Photo of Jetstar plane from Australian Aviation

Australia’s popular low-cost air carrier Jetstar yesterday (Mar 2) announced that they will divert transit flights from Singapore to Hong Kong, China and Middle East. The decision came after the Singapore government went against the advice of the International Air Transport Association to not impose pre-funding taxes for Terminal 5.

Short of funding for Terminal 5, the Singapore government last week imposed a S$13.30 increase per passenger and a S$9 additional levy per transiting passenger.

Jetstar’s CEO Gareth Evans told Reuters that travellers will skip Singapore to avoid the taxes and announced that Jetstar flights from Singapore will increase up to 20% due to the government tax:

“The additional fees would lead to an average increase of 15-20 per cent on the fares the company sells in this market. We are going to have to shift flights around because demand will change. Singapore is competing with Hong Kong, China and Middle Eastern hubs. People will change hubs to fly to Europe, for a few dollars.”

Singapore’s four airport terminals saw 62.2 million passengers, with a capacity of 82 million by end 2018 when Project Jewel terminal is completed. The Terminal 5 will increase capacity by a further 50 million , but the government has been dodgy on the actual cost of the airport terminal. The Transport Ministry said that Terminal 5 will require S$9 billion of taxes, S$3.6 billion from state-owned company Changi Airport Group and an undisclosed borrowing landing the Singapore government into debt.

Jetstar will be replacing their existing A320 aircrafts to the new A321neo, which can travel further and bypass Singapore as a transit.