Changi Airport

SINGAPORE - From April, passengers transferring and transiting at Changi Airport will - for the first time - have to pay service and security charges.

The $12 fee in total would affect about three in 10 passengers at the airport.

A fee hike is also in store for those departing from Changi's Budget Terminal, which handled 1.5 million passenger departures last year. They will have to pay $18 instead of $15 now.

For the airlines, landing charges at Changi will also be raised, adding 15 per cent on average to their landing, parking and aerobridge bill - moves that have sparked some concerns over the competitiveness of Singapore as an air hub.

The Changi Airport Group (CAG) said yesterday the fee revisions comply with the regulatory framework governing its operations and are "necessary to recover part of its aeronautical costs", which remain "heavily subsidised" by its non-aeronautical businesses.

The CAG consulted airlines carrying more than 75 per cent of Changi's passenger traffic. But the International Air Transport Association (Iata), which represents some 230 airlines worldwide, criticised the "limited consultation".

Said an Iata spokesman: "There's no justification for this increase. We had hoped that corporatisation would lead to increased focus on cost-efficiencies and the benefits would be shared with the users."

Some airlines queried why the CAG was increasing fees when it was profitable: It made $227.3 million in profits between June 16 last year to March 31.

"With such a robust profit, it's difficult to understand today's announcement," the Iata spokesman said.

While the CAG is "unable to put a number now" on the extra revenue the fee revision will bring, as it would depend on passenger movements, it said the current level of charges "cannot be maintained indefinitely"; the airport needs to recover costs "in order to fund future investments and deliver a reasonable shareholder return".

CAG head for revenue development and charges management Jeffrey Loke said the airport business was "an asset-heavy business with long payback periods". "It doesn't mean that you make good profit in one year, it'll guarantee you'll make it for the next 10, 20 years," he added.

Passenger transfer fees are imposed at some major European airports, such as Amsterdam, Paris and Frankfurt and, closer to home, Tokyo's Narita airport and Seoul's Incheon airport.

At Changi, aircraft landing fees had been adjusted twice previously, in 1993 and 1995. Even with the latest revision, the CAG maintains that Changi "remains competitive compared to its regional peers".

For example, the landing, parking and aerobridge charges for a narrow-body aircraft, the Airbus A320-200, will cost an airline $1,023 at Changi for a three-hour turnaround, which is $335 and $547 less than at Hong Kong's Chek Lap Kok and Bangkok's Suvarnabhumi, respectively.

But with the fee adjustments set to be higher for narrow-body aircraft, it could hit the low-cost carriers that have fuelled recent growth at Changi.

A Tiger Airways spokesperson said: "We're surprised and disappointed by Changi Airport's decision to increase fees to customers, especially when the global economy is in its early stages of recovery, With growing passenger numbers, there should instead be lower costs through economies of scale."

While the CAG will extend its current landing fee rebate to all airlines from next year to March 2012, observers expect low-cost carriers to pass on any cost increase to consumers. If that happens, passengers like business development manager Kendrick Tan, 30, may switch to full-service carriers.

"They offer meals on board which may narrow any price difference," he said.

But CAG executive vice-president (commercial) Lim Peck Hoon felt that "it's hard to draw a direct co-relation" between higher landing fees and costs being passed on to consumers. "Airport costs typically are less than 10 per cent of (airlines') total costs," said Ms Lim.

Changi Airport