Changi: Fees the price of growth
Singapore’s airport gears up for expansion
The 600,000-plus New Zealanders who pass through Singapore’s Changi Airport each year will have to pay more from mid2019, as it gears up for a massive expansion.
The airport already handles 62 million passengers a year, and is consistently near the top of the rankings for customer satisfaction. Now it faces a surge in traffic.
Last year it opened the highly automated Terminal Four (T4), which can handle another 16 million passengers.
All passengers are categorised as international, as there are no domestic flights. In comparison, Auckland Airport handles about 19 million international and domestic passengers a year.
At the moment, passengers who depart from Singapore pay S$34 ($35.50), while those in transit pay S$6. These charges will increase by $S13.30 and $3 respectively from July 1.
In the past year, 620,000 New Zealanders passed through Changi, up nearly 4 per cent on the year before, as Singapore Airlines and commercial partner Air New Zealand increased capacity.
The International Air Transport Association and low-cost carrier Jetstar have already raised concerns about the increased charges, which Changi Airport has defended as necessary to cope with growth that could double passenger numbers over the next 15 years.
During a tour of T4, group senior vice-president marketing and communications, Ivan Tan, told the Herald the increased charges were essential to pay for new development.
The airport group, wholly owned at arm’s length by the Singapore Government, was also bearing the cost of Changi East, a huge development of an existing runway used mainly by the military. It requires the installation of tunnels for passenger trains and a cargo link to existing parts of Changi, work on services and anti-flooding measures on what is reclaimed land.
A new fifth terminal will be bigger than terminals 1, 2 and 3 combined.
The Government has so far committed S$9 billion, while Changi Airport Group has forked out S$3.6b.
Jetstar group chief executive Gareth Evans says the additional fees for airlines would lead to an average increase of 15 per cent to 20 per cent on fares through Singapore and force the carrier to look at other airports.
He told the Herald this week that his airline believed infrastructure for growth was needed, but wanted to be involved in discussions about it.
“Charges and taxes are a significant part of our cost base. We want to make sure that infrastructure is capital efficient, is fit for purpose and is funded in the most appropriate way.”
Any charges that were not market driven or as a result of improved services could create distortions.
“In the value-based end of the market, $10 on a fare can change behaviour and change demand patterns. So in all these decisions, we want to be involved because we want to make sure that the right decisions are being made t hat don’t have unintended consequences on demand.”
Tan said there was “some thinking” about differentiated pricing.
“But whether you’re flying lowcost or flying full-service, you’re using the same facilities in the airport — it would have been a bit challenging to justify the differential in price.”
In some countries, terminals for budget carriers were many kilometres from the city, but at Changi the airlines were right next to full-service airlines, on land that was scarce and very expensive.
Tan said the airport did give rebates to airlines.
”It’s not automatically a dire thing [but] at the end of the day we need that capacity,” he said.
Changi is facing increased competition from the fast developing Middle Eastern hubs such as Dubai Airport and Hamad Airport in Doha, as well as from its traditional competitors in Asia such as Hong Kong.
”You’ve got to face competition, whether it’s from the Middle East or in Asia,” said Tan. “The good news for us is that aviation is growing and that we’re in the heart of the fastest growing region.”
Demand for air travel in the AsiaPacific is expected to triple in the next two decades.
Terminal 4 caters to airlines flying short-haul routes and its main customers include Cathay Pacific and Air Asia. It covers an area equal to 27 soccer fields.
There is a facial recognition system at several points through the security system and Tan said CT scanning meant passengers didn’t have to remove laptops from bags. While self service kiosks are available, the terminal has staff available to help with the process.
In keeping with the rest of Changi, there are flowers in many places t hroughout, including on the vertical exteriors of the terminal building and neighbouring carpark, which costs S$2.40 an hour.
Tan said that while Changi was putting in more attractions such as cinemas, a pool and indoor forests, passengers still demanded airport staples such as fast food outlets and bookshops. — Grant Bradley travelled to Changi courtesy of Singapore Airlines.