Jetstar CEO: Increase in Changi Airport fees will definitely see demand shift in traffic volume hurting Singapore

Changi Airport announced on Wednesday (28 Feb) a steep increase in its airport fees. From July 1 this year, passengers departing out of Changi Airport will fork out a new tax of $10.80 per passenger, while transit/transfer passengers will pay $6 for a round-trip ticket.

Meanwhile, the airport’s passenger service and security fee (PSSF) will go up by $2.50 to $30.40. Airlines will also face a 1 per cent bump in landing, parking and aerobridge (LPA) fees. PSSF and LPA fees will continue to go up by a further $2.50 and 1 per cent, respectively, each year until 2024.

The PAP government has said that the revenue from these fees would go towards helping to pre-fund its expansion works at Changi East, including the upcoming Terminal 5.

Jetstar CEO Gareth Evans thinks the increase in fees will hurt the competitiveness of Changi Airport.

“This isn’t just going to have an impact on fares, it’s going to have an impact on volume and that’s going to have an impact on GDP,” Mr Evans told BT.

“An airline has to adjust its network to try and optimise earnings. We will definitely see demand shift as a result of this.”

Mr Evans also thinks that the Singapore government’s move could affect the attractiveness of Changi Airport as a regional aviation hub. “People shift hubs for very little money. Singapore is competing against other hubs,” he pointed out.

“We are going to have to shift flights around because demand will change,” he also told Reuters separately.

“Singapore is competing with Hong Kong, China and Middle Eastern hubs. People will change hubs to fly to Europe, for a few dollars.”

Objection by IATA

The International Air Transport Association (IATA) has earlier announced its objection against any attempt by Singapore to charge travellers to help fund the construction of its new Changi Airport Terminal 5. The airline industry’s most prominent trade body stressed that it is “strongly against any pre-financing of any infrastructure”.

IATA chief executive Alexandre de Juniac told a media roundtable as part of the Singapore Airshow on 5 February that passengers should not pay first without having the infrastructure ready to be operated and used by airlines and by the users.