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Tuesday, Sept. 3, 2002

Little-used Kansai airport likely to finish second runway


Staff writer

OSAKA - Eight years after it opened to great fanfare, Kansai International Airport looks likely to get a second runway in 2007, even as its financial problems continue to mount.

Despite opposition from many in the Finance Ministry, as well as foreign airlines, Kansai officials spent most of 2002 pushing for the completion of a second runway, begun in 1999, in 2007. The airport will mark its eighth anniversary Wednesday.

After intense debate earlier this year, the Land, Infrastructure, and Transport Ministry announced in late August that it would seek over 100 billion from the 2003 fiscal year budget to finish the runway as scheduled.

In addition, the ministry said that should Narita be privatized, income from the stock issued could be borrowed by Kansai airport to cover 27 billion of the 100 billion it is requesting.

The Finance Ministry's decision on the budget request is expected by the end of the year.

However, the push by Kansai airport officials to have the central government privatize Narita, Kansai, and the new Chubu airport is being opposed by those who fear Narita's profits will be used to offset the losses at Kansai.

Kansai airport officials say that last year's terrorist attacks in the United States caused a drop in flights in fiscal 2001. In fiscal 2000, there were 124,000 takeoffs and landings. But that dropped to 121,000 by the end of fiscal 2001.

In addition, a number of international and domestic flights left Kansai and moved to Tokyo after Narita opened its second runway in the spring.

In March, when the weaker flight figures were announced, Kansai airport officials announced a two-pronged strategy.

First, the airport offered a 50 percent discount on landing fees to any airline that introduces a new Kansai route between April 1 and March 31, 2003. Second, in early summer the airport said it would aggressively market itself to Chinese airlines, especially those that flew to Kansai from cities in southern China.

"(Kansai airport) is very convenient to many Chinese business travelers and tourists from southern China, who are arriving in the Kansai region in ever increasing numbers," said Yoshihisa Akiyama, chairman of the Kansai Economic Federation, which led the effort.

The decision to go after Chinese air carriers came after Japan Air Systems decided to transfer most of its flights to Tokyo following the opening of Narita's second runway in April and the opening of a third runway at Haneda in July.

It also came after All Nippon Airways began promoting Itami airport in Hyogo Prefecture, which offers connections through Narita, as a more convenient and less expensive gateway to North America. Osaka Pref. Gov. Fusae Ohta's failed efforts to convince American carriers to open up new routes also were a factor.

The only airlines so far to take advantage of the landing fee discount have been China Southwest Airlines, which opened up a new route to Kansai from Chengdu in July, and Emirates Air, which will offer four flights weekly from Kansai to Dubai beginning Oct. 1.

Business at Kansai airport is not likely to improve anytime soon.

When the airport opened in 1994, the number of takeoffs and landings was expected to reach 160,000 by 2007. But over the years, high landing fees, the depressed Kansai economy, and competition from new airports in Inchon and Hong Kong led to lower-than-expected usage. The central government has recently revised its projection for takeoffs and landings to 135,000 by the same year.

For many passengers, however, the concern is that the cost of a second runway will be born, in the end, by them.

"The problems of (Kansai airport) are being passed off to customers in the form of higher ticket prices. I've flown out of Narita to the same destinations for 20,000 less than what it costs to fly from Kansai, and it looks like the ticket prices could be even higher after they build the second runway," said Scott Meadows, an American pharmaceutical executive who flies into both airports regularly.

"I'm not too optimistic about the airport's future."



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