Questions on ownership, operating model for Changi Terminal 5 project

Plans are underway to erect Changi Airport’s biggest passenger terminal, even as key questions remain unanswered.

Who will pay for the Terminal 5 (T5) project? Who will run the mega facility? Will passengers and airlines pay the same charges across all terminals?

T5 is the biggest expansion project since Changi Airport opened in 1981.

It could cost tens of billions, prompting a government rethink of how the airport should be owned and run. The Ministry of Transport has called for consultants to study the issue.

The existing three terminals, built and paid for by the government, are now run by Changi Airport Group (CAG), a corporate entity set up in 2009.

The same model might not work for T5, which is separated from the current airport by Changi Coast Road and is slated to open in phases by the end of the next decade. From 66 million passengers a year now, which is the total number of passengers the current three terminals can handle in a year, Changi Airport will be able to handle 82 million by the time T4 opens next year.

When T5 is ready, total capacity will increase to 135 million passengers a year.

The government has said it will co-fund the T5 project, but by how much? The government faces increased pressure in social spending on healthcare, for the elderly and on workers’ retraining.

Given the importance of aviation, it can be expected to stump out a large amount.

Senior Minister of State for Transport Josephine Teo, who spoke about this last year, pointed out that for the MRT system, the government funds all the infrastructure and first set of rolling stock, which accounts for about 90 percent of the total start-up costs.

Will the T5 project be similarly funded? The jury is still out on the best way forward, but experts concur there is merit in some form of private-sector involvement.

Globally, airports appear to be moving toward a public-private ownership model, as governments that funded the first set of infrastructure seek private support to build new terminals and upgrade existing ones.

In Australia, for example, the Federal Airports Corporation was set up in 1987 as a government business enterprise to operate airports on behalf of the Australian government.

A decade later, a decision was made to privatise the airports.

In India, a concession to operate, manage and expand the airport in New Delhi was awarded in 2006 to a private consortium comprising the country’s GMR Group with a majority stake and Airports Authority of India, Germany’s Fraport and Eraman Malaysia as the other stakeholders.

A similar concession was awarded for the airport in Mumbai, with the team there led by Indian conglomerate GVK.

Source: China Post