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Friday, June 17, 2011
Managing two airports in Kansai
The Diet on May 17 enacted a law to integrate the management of Kansai airport and Itami (Osaka) airport. The transport ministry will establish a new firm by April 2012 with all the capital coming from the government. It will start operating in the summer of that year.
Kansai airport opened in 1994 with a 3,500-meter runway on an artificial island. In 2007, it gained a separate 4,000-meter runway on another artificial island.
Some ¥3 trillion was spent to construct the two runways, burdening the current firm managing Kansai airport with a total of ¥1.3 trillion in interest-bearing debt.
The construction cost also led to the imposition of a landing fee that is about three times that at South Korea's Incheon airport and China's Shanghai airport, putting Kansai airport in a disadvantageous position competitively.
The new firm could sell the right to operate Kansai and Itami airports, although it would continue to own the two airports. The right to operate them would last more than 30 years.
The government hopes that the new firm can find a buyer of the operation rights by fiscal 2015 and receive enough money to offset the ¥1.3 trillion in residual debt. Selling the right to operate the airports would be the first of its kind in Japan.
The March 11 earthquake and tsunami, which devastated northeastern Japan, and the nuclear crisis at the Fukushima No. 1 nuclear power plant have clouded prospects for the airline industry.
The question is whether a company or an investment fund would be interested in buying the right to operate Kansai and Itami airports from the new firm.
The current Kansai airport firm hopes to invite low-cost carriers and increase the number of cargo flights. But there is the need to improve access to the airport.
In the Kansai region, Kansai, Itami and Kobe airports are vying to attract a limited number of passengers. Parties concerned, including the prefectural governments there, should work out a basic policy. Questions include how to divide functions among the airports, how to coordinate flight schedules and whether one airport should be closed.