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New passenger, aeronautical fees at Changi Airport from July 1 to help fund Changi East project

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CHANGI Airport will implement increased passenger and aeronautical fees from July 1 this year to help fund the construction of the mega Terminal 5 project and other expansion works as the airport positions itself to cater to growing traffic.

The Civil Aviation Authority of Singapore (CAAS) is introducing an airport development levy of S$10.80 for passengers departing Changi Airport. Transit/transfer passengers connecting through Changi will pay S$3 per leg, or S$6 in total for a round-trip flight that passes through the airport.

Meanwhile, Changi Airport's passenger service and security fee (PSSF) will increase by S$2.50, going from S$27.90 currently to S$30.40; this will apply from July 1, 2018 to March 31, 2019. Subsequently, the PSSF will go up by a further S$2.50 each year between April 1, 2019 and April 1, 2024.

In addition, the landing, parking and aerobridge (LPA) fees for airlines will increase by one per cent on July 1. The LPA fees will again increase by one per cent annually on April 1 for the next six years, with the last increase on April 1, 2024.

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The funds will be used to help fund the development of the mammoth Changi East project, namely the upcoming Terminal 5, the addition of a third runway by 2020, as well as works to build a network of tunnels and systems to transfer passengers, baggage and airside vehicles between Changi East and the other terminals. The adjustment to aeronautical fees will also go towards upgrading and refurbishing existing terminal infrastructure, such as upgrading of the Skytrain system and a revamp of Terminal 2.

This all comes as traffic at Changi Airport is expected to grow at a clip of 3-4 per cent per year over the next two decades. Last year, the airport handled 62.2 million passengers and it is projected to hit 85 million passengers annually by the late 2020s. Today, the four existing terminals offer a capacity of 82 million passengers and a further 3 million in capacity will soon come from the ongoing expansion of Terminal 1. Terminal 5, which will come onstream around 2030, will add a sizeable capacity of 50 million passengers per year in its initial phase.

In total, the Changi East development is expected to cost "tens of billions of dollars". It has been announced that the government will foot the "majority" of the costs; to date, it has committed over S$9 billion towards the project. Airport operator Changi Airport Group (CAG), which has invested S$3.6 billion so far, will commit its reserves and future surpluses as well as take on a "significant amount of debt" to fund the project.

CAAS' director-general, Kevin Shum, highlighted that expansion is necessary to ensure the airport maintains its edge as a leading air hub in the region.

Mr Shum said: "Changi East is our investment to secure Singapore's future. We need to cater to increasing air traffic as Singaporeans travel more. At the same time, we want to plug into the growth of the region."

He highlighted that the government will fund "a major part" of the investment, while CAG will also invest substantially and will deploy its reserves to do so.

"At the same time, airport users will foot a small part of the cost. We have consulted the airlines and will be keeping the charges to the minimum necessary," he added.

However, the International Air Transport Association (Iata), which had previously flagged its concerns over pre-funding the construction of Terminal 5, expressed its disappointment with the decision. Conrad Clifford, Iata's regional vice-president (Asia-Pacific), stressed that it was unfair to expect passengers and airlines to pay in advance for a facility they may or may not use in the future.

He went on to add: "We are also hoping to have greater transparency on what is the projected cost of Changi East and Terminal 5, and how the costs are being apportioned between the government, CAG, airlines and passengers."