The relief package, worth $130 million, comes amid news that airlines worldwide will lose a combined US$5 billion (S$7.4 billion) this year and are poised to stay deep in the red next year.

The Changi subsidies, announced yesterday, are an extension of a scheme designed to cement Singapore's position as an aviation centre.

The Air Hub Development Fund was introduced in 2003 to help carriers hit by the impact of the Sars crisis and extended for another three years in 2005. In the last six years, it has cost the Government $510 million. The 2009 total will be the largest amount set aside in a single year.

The Civil Aviation Authority of Singapore (CAAS) said that on Jan 1 the scheme will be extended by another year and be 'subject to further review thereafter'.

Under the new package, airlines and other industry players, such as ground-handlers and freight forwarders, will continue to benefit from a 15 per cent rebate on office rents, airline lounges and warehouses.

Landing fee rebates will hit 25 per cent next year, from 15 per cent now. That means for a Boeing 777-300, the landing fee will be $2,239. For the Airbus 380 superjumbo, the charge will be $4,295.

Changi's landing charges are currently among the lowest in the region.

That is one of the reasons airlines are attracted to Changi, which accounts for about 100,000 jobs and is worth over $10 billion to Singapore's economy.

CAAS director-general and chief executive officer Lim Kim Choon said Changi 'recognises the tough operating environment' that carriers and other air-travel-linked companies are dealing with.

Earlier this week, the International Air Transport Association (Iata), which represents 230 airlines worldwide, said the industry will lose US$5 billion this year and an estimated US$2.5 billion in 2009.

More than 30 carriers have gone bust this year, hit first by sky-high fuel prices and now a global economic crisis that has dampened the demand for air travel.

Changi has not been spared either.

While total passenger traffic grew 3 per cent to 34.2 million in the first 11 months of the year, the future looks bleak.

Last month, total traffic dropped 3 per cent compared with November last year.

The air freight sector did worse with a 14 per cent year-on-year fall in the amount of cargo handled last month.

Pledging Changi's commitment to its partners, Mr Lim said that CAAS will continue to 'support the airlines at Changi Airport and aviation industry players in Singapore, especially in bad times'.

Carriers contacted applauded the move.

Changi's biggest tenant, Singapore Airlines, gave the new incentives two thumbs up.

Spokesman Stephen Forshaw said: 'We welcome any initiatives that lower the cost burden on airlines, particularly at this difficult time, and applaud the CAAS for its proactive stand on supporting air traffic development through Changi.'

Asia-Pacific spokesman for the Iata, Albert Tjoeng, said: 'This is a welcome relief.'

With such tough operating conditions, 'we need other airports in the region to follow the example of Changi', he said.

karam@sph.com.sg