Changi Airport raises airport charges

Changi Airport Group raises airport charges

Airlines and travellers using Changi Airport will have to pay more from April next year, following the revision of airport charges announced by the Changi Airport Group on Wednesday.

The revision includes service and security charges for transit and transfer passengers, and an increase in landing fees for airlines, which analysts said will also result in budget travellers paying more.

Departing passengers using Changi Terminals 1, 2, and 3 will not be affected.

Changi Airport handles about 37 million passengers a year - with 30 per cent on transit or making a transfer.

From April 1 next year, such travellers will be subjected to a passenger service charge of S$9 and a security service charge of S$3, which will be added to the price of the air ticket.

Changi Airport Group said transit and transfer passengers also have access to the facilities and services within the transit areas in Changi. These include the holding rooms, transfer counters and free Internet access. So it is only appropriate for them to share the costs of providing these facilities.

It added that investments in security since the September 11, 2001 attacks have resulted in higher costs.

It said fees for such transit and transfer passengers are already levied in major airports in Europe and Asia.

Travellers that Channel NewsAsia spoke to had mixed reactions.

One traveller said: "I guess S$12 is too much for a transit passenger."

However, another said: "The things you can do - eat and shop - so for me, I will be ok with it."

Changi said following a S$20 million upgrading last year, budget travellers have enjoyed an improved experience at the terminal, and there is a need to recover part of the cost of operating the terminal.

The passenger service charge for budget travellers will be raised to S$7.80 per trip, from S$4.80. The passenger security service charge, however, remains unchanged at S$8.

"As a whole, if you compare the total amount, the S$3 (increase) is not very significant," a traveller said.

"I would not think it's expensive, it's fine for me," another added.

The new fees will apply to all air tickets purchased from February 1 next year for travel on or after April 1.

Analysts said it is still too early to tell how much ticket prices will be affected, as airlines - especially those with smaller aircraft - will have to pay more landing fees.

Airlines will see a 15 per cent average increase in their landing, parking and aerobridge (LPA) bill.

Changi said expenses have increased significantly with major enhancements to infrastructure, and the current landing fees for narrow body aircraft is also disproportionately lower compared to larger aircraft types.

Low-cost carriers are no doubt unhappy with the move as it will hit them harder, but analysts said they are unlikely to see a loss of business.

Siva Govindasamy, managing editor, Asia, Flightglobal, said: "It is far easier for the full service carriers to pass on higher costs to their passengers, simply because fares are higher.

"This will affect the low cost market a lot more because it will mean higher fares for the passengers ...

"The low cost carriers which operate on the principle that you have to keep your cost base low - they are going to face higher cost and they will have no choice but to pass it on to their customers.

"So will it affect their business? Unlikely, because the low cost model is growing and there will continue to be a lot of demand for low cost travel in this part of the world."

As for full-service carriers, Singapore Airlines said that in general, any cost increase is of concern, given the fragility of the economic recovery.

Nicholas Ionides, vice president of public affairs at Singapore Airlines, added: "Where increases in fees are applied, they should be fair and equitable so that all airlines compete on a level playing field.

"Our common objective is the sustained success of Singapore as a leading aviation hub. We are appreciative of the fact that CAG consulted stakeholders as part of its review of aeronautical charges."

Jetstar said it is concerned that its cost base will rise in "this extremely competitive environment".

Both Tiger Airways and Jetstar said they will take cost adjustments into consideration when determining future capacity.

Tiger Airways added that Asia continues to hold a lot of growth potential for low cost carriers. To keep up with the region's growth potential, it is looking to expand its fleet from 21 to 26 by next March, and to 33 by the following March.

Tony Davis, president and group CEO, Tiger Airways, said: "We're saying to airports - you've got to make your facilities affordable. If we're pushing fares down and reducing our costs, we expect airports to do the same.

"We want simple basic infrastructure at a low price, and airports that deliver that to us are going to get the most growth."

The impact of the fee increase may be cushioned as Changi extends its landing fee rebate of up to 10 per cent for all airlines until 31 March 2012.

Changi said even with the landing fee revision, the airport will remain competitive.

Since the airport's opening in 1981, landing fees have been adjusted twice - in 1993 and 1995.

-News courtesy of Channel Newsasia-