S'pore plans a second fund to lure airlines to Changi
S'pore plans a second fund to lure airlines to Changi
Bloomberg, Singapore
Singapore's government plans to set up a new fund to give airlines financial incentives to route more flights through the island's Changi Airport, the world's sixth- busiest, Transport Minister Yeo Cheow Tong said.
The Singapore government, which gave 44 airlines more than S$105 million (US$64.3 million) since 2003 after Asia's SARS outbreak, plans to cut Changi's landing fee and give other incentives to encourage carriers to use the airport, Yeo said, without disclosing the size of the proposed fund.
"Growing the passenger arrivals is very important because that's our role as a regional business hub to enhance tourism," Yeo said at the Asia Pacific & Middle East Aviation and Tourism Outlook conference in Singapore today. "We need to encourage more airlines to fly here because they bring people."
Tourism receipts make up more than 5 percent of Singapore's S$91 billion economy every year and an increase in tourist arrivals last year expanded the economy by 8.1 percent, the fastest annual pace in four years. Changi, Singapore's main airport, handled a record 30.4 million passengers last year, 4.7 percent more than in 2002. It also processed a record volume of 1.8 million tons of cargo last year, 8.4 percent more than 2003.
Changi has been trying to increase its traffic by cutting airport fees, letting more companies handle ground services, adding a third terminal, and building a dedicated, lower-cost facility to attract low-fare carriers. Less than a third of passengers passing through Changi enter Singapore, most of them stopping in the city in transit.
Qantas Airways Ltd., Garuda Indonesia, Air China, China Eastern Airlines Corp., China Southern Airline Co. and Air India are among the airlines that have received disbursements from the first fund because their operations in Changi added to the airport's growth, Yeo said.
"Because of the overwhelming endorsement from our airline partners, we have decided that when the fund expires at the end of this year, we will replace it with another fund so that we can continue to support and facilitate the expansion," Yeo said.
The Dec. 26 earthquake-triggered tsunami will only affect the travel industry in the short term, Yeo said. He expects air travel within Asia to continue rising, with China and India as the main catalysts for growth.
"While the recent tsunami tragedy will have some impact on the industry in the short term, I am confident that air travel within Asia will continue to grow rapidly," Yeo said.
Southeast Asia, home to over 500 million people with a combined gross domestic product of about $700 billion, will experience "strong aviation growth" partly driven by the emergence of low-fare carriers, Yeo said.
About 10 low-fare carriers are flying in the region. Singapore is home to three discount carriers -- Valuair Ltd., Tiger Airways Pte. and Jetstar Asia.
Budget carriers accounted for 7 percent of total flights at Changi last year, flying to eight cities from Singapore, such as Hong Kong and Thailand's Bangkok, Phuket and Hat Yai.
Thai AirAsia Co., a budget carrier jointly owned by Thailand's Shin Corp. and Malaysia's AirAsia Bhd., also operates in Changi.
"The potential for low-cost carriers growth in Asia is tremendous," Yeo said, citing China's population of 1.3 billion people and India's 1 billion.
Changi is upgrading and expanding its two terminals and building a third terminal to meet rising travel demand. It is also building a terminal dedicated for low-cost carriers, with commitment from Singapore-based Tiger Airways to use the facilities.
The low-cost terminal will be gradually expanded if any other discount carrier uses it, Yeo said. Low-fare carriers will be treated the same way as full-service airlines, paying the same landing fees, he said.
Yeo said that this year, Singapore hopes to exceed the 30.4 million passenger traffic at Changi and the more than 8 million tourists that visited the island nation.
Singapore expects its tourist arrivals to rise 6.9 percent in 2005 to 8.9 million from last year's record of 8.3 million, the Singapore Tourism Board said. The government agency also said it expects tourism revenue to rise 8.3 percent to S$10.4 billion this year.