November 8, 2024
SINGAPORE – Passengers and airlines at Changi Airport will pay higher fees and levies over the next six years, as the airport looks to finance a new $3 billion improvement plan across its four terminals and cover rising operating costs in areas such as energy and labour.
Departing passengers who start their trips at Changi Airport will continue to pay a total of $65.20 in fees for the next two years. But this will go up in stages from April 2027, reaching $79.20 in April 2030 – a 21 per cent rise.
For travellers transiting through the airport, the total fees levied on them will more than double, from $9 now to $21 in April 2030.
Meanwhile, airlines will need to pay about 40 per cent more to land and park their planes at Changi come 2030.
For narrow-body jets such as the Airbus A320, the landing, parking and aerobridge fee at the airport will rise every year from April 2025, starting from $1,200 per landing now to about $1,725 per landing in April 2030.
For wide-body planes such as the Airbus A350, the fee will also climb each year, from $3,600 today to $5,040 six years later.
Announcing the fee hikes and the multibillion-dollar investment on Nov 7, the Civil Aviation Authority of Singapore (CAAS) and airport operator Changi Airport Group (CAG) said the money will be used to improve existing services and infrastructure, such as baggage handling systems and the Skytrain, which connects Terminals 1, 2 and 3.
There are also plans to refurbish the 16-year-old Terminal 3, though this is still at the planning stage.
Justifying the latest increase in airport charges, which will kick in from April 2025, senior executives at CAG said the airport needs to add more capacity in the short term to meet an expected increase in demand.
With the opening of a third runway in the latter half of this decade, more flights will take off from and land at the airport, and more passengers will pass through it.
Hence, CAG expects the four existing terminals at Changi to be operating close to their maximum handling capacity of 90 million passengers per year by the end of the decade.
This is before the future Terminal 5, which can handle 50 million passengers a year, opens in the mid-2030s to relieve some of the pressure.
In the 12 months ending in September, Changi Airport handled 65.9 million passengers, shy of the 68.3 million handled in 2019.
CAG executive vice-president for engineering and development Koh Ming Sue said some of the critical systems and equipment at the airport need to be renewed, as they are reaching the end of their operational lifespans.
Some of these systems also need to be expanded and upgraded, so they can meet changing operational needs and are able to withstand “very high-intensity use” over the coming years.
CAAS director-general Han Kok Juan said the regulator and CAG are mindful of the impact of the fee hike on travellers. “We have held back the increase, which needs to be made, for as long as we could… We have kept the increase as small as possible, and we have tried to stage it out over many years,” he added.
While airport charges were raised in November 2022, Mr Han said this was not enough to recover the investments that CAG had made during the Covid-19 pandemic, such as the expansion of Terminal 2.
He said these earlier investments were made despite airport charges being frozen between 2020 and 2022, and planned fee increases being suspended to help tide airlines over the crisis.
The latest fee hike will allow CAG to recover some of these earlier investments.
Mr Han also said airport charges for transit passengers have been unchanged since 2015, and the decision to raise them was so that the fees would correspond to the services that Changi Airport provides to this group of travellers.
The International Air Transport Association (Iata), the industry body for airlines, and the major carriers were consulted about the latest fee increase, Mr Han said.
Taking their feedback into account, CAG will provide a 50 per cent rebate on the increase in landing, parking and aerobridge charges for six months, from April to September 2025.
CAG chief executive Yam Kum Weng said Changi Airport has not been spared from the rising cost pressures that have affected other industries.
While it has been managing this through measures such as automation and working hard to offset its aeronautical expenses through other revenue streams, these efforts have not been enough to cover the increased costs.
Although the fee hikes will cause airfares to go up, Mr Yam said passengers and airlines will benefit from the investments being funded by the higher charges.
“If we do not have all this infrastructure, airlines can’t grow. What it means is that the demand may be higher than supply. And as a result of that… the (air ticket) price may also go up,” he added.
To minimise inconvenience to passengers, the planned improvements will be done only during off-peak periods. But there may be periods when the Skytrain, which operates from 5am to 2am, will need to be closed for longer to allow the replacement of its subsystems, including its signalling and communications system.
With high inflation, rising interest rates and improvements being made to airports globally, Changi Airport is not alone in raising fees.
On Oct 31, Amsterdam’s Schiphol Airport announced a 37 per cent increase in airport fees that will gradually come into force over the next three years – a move that has drawn backlash from airlines such as the Netherlands’ flag carrier KLM.
In the Philippines, Manila’s plans to raise airport charges at Ninoy Aquino International Airport by September 2025 has also drawn pushback from passengers.
Dr Xie Xingquan, Iata’s interim regional vice-president for North Asia and the Asia-Pacific, said the airline trade body understands the need for airports to invest in infrastructure, but he warned of the impact of fee hikes on airline operations and passenger demand.
“While we appreciate the efforts of CAAS and CAG in engaging the industry in robust consultations over the last few months, any increase in charges is never good news,” he added, noting that the aviation industry is still recovering from the pandemic.
Singapore budget carrier Jetstar Asia said the latest airport fee hike will have an impact on its ability to offer low fares. It said it will review the new charges in more detail, noting that the majority of CAG’s planned upgrades do not apply to T4, where it operates.
Mr Shukor Yusof, founder of aviation consultancy Endau Analytics, said the fee hike will be a contentious issue among airlines, but he believes CAG’s investments will strengthen Changi’s future.
“There is a price to pay to depart from or land at one of the world’s most efficient, fun and secure airports,” he added.
Ms Jaime Yah, 23, a frequent traveller on budget airlines, was irked by the fact that her flights will cost more.
But the sales and administrative executive said this will not deter her from travelling overseas in future.
Ms Mei Ong, who transits through Singapore when she flies from her home in Melbourne to visit her parents in Kuantan, Malaysia, said she will continue to lay over here, as the increase in fees is not too significant and her flight options are limited.
The 35-year-old analyst, however, questioned the necessity of CAG’s upgrading plans. “Everything seems perfect as it is,” she said.