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.