Changi Airport sets up $70m aid kitty

February 13, 2009

CHANGI Airport has set up a $70-million aid kitty to help airlines and cargo handlers, as well as retail and dining outlets, deal with the business slowdown.

Amid the global economic downturn, the airport expects passenger traffic to dip 8.5 per cent to 34.7 million this year, compared to last year.

Cargo volumes could slide 5.1 per cent to 1.77 million tonnes.

The $70-million relief package, announced by Mrs Lim Hwee Hua, Senior Minister of State (Finance and Transport), in Parliament yesterday, will include rental rebates and advertising support.

To incentivise cargo agents to bring in more business, warehouse and office tenants within the Changi Airfreight Centre will also receive cash payouts of $10 per tonne of cargo handled every quarter.

The total payout will be subject to a maximum, which is equivalent to 15 per cent of their rent during the time.

Changi’s latest relief scheme is on top of a year-long help package which was extended to airlines and ground handlers last month.

Worth $130 million, it is an extension of a six-year scheme to cement Singapore’s position as an aviation centre.

The Air Hub Development Fund was introduced in 2003 to help carriers hit by the impact of the Sars crisis.

With yesterday’s announcement, the Civil Aviation Authority of Singapore (CAAS) will spend $200 million this year to help its troubled partners.

Welcoming the helping hand, Mr Ken Tse, managing director of airport cosmetics and perfume chain Nuance-Watson, said: ‘Airport retailers are operating under extremely challenging conditions so any assistance that comes our way is a positive thing and very much welcomed.’

Addressing MP’s queries and concerns, Mrs Lim said that to protect the competitiveness and dynamism of Changi’s air hub status, three things need to be done.

Help the aviation industry to reduce and contain costs - which is what the help packages are for.

Push for greater liberalisation in the regional air travel market.

Continue with infrastructure upgrading and expansion.Liberalisation is ‘critical to Changi as a hub because the starting point to an air hub’s connectivity is the rights for the airlines to operate’, she said.

The benefits are clear. With the opening of the Singapore-Kuala Lumpur air market, passenger traffic in 2008 grew by 11 per cent to 1.89 million passengers, compared to the year before.

Airport expansion and upgrading works are also in full swing with ongoing projects at Terminal 1 and the Budget Terminal.

Mr Cedric Foo (West Coast GRC) and Dr Lam Pin Min (Ang Mo Kio GRC) also asked for an update on plans to corporatise Changi Airport, which will see the CAAS split into two later this year - one part to run the airport and the other to regulate the industry.

Plans are on track, Mrs Lim said, adding that the downturn has not diminished the rationale for corporatisation.

The change will give Changi Airport ‘the flexibility to respond to changes in the aviation industry and the global business environment, and to stay ahead of the competition’, she said.