With the aviation sector battered by the COVID-19 pandemic, it is “not the time now” to be talking about imposing an environmental tax on Singapore Airlines (SIA), said Transport Minister Ong Ye Kung in Parliament on Tuesday (Oct 6).
Doing so will worsen the situation for the national carrier, which is trying hard to preserve cash and generate revenue at the moment, he added, responding to a question from Workers’ Party (WP) Member of Parliament Jamus Lim on why the Government would not consider such a tax.
Earlier in his ministerial statement which outlined the Government’s strategies to support the struggling aviation sector, Mr Ong described SIA as “far from being out of the woods” despite a recent recapitalisation exercise. One of the ideas that the airline had to generate revenue was to launch flights to nowhere, he noted, although this was later scrapped.
“Whichever way SIA had decided, MOT (Ministry of Transport) would always try our best to support our national carrier in times like this,” the minister said in his speech to the House.
“What I will not contemplate is to impose on them an environment tax at this time, as Associate Professor Jamus Lim indicated in his question, because that will just worsen the crisis for SIA.”
Seeking a clarification after Mr Ong’s ministerial statement, Assoc Prof Lim said it is “entirely possible” that the tax will not have an immediate concern on SIA’s economic viability if it is able to pass on the cost to consumers for instance.
The opposition MP also asked if more innovative ways can be considered so that environmental needs “need not be a casualty” to business considerations.
“The simple answer is this, we are in a crisis,” Mr Ong replied.
“SIA, as I mentioned, is ferrying 1.5 per cent of its passenger volume so it’s not about passing the cost to passengers – there are no passengers to pass (the tax) to now,” he added.
With SIA likely to have gone under if not for its recent recapitalisation exercise, policymakers will “need to help SIA preserve as much cash as it can”, said the minister.
“So, this is really not the time now to talk about an environmental tax on SIA. If I were to do that … I would have made the situation much worse for SIA,” said Mr Ong, citing a Chinese idiom that depicts a scenario of throwing stones at somebody who has fallen into a well.
Urging caution, Mr Ong said that the international conversation on environmental taxes will go on when “things resume”.
The other six MPs who sought clarifications from the minister include People’s Action Party (PAP) MP Melvin Yong, who asked whether SIA’s decision to gradually increase its flight operations is tied to the Government’s ongoing negotiations on reciprocal travel arrangements.
SIA has said that it will continue to increase flights gradually, reaching about 15 per cent of its usual passenger capacity by the end of this year.
Mr Ong replied that this is partly a commercial decision by the airline to maintain a presence in certain markets despite low demand.
The Government’s support package for the aviation industry, announced as part of the Resilience Budget in March, also helps the national carrier to maintain a minimum level of air connectivity so that overseas Singaporeans can return home and cargo flights can continue to ensure supply chains are not affected.
PAP MP Sharael Taha wanted to know if anything could be done to reduce costs associated with parking grounded planes.
Noting that he does not have the details on that, Mr Ong said some of these fees have been waived for this period. “But it is not a lot and not significant compared to the cost of operating an airline,” said Mr Ong.
In his ministerial statement, Mr Ong had said that pursuing more green lanes and negotiating air travel bubbles with countries whose COVID-19 infection rates are low were among Singapore’s plans to revive its air hub.
PAP MP Saktiandi Supaat wanted to know the status of plans to open up regional air travel between ASEAN countries as testing technology improves.
To that, the minister said: “As of now, I wouldn’t say ASEAN is ready to discuss a regional plan but individual countries … are doing our own assessment of what is safe, what is unsafe.”
Within ASEAN, Singapore unilaterally opened its borders to travellers from Vietnam, and has concluded reciprocal green lane arrangements with Malaysia and Brunei.
“So we will push in that direction, taking a country by country approach, and bearing in mind ASEAN is an important market for us,” said Mr Ong.
PAP MP for Sembawang Poh Li San asked if MOT would consider reducing the stay-home notice period for territories that have been “relatively successful” in containing COVID-19.
For instance, the stay-home notice period for China and Taiwan could be reduced from seven days to three to five days, she said.
Unilateral openings are better than reducing the stay-home notice period from 14 days, replied Mr Ong.
Countries like Brunei, New Zealand, Vietnam and Australia – except Victoria state – have “similar to or better” incidence rates and risk profiles compared to Singapore, and travellers from these countries do not have to go through a stay-home notice period.
“When you have similar risk profiles, technically there is actually no need for tests. Because someone from those countries coming to Singapore (are) not different from someone from Jurong, Sembawang or Bedok going to Changi Airport,” he said.
“But out of an abundance of precaution, we still administer a post-arrival test. Once negative, they are free to move about,” he added.
WP MP Gerald Giam asked why incoming arrivals are placed on stay-home notices before their first COVID-19 test, instead of being tested on arrival.
All travellers that Singapore opens up to unilaterally have to be tested on arrival, said Mr Ong.
Health Minister Gan Kim Yong added that for travellers coming in who are tested after their stay-home notices, it is because of the incubation period of the virus.
“When they come in, they may have been infected, and if we test them on the spot on arrival, it may not be detected because there is (an) incubation period.
“And that is why we put them within the (stay-home notice) for the whole duration of the incubation period and test them at the end. And if they are still negative, that means they have passed the incubation period … and we can then allow them to go into the community,” he said.
PAP MP for Bukit Panjang Liang Eng Hua asked if it made sense to resume travel from a cost revenue standpoint, given the current economic climate.
He cited measures like the reciprocal green lane arrangements, controlled itinerary, various COVID-19 tests, monitoring and surveillance, higher prices for plane tickets, as well the cost for airlines to operate flights which are not full.
He also asked if the minister was confident of bringing back major airlines which might have moved out of Singapore.
While the costs of running passenger services have risen, supply and demand have dropped, and there are many passengers still prepared to pay more to travel, said Mr Ong.
“I think the demand is there because the supply has totally been decimated,” he said.
On bringing back major airlines, Mr Ong said: “That is why we need to start taking steps, as I mentioned, to start signalling that we would be determined, we are determined to hold onto our status as an air hub.”
He added that the ministry is taking “active steps” to open borders and revive travel, and many in the airline industry are “still very keen” to return to Singapore.
MEDIUM- TO LONG-TERM PLANS
Mr Saktiandi asked Mr Ong for the Government’s post-COVID-19 plans, such as infrastructure strategies, to “put us in a better state beyond one year ahead”.
“We are not short of infrastructure plans,” replied Mr Ong, citing Changi Airport’s new Terminal 5 and the various terminal upgradings.
“What we need now is not so much the hardware, but the software of being able to open up our borders, welcome travellers to and fro, but do so safely,” he said.
“And it will mean infrastructure such as testing capacity, such as people who can do the test, such as adopting new, novel testing methods, including rapid test kits that allow us to open up safely.
“This is what is critical now. If we succeed, if we can make the first moves, then when there is a vaccine, when air travel opens again internationally, we will find that Singapore is right up there, ahead of the curve and we can retain our air hub status.”