Changi $6.8b upgrade challenges Chek Lap Kok

PUBLISHED : Saturday, 08 April, 2000, 12:00am
UPDATED : Saturday, 08 April, 2000, 12:00am

A third terminal, costing S$1.5 billion (about HK$6.81 billion) is to be built at Changi Airport, increasing the competition with Chek Lap Kok in the race to become Asia's dominant air transport hub.

The new terminal will boost Changi's annual passenger capacity to 64 million passengers after it is completed in 2006, which could make it the biggest airport in Asia.

Singapore's passenger throughput still trails Hong Kong's, but the gap is closing fast.

Chek Lap Kok's passenger traffic grew 6.7 per cent to 29.73 million passengers last year, placing it third in the region after Tokyo and Seoul.

Changi recorded passenger growth of 9.5 per cent to 25.1 million last year.

Airport authorities around the region are investing heavily to expand capacity and upgrade infrastructure and facilities to capture a bigger share of Asia's fast-growing air transport market.

Since Chek Lap Kok started operating in 1998, Shanghai, Guangzhou, Bangkok, Seoul and Kuala Lumpur have announced plans either to build new airports or expand their infrastructure.

Singapore is also building an underground rail link to connect Changi to the city state's underground railway network and has begun reclaiming land to cater for the expansion.

The Civil Aviation Authority of Singapore (CAAS), which manages the airport, said it had no plans to raise funds publicly, because it had more than S$3 billion in cash on hand generated from airport operations.

Since 1995, CAAS has ploughed more than S$825 million into expanding Changi's first two terminals.

Unlike Chek Lap Kok, which is not expected to book any earnings until next year at the earliest, Changi has been operating profitably for years.

CAAS booked a S$300 million profit last year on turnover of S$770 million.

Goh Yong Long, public relations director, said Changi would strive to improve competitiveness by keeping a lid on its landing charges while maintaining margins.

Its strategy is to maximise non-aeronautical revenue - from commercial rent, airport retail concessions and franchise fees - to enable it to pass on lower charges to airlines.

'By maximising commercial revenues, we can lower our landing fees,' Mr Goh said.

Commercial revenues accounted for 60 per cent of Changi's turnover last year, a higher proportion than the vast majority of airports around the world.

CAAS is also setting its sights on overseas investment opportunities in airports with strong growth potential, to add additional revenue streams.

Among the investments being considered were four airports in India about to be privatised, said Mr Goh.

CAAS holds a 7.1 per cent stake in New Zealand's Auckland Airport and has won consulting contracts for airports in the mainland, India, Pakistan, Fiji and the Philippines.

Singapore is also boosting Changi's cargo handling capacity ahead of expected fast growth in demand.

Privately-owned Singapore Airport Terminal Services, which runs the airport's cargo operations, is now building a sixth air freight terminal with 800,000 tonnes-per-year handling capacity.

After the facility is completed this year, Changi will be able to handle more than two million tonnes a year.