Following Australian air carrier Jetstar’s threat to skip Singapore as a transit hub to Europe and raise airfares from Singapore by 20%, the Singapore government is now backing off from increased airport charges by offering discounts in aircraft parking and landing fees on the same day when the new taxes will be imposed, 1 July 2018.
According to state media reports, the Singapore government is working on the details of the discount, but the discounts will not be permanent. The authorities said that the airlines will get the discounts only when they promise to pass on the savings to their customers.
The Ministry of Transport, Civil Aviation Authority of Singapore and Changi Airport Group issued a joint press release saying “short-term measures will be put in place to assist airlines”.
The discounts however will apply only to airlines. Travellers will still see a S$13.30 increase in T5-prefunding tax, while transit passengers will see a S$3 T5-prefunding tax increase. Travellers currently pay S$34 while transit passengers pay S$6 in existing airport charges.
Airlines face a 1% increase in aircraft and landing charges each year for the next 6 years until 2024 as T5-prefunding tax.
Along with an increase in aircraft and landing charges, the new taxes will pre-fund the construction Terminal 5, which cost more than S$12.6 billion and only be completed by 2030.
The International Air Transport Association (IATA) has earlier criticised the Singapore government saying that it is unfair to charge passengers pre-funding taxes for any infrastructure or facilities not already enjoyed by travellers. When notified of the discounts, the IATA now said it welcome the discounts as counteroffer:
“The fact that MOT, CAAS and CAG are contemplating relief measures indicates that they recognise the negative impact of the increases. Still, any form of relief that will offset the increase in costs would be welcome. We look forward to receiving the details so as to understand the exact impact it will have.”