Stefano Baronci, director-general of Airports Council International Asia-Pacific and Middle East, said a challenge for Asia-Pacific airports is congestion. - Photo: ST
SINGAPORE: With air traffic in Asia-Pacific set to double over the next 20 years, passengers and airlines will need to help cover the cost of infrastructural improvements that are required to meet future demand by paying more in airport fees, said the head of a regional industry group.
“In order to attract the resources that are needed, you need to cover the costs. In one way or another, this means increasing the charges,” said Stefano Baronci, director-general of Airports Council International (ACI) Asia-Pacific and Middle East, which represents more than 600 airports in the two regions.
“There is no free meal,” he told reporters at a media roundtable on Sept 3 at Jewel Changi Airport. “If you cannot find other sources of financing, such as state support, then the primary beneficiaries of the (airport’s) service are the ones that have to bear the cost.”
Baronci sought to downplay the impact that such charges have on air fares, noting that international airport charges in Asia-Pacific and the Middle East have, on the whole, remained steady since the Covid-19 pandemic.
Instead, he argued that the price of an air ticket is driven by other factors such as demand patterns, supply and price elasticity.
Noting how air fares in Singapore have come down as airline seat capacity recovered, Baronci cited preliminary industry figures for April and May 2024 that showed that fares here are now about 7 per cent higher than in 2019.
In comparison, during the height of the pandemic, air fares here were more than 20 per cent pricier.
“Competition, which is very high at Changi Airport, will allow, to some extent, the air fare to be controlled because airlines will find a way to be competitive versus the others,” Baronci said.
“I don’t think that in Singapore... the increase of (airport) charges has a huge impact in terms of a decrease in demand.”
Many airports around the world have raised passenger fees, or have made plans to do so, now that air travel has largely recovered from the impact of the pandemic.
In Malaysia, for instance, the service charge for passengers flying out to other Asean countries was raised in June from RM35 (S$10.50) to RM73, while six Thai airports raised passenger charges in April by 30 baht (S$1.15) to fund new automatic check-in and baggage drop-off counters.
Closer to home, Seletar Airport raised its fees and charges for both passengers and aircraft operators in July.
Meanwhile, Changi Airport last raised its fees and levies in November 2022, with the current total charge of $65.20 for departing passengers applicable until March 2025. This includes a $10.80 airport development levy that was introduced in 2018 to help fund new infrastructure, such as the upcoming Terminal 5 (T5).
Baronci said a challenge for Asia-Pacific airports is congestion, with domestic and international passenger traffic in the region projected to reach 8.7 billion by 2042, according to ACI forecasts, more than double the levels in the region in 2019.
Asia-Pacific is also projected by ACI to be the fastest-growing region in terms of passenger traffic. China is expected to overtake the United States as the biggest market by traffic volume in 2042, with Indonesia and Thailand breaking into the top 10.
This expected increase in demand will necessitate about US$1.3 trillion (S$1.7 trillion) in capital expenditure on airport infrastructure in the region, ACI has said, though Baronci’s view is that such a high level of investment is unlikely.
“Even if 50 per cent of (the $1.3 trillion) is achieved, it means a lot for the region because we will have to build new infrastructure,” he added.
“There is a gap that we have to address, since the demand will be higher than in other regions.”
The good news is that airports have started building again, with Baronci pointing to various airport development projects in Asia-Pacific.
Examples include the new Western Sydney Airport, which will open in 2026 and Cambodia’s upcoming Techo International Airport, which will start operations from 2025, as well as terminal expansion projects in New Delhi, Bangkok, Seoul, Tokyo and Taipei.
Asked about the challenges that Singapore will face in the next 20 years, Baronci said Changi Airport is operating in a highly competitive market.
“There are airports that are trying to catch up very fast in terms of infrastructure development, like Hong Kong, which during Covid-19 (pandemic) has built huge infrastructure and is planning to improve the quality significantly.”
But Baronci said Changi’s edge is its integration of efficient airport operations with a unique passenger experience, as well as the investments made in technology and its staff.
“Something like Jewel, which has nothing to do with the service of transporting a person from A to B, is a model that now other airports have started to replicate. I remember that when this was discussed, there was a big fuss from a cost perspective.”
He added: “To me, strategically, what is important is that you make the right decision in a timely way... You cannot wait for the demand to knock at your door.” - The Straits Times/ANN
