The Changi Airport Group will increase aeronautical fees for both passengers and airlines at Singapore's Changi airport.
CAG says the additional fees will help to fund part of the Changi East development, as well as the upgrading and refurbishment of existing terminal infrastructure and security facilities.
The Passenger Service and Security Fee (PSSF) will be increased by S$2.50 ($1.89) per year, from July onwards, for all origin and destination passengers. It presently stands at S$27.90. There will be no change in the PSSF for transit passengers who pay S$6 when departing from Changi.
CAG adds that the PSSF will be subsequently increased annually on 1 April by S$2.50 over the next six years, with the last increase on 1 April 2024 - the mid-point of the estimated construction phase of the Changi East project.
The Changi East project will include the upcoming Terminal 5 which is now scheduled for 2030-operational start date, as well as a new runway and other aerospace-related infrastructure.
In addition, the landing, parking and aerobridge (LPA) fees will increase by 1% from 1 July onwards. The LPA fees will then increase by 1% annually on 1 April for the next six years, with the last increase on 1 April 2024.
Separately, Singapore's ministry of transport will introduce a new "Airport Development Levy", with effect from 1 July. Departing passengers at Changi will have to pay an extra S$10.80, while transit passengers will have to pay an extra S$3.
"Under the regulatory regime, CAG has the flexibility to set the amounts for the various aeronautical charges for up to 2030, so long as the overall amount does not exceed the cap set by the Civil Aviation Authority of Singapore. This cap will be reviewed if the competitiveness of Singapore air hub is adversely impacted," explains CAG. "Based on projections, Changi Airport’s handling capacity of 85 million passengers per annum is expected to be fully utilised by the late 2020s. Without further expansion, service standards may drop, with passengers experiencing delays."
The company adds that having an earlier adjustment in aeronautical fees will also "help to avoid a steep escalation of fees at a later stage.
CAG also says the increases in the PSSF "have been calibrated to be moderate and sustainable over the years".
"CAG will continue to work with and support airlines to ensure their growth at Changi. This commitment has been especially demonstrated during challenging periods in the past, when rebates on aeronautical fees were given to help airport partners navigate difficult operating conditions."
Meanwhile, CAG says that funding for the Changi East project will come from themselves, the Singapore government and airport users. Although the government will fund "the majority" of the project's development cost, CAG will commit "a substantial portion of its reserves and future surpluses, including earnings from its airport concessions, to the development"
In addition, CAG will take on "a significant amount of debt" to fund its contributions to Changi East.
IATA, which has been vocal against the move, was quick to issue a statement: “While we recognize that the government will be bearing the majority of the costs for the development of Changi East and Terminal 5, we are still disappointed with the decision to proceed with the pre-funding model despite the feedback provided by the industry. 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."
It says that the move will hurt travel and tourism, and is unfair to charge passengers and airlines pay "for a facility they may may not use in the future."