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Wednesday, March 6, 2002

Kansai landing-fee cut seen as too little, too late


Staff writer

OSAKA -- Kansai International Airport announced Friday that it will reduce landing fees by over 50 percent, but the move is being greeted with skepticism by foreign government and industry officials who have long been calling for such a cut.

Beginning in April, fully loaded Boeing 747s will be charged 410,000 yen per landing, down from the current rate of about 830,000 yen. The new rate will remain in effect until the end of March 2003.

The decision comes more than six months after airport officials said they would consider a variety of options, including reducing landing fees, to lure foreign airlines back to the financially troubled airport.

After the September attacks in the United States, many foreign carriers, especially U.S. airlines, either cut back or canceled flights to Kansai, citing a drop in Japanese tourism. Some 11.5 million international travelers departed from Kansai airport in 2001, down from about 13 million in 2000, according to airport figures.

By cutting landing fees, Kansai airport hopes to stem the exodus of carriers expected once a second runway opens at Narita airport near Tokyo in April. Japan Air System has already announced that it will stop operating its 15 international flights to and from Kansai, which amounts to nearly 10 percent of the airport's landing fee revenues, when Narita's new runway becomes operational.

The reaction of foreign governments and business groups to the move, however, is mixed. Many say they expect few foreign airlines to change their current plans due to the landing-fee reduction.

"It's a hopeful sign, but, ultimately, whether or not U.S. airlines come back to Kansai airport is going to depend more upon the macroeconomic situation than any single reduction in landing fees," said Douglas Meurs, U.S. consul for political and economic affairs in Osaka.

Mark Schwab, cochair of the transport and logistics committee of the American Chamber of Commerce in Japan and an expert on the airline industry, agreed. "The move to reduce landing fees is well-intentioned. But I don't think it will have the effect of bringing in new carriers, except by pure luck.

"Airlines plan their schedules far in advance. The (fee reduction) announcement was sudden," he added.

Schwab also criticized Kansai airport's plans to offer carriers further discounts on landing fees if they improve domestic connections between Kansai and three airports -- Tokyo's Haneda, Sapporo and Fukuoka.

However, the discount does not apply to foreign airlines.

"Landing fees should be based on the weight of the aircraft, not the aircraft's destination," Schwab said.

Another body that has been demanding a slash in landing fees is the Tokyo-based Foreign Airlines Association in Japan, which comprises over 40 international carriers serving Japan.

In addition to the landing-fee issue, the FAAJ has questioned the need for a planned second runway at Kansai airport -- skepticism that many in the foreign business community and local governments in the Kansai region share. In 2001, the single-runway airport saw around 120,000 landings, well below the 160,000 claimed to be its full capacity.

The association joined the long list of Japanese officials who doubt whether the airport needs the new runway, due to open in 2007, given the second runway at Narita, discussions of opening Haneda airport to limited international service and the opening of Chubu airport near Nagoya in 2005.

And even with the 50 percent cut in landing fees, Kansai airport will still be more expensive than Inchon international airport near Seoul, which charges the equivalent of about 300,000 yen per plane.

But Kansai airport officials note that the new rate puts them on a par with European airports like Amsterdam's Schiphol. Schwab, however, said that comparison is misleading.

"Taking all costs into consideration, it's cheaper to use Schiphol," he said. "(Kansai) remains one of the most expensive airports in the world."



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