What is the Airport Development Levy and why should I pay for it?

On 28 February 2018, the Ministry of Transport (MOT) and the Civil Aviation Authority of Singapore (CAAS) announced the new Airport Development Levy to fund airport developments, including Terminal 5, and related infrastructure at Changi East.

Here is why travellers have to pay the new Airport Development Levy, which goes towards funding the Changi East developments.

1. Why must I pay for something that I am not using at the moment?

Infrastructure investments can be very lumpy, with hefty investments required upfront. The joint contribution model by the Government, the Changi Airport Group (CAG), and airport users prevents large spikes in airport charges. Airports in Hong Kong, Dubai and Qatar have similar models for their airport infrastructure.

2. Why can’t the Government pay for everything?

In general, airport users should bear their share for the use of airport facilities. Airport users have conventionally paid for the expansion or upgrading of airport facilities at Changi. For instance, the construction of Terminal 4 in 2017 and the expansion of Terminal 2 in 2023 were fully funded by CAG through airport charges collected from airport users, as well as other revenue streams, such as rental of office and shop spaces at the airport.

Due to the strategic value of Changi East for Changi East development, the Government will pay the majority of the costs as the benefits of having a well-connected airport accrue not only to the aviation system but also the wider Singapore economy. The remaining will be borne by CAG, through its reserves, future surpluses and borrowings, and airport users.

Sources:

Joint MOT-CAAS News Release (28 February 2018)

The Straits Times - Travellers using Changi Airport to pay higher fees and charges from July 1 (28 February 2018)

This article is accurate as of March 2018. For latest updates, head over to: www.caas.gov.sg.