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Changi Airport offers airlines short-term rebates to help offset higher airport charges

CHANGI Airport is rolling out a one-year rebate package for airlines to help them cope with the increase in landing charges as well as parking and aerobridge fees which kick in from July 1 to partly fund the development of Terminal 5.

From July 1 to June 30 next year, carriers will receive a 1 per cent rebate on landing charges, 50 per cent rebate on parking fees and 50 per cent rebate on aerobridge fees.

In a response to a query from The Business Times, the Ministry of Transport (MOT), the Civil Aviation Authority of Singapore (CAAS) and Changi Airport Group (CAG), said: "These measures serve to cushion the impact of the increase in passenger charges on airlines from July 1, 2018, as we recognise from industry feedback that airlines may have to absorb some of the increase in the short-term, in order to keep their air fares competitive."

Industry players such as Singapore Airlines and Lufthansa said they welcome the rebates, given the current challenging operating environment, although some pointed to the short-term nature of the measures. A spokesperson for Lufthansa added: "While the immediate impact might not seem much, however, we are looking at a long-term partnership and viable operation cost at Changi Airport. Thus, we hope Changi Airport will review its landing and parking charges in due time, especially not to pre-fund expansion of facilities before they are ready."

Vinoop Goel, Iata's regional director (Asia-Pacific) for airports and external relations, said: "We welcome the relief measures that have been introduced by the government and CAG. These will help offset some of the increases that will be effective from next month. Both the government and CAG need to continue to work with the airline industry to identify long-term cost efficiencies to improve the competitiveness of Changi Airport."

In February this year, MOT and CAAS announced a new airport development levy of S$10.80 that will be introduced for passengers departing from Changi Airport from July. Meanwhile, Changi Airport's passenger service and security fee (PSSF) will go up by S$2.50 to S$30.40, also from July. Subsequently, the PSSF will go up by a further S$2.50 every year between April 1, 2019 and April 1, 2024.

Similarly, airlines will see landing, parking and aerobridge fees increase by 1 per cent on July 1, and then again by 1 per cent annually on April 1 for the next six years, with the last increase on April 1, 2024.

The fee increases will be used to help fund the development of the massive Changi East project, including T5 and the addition of a third runway.

Iata has voiced its concerns over the pre-funding of infrastructure, saying it was unfair to expect passengers and airlines to pay in advance for a facility they may not use in the future. However, other airports in Hong Kong and Dubai have already introduced similar charges to pre-fund their own airport expansion projects.

The Changi East development is expected to cost "tens of billions of dollars", with the government footing the majority of the costs. Airport operator CAG has also invested S$3.6 billion so far, and will commit reserves and future surpluses as well as take on debt to fund the project.

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