SINGAPORE -- Singapore's dedicated terminal for budget airlines will undergo a 10-million Singapore dollar (US$7.25 million) upgrade that will more than double its handling capacity, authorities said Thursday.

The expansion, which will start in July, will raise the terminal's annual handling capacity from 2.7 million passengers to 7.0 million when the upgrade is completed in early 2009, the Civil Aviation Authority of Singapore (CAAS) said.

The terminal will also get three more boarding gates, additional baggage handling equipment as well as an extra seven check-in counters, it said in a statement.

CAAS chief executive Lim Kim Choon said the upgrade will allow the terminal to cope better with an expected rise in traffic when restrictions on flights between Southeast Asian capital cities are lifted by the end of the year.

"With increased air transport liberalization in this region, airlines, including low cost carriers, have now greater opportunities to rapidly expand their air network and increase their flight operations," Lim said.

"The expansion of the budget terminal to increase its handling capacity is timely as we expect passenger traffic to increase further with ASEAN's goal to remove all restrictions on passenger flights between ASEAN capitals by December 2008."

ASEAN is the Association of Southeast Asian Nations that groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Figures from the CAAS showed the budget terminal's number of weekly flights has increased from 124 in March 2006 when it began operation to 248 last month.

Singapore-based Tiger Airways and Cebu Pacific of the Philippines are the two carriers using the budget terminal.