Iata warns against pre-funding Changi's expansion

Singapore

WHILE infrastructure constraints remain a major bottleneck in the region, the International Air Transport Association (Iata) warned against pre-funding to finance airport expansion projects such as Changi Airport's upcoming Terminal 5.

Advising against saddling users with additional charges, Iata chief executive Alexandre de Juniac said: "We shouldn't pay first without having the infrastructure ready to be operated and used by the airlines and users. We have mentioned several times that we are not in favour (of it), and we will reiterate our reluctance.

"We have a permanent dialogue with the Singaporean authorities; we have very close links." He was speaking to media on the sidelines of the Singapore Airshow Aviation Leadership Summit (SAALS).

This follows a Straits Times report last month that a new S$10 to S$15 passenger tax is being considered at Changi Airport to help pay for expansion works, including the construction of T5. Meanwhile, fees for airlines are expected to increase by 30 per cent.

The Ministry of Transport said previously that the government will still bear a large proportion of total costs for Changi East, while airport operator Changi Airport Group will channel a portion of its annual profits to the project.

The Changi East project - which includes the construction of T5, ground works and the construction of tunnels - is expected to cost tens of billions of dollars.

T5 is being built to help the airport handle growing passenger traffic. When the new terminal comes onstream in the late 2020s, it will boost Changi's passenger handling capacity by 50 million per year from 82 million currently.

Other airports which have introduced charges to help fund expansion plans include Hong Kong International, while London's Heathrow Airport is proposing a third runway at the cost of £14 billion (S$26 billion), which Iata has also opposed.

Mr de Juniac emphasised that the cost of infrastructure is sky-rocketing, which could have a knock-on impact on airlines, passengers and eventually travel demand. "When we look at the numbers for Heathrow's third runway, we are very worried. Even the numbers for T5 in Singapore are very high. We have to pay attention to these costs from the beginning."

On the other hand, there are airports such as Incheon in Seoul, which have added runway and terminal capacity without raising charges for airlines and passengers.

While he stressed Iata's opposition to airport privatisation - owing partly to investors' focus on profit-making - he noted that the private sector can still play a positive role where airports are concerned. "By all means, invite private sector expertise to bring commercial discipline and a customer focus to airport management. But our view is that the ownership is left in public hands."

Airports in cities such as Jakarta, Bangkok and Manila are adding capacity to deal with constraints, albeit not fast enough to meet rising demand. Decisions about new infrastructure have to be made now in order to cater to the burgeoning number of passengers in the region, he said. Aside from airport facilities, countries such as China are also dealing with air traffic management constraints.

Iata estimates that by 2036, this region will see 3.5 billion trips, nearly half of the 7.8 billion people expected to travel worldwide. Much of this will be driven by China, which will emerge as the single largest aviation market by 2022.

"All the optimism supporting strong aircraft orders will mean nothing if we don't have the capability to manage traffic in the air and at airports," said Mr de Juniac in his keynote address at SAALS on Monday.

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