Airport fee cuts: Step 'in right direction'

Airport fee cuts: Step 'in right direction'
With the discounts, Changi Airport's charges will be on a par with or lower than those at many other airports in the region, industry observers say. Travellers, airlines and other beneficiaries are expected to reap total savings of about $180 million over the next two years.

CHANGI Airport, in announcing fee cuts and extended rebates yesterday for selected travellers, airlines and other partners, is moving in the right direction, industry analysts said.

Amid intense competition from rival airports, for example in Hong Kong, South Korea and the Middle East, Changi knows it must do more to remain competitive, especially in the face of falling passenger numbers, they said.

The perks include lower passenger service fees for transit travellers from July - from $9 to $3, and usually added to the ticket price - as well as extended discounts for aircraft landing, parking and aerobridge fees.

The rebates are as high as 50 per cent, in some cases.

Ground-handling firms that provide passenger check-in and baggage services, as well as flight catering, will also enjoy a 20 per cent rebate on the franchise fees they pay the airport operator.

With the discounts, Changi's charges will be on a par with or lower than those at many other airports in the region, industry observers said.

Travellers, airlines and other beneficiaries are expected to reap total savings of about $180 million over the next two years.

The measures will "help strengthen the attractiveness of Changi Airport as a long-haul transfer hub for both airlines and passengers", Changi Airport Group said yesterday.

Its chief executive officer, Mr Lee Seow Hiang, said: "Notwithstanding lower fuel prices, the operating environment in the near term remains challenging for the region's airline industry. Likewise, there are also tough conditions for our ground handlers. They face severe manpower constraints which may affect their ability to maintain the high level of service and efficiency expected by airlines and their passengers."

Singapore Airlines spokesman Nicholas Ionides said: "Retaining its competitive edge will help enable Changi Airport to continue to attract and retain airlines, especially our partners, to facilitate Singapore's global connectivity."

Mr Alex Hungate, president and chief executive officer of ground-handling firm Sats, said: "We believe that this is positive for the whole aviation community in Singapore."

Aside from the rebates announced by the airport, there are other funds the industry can tap.

They include a $160 million kitty announced by the industry regulator, Civil Aviation Authority of Singapore, last month to help aviation firms boost productivity and make other improvements.

Mr Shukor Yusof of Endau Analytics said: "The new measures are intended to prevent further erosion of passenger traffic... I'm not sure they go far enough to fend off the competition but it's better than nothing."

Last year, Changi's total traffic grew by just 0.7 per cent year on year, the lowest since 2009 when business was hit by the global financial crisis.

Mr Shukor said: "To be fair, Changi has been proactive in reacting to the changing landscape. The construction of Jewel is a clear indication that Changi is stepping up its act."

Slated to open in 2018, the $1.7 billion retail-cum-airport structure is being built in front of Terminal 1, where an open-air carpark now sits.

On the impending cut to the transit fee, Mr Brendan Sobie of the Centre for Asia Pacific Aviation said: "Transit traffic is only one component of traffic but it is the most competitive.

"Changi needs transit growth for overall traffic figures to grow again. Rolling back these fees is particularly important to stimulate low-cost carrier transit traffic, which is a new segment for Changi and one that provides huge opportunities for growth from a very small base."

karam@sph.com.sg


This article was first published on April 25, 2015.
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