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Friday, Sept. 3, 2004
KANSAI'S SINKING FEELING
Airport begs question, 'what went right?'
OSAKA -- A decade after opening, Kansai International Airport has become to airport officials, passengers, airlines and travel agents a symbol of gross mismanagement and grand plans gone horribly awry.
On Sept. 4, 1994, Kansai officials proudly inaugurated what was touted as the world's first offshore airport, built on a man-made island far from downtown Osaka.
With its sleek terminal building designed by famed Italian architect Renzo Piano and flights nearly twice the number of Osaka's Itami airport, Kansai had hoped the airport would usher in a new era of prosperity for the region and serve as the international gateway to Asia.
That was not to be.
Foreign airlines balked at Kansai airport's landing fees, which, at nearly 1 million yen for a Boeing 747, were the highest in the world. They also complained about a lack of services targeting business travelers, particularly an absence of first-class and business-class lounges and other amenities common at the world's top airports.
As a representative with Northwest Airlines said at the time, Kansai airport seemed to be designed for economy-class Japanese tour groups instead of international business travelers.
The high landing fees, lack of services and lack of customer demand caused some carriers, including British Airways, to suspend flights just two years after the airport opened.
Delta and American Airlines postponed plans for direct flights, forming code-sharing arrangements with Japan Airlines instead, while European and Asian carriers that did fly into Kansai reduced the number of flights or began flying smaller aircraft when it was apparent demand was lacking.
To make matters worse, the artificial island the airport was built on was sinking much more rapidly than predicated, raising the possibility that billions of yen more would be needed for repairs to keep it above the waves.
With falling customer demand, rising costs and increased competition from other airports in Asia, Kansai officials were faced with an apparent need to cut back. Their response: plow ahead with expansion of the island and construct a second runway, due to open in 2007.
The second runway was opposed by many in Tokyo, especially within the Finance Ministry, as well as by the Foreign Airlines Association of Japan, which recommended in 2000 that the central government give priority to completing a second runway at Narita.
That report prompted Wa Tashiro, then head of the Osaka Chamber of Commerce and Industry, to remark that the problems of Kansai airport were not the concern of foreigners.
Today, Kansai airport is nearly 1.2 trillion yen in debt.
About 14 million passengers passed through the airport in 2003, about half the number who flew through Narita.
Kansai airport handled about 100,000 takeoffs and landings last year -- about 20,000 fewer than predicted in 1994.
"Kansai airport is really a symbol of Japan's bubble economy years of grandiose plans that simply ignored market realities," said one European airline executive whose carrier only serves Kansai a few times a week.
If airlines are dissatisfied with the airport, international passengers are even less happy.
"I fly into Kansai about once a month. Compared to (Seoul's) Inchon airport, the new airport in Hong Kong, or Changi airport in Singapore, there's not much here in the way of services," said Joseph Bradley, an American software engineer from Seattle. "There are no English-language bookstores and many of the restaurants don't have English menus."
Ray Kruger of Academy Travel, an Osaka-based travel agency, observed that Kansai airport has been grossly mismanaged from the get-go.
"The cost of the airport was so huge that its managers attempted to get their money back as quick as possible. This meant charging the world's highest landing fees, offering no incentives for the airlines and little in the way of customer services," Kruger said.
And the future is increasingly uncertain because Kansai officials face a new competitor that has them extremely nervous.
On Feb. 17, Central Japan International Airport, or Chubu airport, near Nagoya will open.
Because it was completed at nearly 20 percent under budget, landing fees at Chubu airport are expected to be around 700,000 yen for a Boeing 747.
It was only under great pressure from the airlines that Kansai reduced the fee over the past decade from around 1 million yen to about 820,000 yen today. Chubu will still be cheaper.
In terms of the number of international flights, Kansai has an advantage over Chubu, offering 679 weekly, compared with Chubu's estimated 300. But airlines and travel agents say a key factor for passenger convenience is domestic connections.
Here, the numbers are reversed. There are only about 300 flights a week domestically from Kansai, while Chubu is expected to offer 700, making connections to and from international flights to other regions in Japan far more appealing.
"Ultimately, it will depend on Chubu's domestic connections as to how well the airport does. Even if there are only limited flights abroad, if the international airlines have high load rates, they will service Chubu, possibly at the expense of Kansai," Kruger said.
It also remains to be seen what effect Chubu airport will have on those living in Kyoto and Shiga prefectures, who at present only have the option of Kansai for international flights.
Travel time to Kansai airport from Kyoto Station is about 15 minutes, less than what it would take to travel to Chubu airport from Kyoto, via Nagoya Station on the bullet train.
For those traveling from Maihara Station in Shiga Prefecture, it's about 20 minutes less to Chubu than to Kansai.
"If it turns out that it's more convenient and about the same cost to reach Kyoto from abroad via Chubu airport than via Kansai airport, that could spell trouble for Kansai, especially for international travelers specifically going to Kyoto on business or for sightseeing," said a Chubu airport spokesman who declined to be identified. "It's something we will be watching closely."
And then there's Kobe airport, due to open in 2006.
For the past decade, Kansai officials have been bickering among themselves over its necessity. Kobe airport officials recently angered Kansai officials and Osaka Gov. Fusae Ohta when they announced there would be charter flights to Shanghai from Kobe airport, which is supposed to be a domestic-only airport.
A panel of Kansai business leaders that was formed last year to debate how to best manage the region's three airports -- Kansai, Itami and Kobe -- has done little, drawing criticism from both central government officials, including transport minister Nobuteru Ishihara, and its own members.
The only progress, announced just last month, was to get the airlines to agree to stop serving Itami with Boeing 747s, which are used on a few flights from Tokyo, Sapporo and Okinawa, and instead route the jumbos to Kansai.
"The Kansai region faces intense competition from elsewhere. It's important that Kansai airport increases the number of daily domestic flights to realize its potential as an international hub," Ohta said after the announcement.
Kansai airport officials are still puzzled, and angry, that the transport ministry kept Itami open after Kansai began operations.
In the late 1980s, many believed the ministry would close Itami, which straddles the Osaka-Hyogo prefectural border, because of noise pollution concerns.
But Itami has not only remained open, it has also been completely renovated.
With fewer international flights at Kansai, All Nippon Airways, which operates the majority of flights out of Itami, occasionally advertises Itami, via Narita, as the gateway to North America and Europe.
But the odds that Itami, which is closer to central Osaka and Kobe than Kansai airport, may once again offer direct international flights appear slim.
"I think a lot of people in (the) Kansai region would love to see Itami offer international flights again. But the chances are nil," Kruger said. "The region is stuck with Kansai as the international airport, and there is no choice but to try to make it a success."