Singapore, which operates Asia's sixth-busiest airport, may double the capacity of its S$45mil terminal for budget airlines, Asia's first, betting more people will travel by air on discounted fares.

The city state, which has completed the terminal, the size of three football fields, is on course to open the facility on March 26, for people using Singapore Airlines Ltd's budget carrier Tiger Airways.

Singapore may boost the 2.7 million annual passenger capacity of the terminal to as much as five million, if it attracts more low-cost airlines, Transport Minister Yeo Cheow Tong said yesterday.

"By making it more cost effective, we hope that the budget airlines using this terminal would be growing their business,"Yeo told reporters.

Singapore, which is seeking to preserve its status as a hub, aims to tap increasing air travel demand as budget carriers in the region of 500 million people have risen to at least 18 from none four years ago. The terminal, adjacent to the existing Changi airport, will charge fees that are 38% cheaper than the two existing terminals, helping carriers cut costs to attract more passengers to use the facility.

Asian budget carriers, which started flying in late 2001, currently account for 10% of total flights at Changi airport. Low-fare airlines in Asia-Pacific had about 5% of the market in 2004 and that may increase to 15% in 2014, Morgan Stanley analyst Chin Lim said in a June 2005 report.

Asia had no discount airlines until December 2001 when Malaysia's AirAsia Bhd, South-East Asia's biggest discount carrier, started operations. - Bloomberg