By Nicholas Yong

AIRPORT charges will not be changed for a period of two years after the Civil Aviation Authority of Singapore (CAAS) is formally corporatised in July.

Second Minister for Transport Lim Hwee Hua said during the debate on the CAAS Bill that this will be in addition to a price cap mechanism to keep airport charges competitive, and to avoid irregular or sudden cost increases.

The Government was prepared to "step in with other measures" in the face of "exceptional circumstances" such as a severe economic recession.

Her comments followed questions from MPs like Mr Liang Eng Hwa (Holland-Bukit Timah GRC) on whether corporatisation would lead to higher charges for stakeholders such as airlines and passengers.

Mrs Lim added that a "hybrid tilt" system would be adopted. This is where a proportion of non-aeronautical revenues or profits is used to keep aeronautical charges competitive.

About 40 per cent of Changi's revenue comes from airlines' landing and parking fees, and from taxes and charges levied on passengers. The rest is collected mainly from airport shops and restaurants.

From July 1, CAAS will be separated into two entities - one to regulate the industry and the other to run the airport. They will have joint responsibility for Changi Airport's development as an aviation hub.

Mrs Lim said there were no immediate plans to privatise the airport, adding that Singapore's long-term strategic interests would come first.

Mr Liang, Nominated MP Gautam Banerjee, and chairman of the Government Parliamentary Committee for Transport Cedric Foo all raised concerns that a profit-motivated airport might find it difficult to align its short-term commercial interests with the country's interests.

But Mrs Lim said the very aim of corporatisation was to ensure Changi's competitive edge is maintained. It was "an over-arching consideration and concern of the Government".

A key challenge Changi faces is competition from airports in Bangkok, Dubai and Hong Kong. She pointed out these airports were either corporatised or privatised entities and enjoyed strong governmental support.

This article was first published in The Straits Times.