, 2024, the total departure fee for passengers departing from Changi Airport will go up to $62.30, the authorities said, even as they stressed that the bulk of the costs for the Changi East development, which includes the construction of Terminal 5, will be borne by the Government and Changi Airport Group (CAG), which operates the airport.
It is not clear if the departure fee will be reduced when the Changi East development is completed and T5 opened around 2030.
The departure 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, ground improvement works at the site of more than 1,000ha and the building of massive drains and tunnels, some of which will move bags and people between T5 and the current airport.
The total bill is expected to run into tens of billions, the Government said on Wednesday, without divulging actual numbers.
When completed, T5 is expected to eventually handle up to 70 million passengers a year - more than T1, T2 and T3 combined. However, the third runway being built in the same project will be operational in the early 2020s before the completion of T5.
CAAS director-general Kevin Shum told journalists: "Changi East is our investment to 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."
Transport Minister Khaw Boon Wan stressed in a Facebook posting 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.
"Airport users, like airlines and passengers will also have to do their part in funding this project....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."
CAG said in a statement that the airport handled a record number of 62.2 million passengers in 2017, with growth expected to continue with the demand for air travel in the Asia-Pacific region projected to triple over the next two decades.
Based on its projections, the airport's current handling capacity of 85 million passengers per annum is expected to be fully utilised by the late 2020s.
"Without further expansion, service standards may drop, with passengers experiencing delays," the airport said.
Other airports have introduced user charges to support growth plans.
In 2016, Hong Kong International Airport, which is building a third runway due to be completed in 2024, started collecting between HK$70 and HK$180 (S$11.85 to S$30.50) a traveller. Also in 2016, airports in Dubai, United Arab Emirates and Doha in Qatar introduced a departure tax for travellers - the equivalent of about $13 - to help fund ongoing expansion projects.
The International Air Transport Association - the global voice of airlines - has, however, said repeatedly it does not support pre-funding, where airlines have to pay for services and facilities they do not currently utilise.
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.
"We are also hoping to have greater transparency on what is the projected cost of Changi East and Terminal 5, and how the costs are being apportioned between the Government, CAG, airlines and passengers."
He noted that aviation is an economic catalyst and the added capacity does not just benefit the aviation community but the entire Singapore economy, including tourism, trade and manufacturing.
He said: "Making air travel more expensive for passengers will have a negative impact on travel, tourism, and as a result, aviation's contribution to an economy. Increasing charges for airlines could also affect the financial viability of their services to and from the airport."
Despite the higher charges for travellers and airlines, some aviation analysts said they do not expect that this will have a significant negative impact on Changi Airport and Singapore's aviation hub status.
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New airport charges from July to avoid 'large spikes' in fees later: Ng Chee Meng
SINGAPORE — Defending the decision to levy a charge on passengers to fund new airport developments like Terminal 5 some 12 years before its completion, Second Transport Minister Ng Chee Meng on Wednesday (March 7) said having users pay earlier avoids the “large spikes” in the amount they must pay later.
Passengers will progressively enjoy the benefits from the Changi East project, which spans many phases including a third runway set to be operational in the early 2020s, he added.
Mr Ng, who was speaking at the Transport Ministry’s budget debate in Parliament, said that travellers would have to pay much higher airport charges without a sizeable investment from the Government, which is footing the bulk of the bill for the project.
The minister also revealed that the Government had considered a distance-based Airport Development Levy, where charges vary based on the distance travelled by passengers. But it decided that imposing a flat rate was “only fair” since travellers make use of the same airport facilities, irrespective of their destinations.
This principle was used in other passenger charges, such as passenger service and security fees, said Mr Ng.
He was responding to a suggestion by Mr Zaqy Mohamad, Member of Parliament (MP) for Chua Chu Kang Group Representation Constituency, who asked on Tuesday if the fee could be differentiated such that long-haul passengers pay more than those travelling in the region, so that Changi Airport does not lose its edge as a regional hub.
Last month, the authorities announced that a new Airport Development Levy — S$10.80 for departing passengers, and S$3 for transit travellers — will be introduced from July 1 to help fund airport developments. To help pay for the expansion and upgrading projects, passengers and airlines will also have to fork out higher aeronautical charges over the next six years, said airport operator Changi Airport Group (CAG).
The move sparked dismay from the airline industry’s most prominent trade body, as the International Air Transport Association said it was “unfair” to expect passengers and airlines to pay in advance for a facility they may not use in future.
On Tuesday, Mr Zaqy also asked why the Government was funding a majority of the bill for the mega-project, rather than let state investment firm Temasek finance it from the private market. Mr Ng said the Government was making a “strategic investment into Singapore’s future” by funding the Changi East mega-project, of which Terminal 5 is a part. The airport yields considerable economic benefits for Singapore beyond the aviation industry, and is vital to the economy, he added.
“Without government funding, airport charges will also have to increase much more,” said Mr Ng. “Given the importance of the air hub to Singapore, we need to strike the right balance and keep charges for airlines and passengers at a level that will ensure that Changi remains competitive, and continues to be the air hub of choice.”
The Government has already invested more than S$9 billion in the project, which is expected to run into “tens of billions of dollars”. On top of investing S$3.6 billion to date, CAG will commit its reserves and future surpluses, and take on substantial borrowing to fund the development, added Mr Ng.
The Changi East project will include a third runway that will be operational in the early 2020s. Terminal 5, which will be completed around 2030, is expected to eventually handle up to 70 million passengers yearly, more than the capacity of Terminals 1, 2 and 3 combined.
A massive network of tunnels and systems will also be built to allow the transfer of passengers and baggage between the new terminal and the existing airport.
The minister said the Government, as a major investor, will ensure the money is spent prudently.
Other than analysing Changi’s traffic projections thoroughly, it is also scrutinising the cost of Changi East. “We will strive for the most cost-effective way to develop Changi East and ensure that Changi continues to be world-class,” said Mr Ng.
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Original plan was to levy higher charges for airport users
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.
A version of this article appeared in the print edition of The Straits Times on March 20, 2018, with the headline 'Original plan was to levy higher charges for airport users'.
