Source: Channel NewsAsia Author: 04/14/2009
Subject Concerned: Government Opinion Airport
Parliament has passed a Bill to corporatise Changi Airport.
Under it, the functions of the Civil Aviation Authority of Singapore (CAAS) will be spilt between two entities.
A smaller CAAS will continue to be the regulator, promoter and developer of the aviation industry, while a corporatised entity will operate Changi Airport and the airport emergency services as well as exploit investment opportunities overseas.
However Second Minister for Transport Lim Hwee Hua gave the assurance that Changi Airport will not be fully privatised just yet.
She said: "The government will still retain full beneficial ownership of the airport company after corporatisation.
"Privatisation is a separate and distinct step to be deliberated upon and decided later by the government.
"Nevertheless, we have designed an economic regulatory system that is robust, regardless of ownership, should a decision to privatise be taken in the future."
During the parliamentary debate, MP for Holland-Bukit Timah, Liang Eng Hwa, raised concerns that corporatising CAAS could impact on Changi Airport's current status as an international air hub.
Mr Liang highlighted that the new airport company may not able to align its shorter term commercial targets with those of Singapore's longer term strategic interests.
Monopolistic pricing could arise. This, Mr Liang said, may see Changi Airport lose its competitive edge over other airports in the region.
He said: "For example, in the face of a new entrant, Changi Airport may need to temporarily price its charges very low to defend its position and fend off new competition.
"It may even have to be priced below the required commercial returns of a corporate entity in the short run.
"Would a profit-seeking company be prepared to go that extra mile for the overall economic gain of the country?
"Understandably, as a commercial entity, the company's strategic horizon will be shorter than that of a national agency like CAAS."