How to foot bill for Changi's T5?
AFTER setting out to build an airport terminal that is 10 times the size of Singapore's largest shopping mall, stakeholders are looking at ways to fund it.
There is no way that Changi Airport Group (CAG) can pay for the future Terminal 5 and related facilities on its own, said chairman Liew Mun Leong in an exclusive interview with The Straits Times. He feels that the Government would have to step in.
Giving a sense of the scale of the project, he said it would be about 10 times as big as VivoCity.
Current plans are for a five-storey-high 10 million sq ft terminal, revealed Mr Liew.
"As it is conceived today, we are looking at 2 million sq ft per floor. If you collapse VivoCity and spread it out, you need to double that to make up one level of T5," he said.
"That's very big," added Mr Liew, who is also former president and chief executive of CapitaLand.
T5, slated to open in 10 years, is expected to handle up to 50 million passengers a year. Not only is that more than T1 and T2 combined, but it almost matches the total number of passengers that passed through Changi Airport last year.
The idea is to have a game-changer that seals Singapore's position as a key hub for air travel in Asia and across the world.
Depending on how traffic grows, the facility could open in phases.
When completed, T5 is likely to be the third-largest passenger terminal in the world, after facilities in Dubai and Beijing.
Changi's new passenger terminal and related facilities - including a third runway, taxiways, underground tunnels to move people and bags between the existing and new airport premises, and air cargo facilities - are expected to cost tens of billions.
Given the scale of the development in Changi East, now separated from the airport by a major road, who will foot the final bill is still "a big discussion", said Mr Liew.
"There is no way, from the capital management point of view, that we (CAG) can finance this," he said, adding that his own view is that such huge infrastructure projects should be the Government's responsibility.
"A possible model is for the state to own the assets and for us to run it," he said.
And what if the Government does not agree with the airport's thinking?
Mr Liew said: "The fact is that the Government knows that the airport is such an important part of the country's economy... All over the world, big airports are building big terminals. So if you want to compete, you cannot not build T5."
Dubai Airport has plans to increase its annual handling capacity from 80 million to 250 million passengers, while South Korea's Incheon Airport is ramping up from 80 million to 145 million passengers.
T5 will take Changi to 140 million passengers a year.
Despite the slowdown in passenger traffic at Changi Airport in the past one to two years, Mr Liew is confident the numbers will pick up, given strong projections for air travel in the Asia-Pacific.
He said: "Singapore needs air connectivity and that's what we've been saying all the time. If we don't have the money as a company, somebody must pay" he said, adding that CAG has about $3 billion in the bank.
Subhranshu Sekhar Das, an aviation analyst at industry consultancy Frost & Sullivan, said there are no hard and fast rules about who should pay for airport expansion and development works.
In many cases, it is a public-private partnership, though in Singapore's case, he expects the Government to bear the bulk of if not all the costs, given the importance of the airport to the overall economy.
Terence Fan, a transport specialist from the Singapore Management University, said: "Perhaps, Changi can consider opening itself to retail investors so that there is some private investment, either in terms of bonds issued to the public or shares to retail investors, or both, with the Government retaining an important say on strategic decisions.
Even as discussions continue, Mr Liew stressed that works will proceed as planned, for the sake of the Singapore air hub.
With the demand for air travel in the Asia-Pacific growing faster than the global average, Changi must ensure it has enough capacity to meet future needs.
Not catching this growth would jeopardise the air hub, he stressed.