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Friday, Feb. 18, 2005

SKIP THE POMP, GET DOWN TO BUSINESS

Guarded optimism as Chubu airport debuts


Staff writer

NAGOYA -- The opening of Central Japan International Airport is being touted here as a triumph of the "Toyota way" and Nagoya work ethic, where fiscal prudence, management skills and an emphasis on function over form are the guiding principles.

Similarly, hopes for the airport's future are expressed cautiously.

Unlike the circuslike atmosphere and grand promises of prosperity that accompanied that opening of Kansai International Airport in 1994, the atmosphere in Nagoya was decidedly quiet as the area prepared for the Chubu airport opening.

People had other things on their minds.

"It's the Nagoya way not to get overly excited about anything. If people are looking forward to anything this year, it is the opening of the Aichi Expo in March, or even the opening of baseball season, rather than the opening of Chubu airport," said Yutaka Mori, who works at a travel agency in Nagoya's Sakae district.

"I think (the airport) is seen as more of something that will mostly benefit businesspeople, especially those in the auto industry."

For their part, the local business community makes no apologies for what some have dubbed "Toyota International Airport" after Toyota Motor Corp., Japan's largest automaker, which is based in Aichi Prefecture.

With 44 percent of Japan's automobiles and 45 percent of auto parts manufactured in and around the Nagoya-centered region, which includes Toyota's headquarters, the new airport is expected to serve as a convenient cargo hub and the key to attracting not only auto-related businesses, but a host of industries ranging from environmental technology to tourism.

"Because the president and many senior executives at Chubu airport are originally from Toyota, there is a perception that the airport was built under Toyota-style management, with an emphasis on cost-cutting and as little government intervention as possible," said Yasutaka Ito, manager of Chubu Economic Federation's aviation division.

"To a large degree, this is true. But it's also true that Chubu airport was planned and built when the central government was not prepared to provide lots of financial assistance, and the private sector simply had to provide much of the funding and management knowhow."

Most in the Chubu region are taking a wait-and-see attitude toward the airport's economic impact over the long run.

One of the few predictions, made in 2002, as to what the airport will mean to the region was made by UFJ Institute's Nagoya office.

Chubu airport, the report says, will eventually directly benefit Aichi Prefecture to the tune of 1.3 trillion yen.

With both the opening of the airport and the Aichi Expo, UFJ predicted at that time that there would be an influx of visitors and capital that would benefit the prefecture's economy by 170 billion yen in fiscal 2005 alone. If all goes according to plan, Chubu airport will have 120 million passengers in fiscal 2005, and more than 200 million by 2025.

But UFJ officials are cautious today about the forecast that was made three years ago.

"We really have to wait and see how the new airport is received, and whether or not it will be used to the extent we hope. It's difficult to come up with detailed figures at the moment," said Fumiaki Kadono, senior managing director of UFJ Institute's economic research division in Nagoya.

Of major concern is whether airlines will shift their passenger and cargo flights to Chubu to take advantage of the cheapest landing fees -- about 655,000 yen for a Boeing 747 -- among the three major international airports in Japan.

While most Chubu airport officials, and foreign businesses in Nagoya, are confident that freight flights will come to Chubu, they are less sure about passengers.

"Chubu has good connections to Asia, but there have been complaints about the lack of flights to Europe and North America. By April, United Airlines and American Airlines will have added flights to San Francisco and Chicago. But Kansai and Narita will have far more international flights than Chubu," said Tomoyuki Nishikawa, a spokesman for the Chubu Economic Federation.

Then there is the Inchon airport factor.

Being less than 90 minutes away from western Japan, and with landing fees around 60 percent cheaper than even Chubu, a large modern terminal, and quick connections to more international cities than either Kansai or Chubu, South Korea's Inchon has become the international airport of choice for many in western Japan.

Kansai, Hiroshima and Fukuoka travel agencies report that more and more Japanese are flying to Inchon first and then connecting to flights to Europe, Asia and Oceania.

This has not escaped the attention of Korean Airlines. On some of its flights to Europe that originate from Inchon, announcements are made in Korean, English and Japanese.

"Inchon is a tough competitor, and Chubu's success will depend on how well we can compete with them," Nishikawa said.

The official caution over the airport's economic impact is also due to worries that promises will be made that can't be kept.

Already there are concerns that Maeshima, a man-made island district near the offshore airport, will fail to realize its potential as an office and commercial park.

Aichi Prefecture has poured nearly 240 billion yen into developing Maeshima, but -- due apparently to its inconvenient location -- only one company has so far expressed interest in locating there. Maeshima thus runs the risk of becoming yet another wasteful government project that bleeds red ink.

Meanwhile, the town of Tokoname, where Chubu airport lies off, has announced it expects the airport to generate tax revenues of 7 billion yen over the next 10 years from companies and individuals who use the airport.

A small portion of Tokoname's anticipated revenue is expected to come from passengers who use a new ferry that connects the city of Tsu on the east coast of Mie Prefecture to Chubu airport in 40 minutes.

Chubu officials hope the new ferry will make the airport attractive not only to businesspeople throughout Japan but also tourists heading to Ise Shrine in Mie Prefecture, and perhaps even as far away as scenic Yoshino, Nara Prefecture.

"Development of the tourism industry in Chubu still lags behind other regions, including Kyushu, Kansai and Hokkaido. An integrated policy that allows people to fly to either Kansai or Chubu airport, tour Kyoto, Ise, Lake Biwa and Gifu, and then fly out of the other airport is one way to develop both the tourist and convention potential of the region, and one that Chubu officials need to begin working on now," Kadono said.

Such a policy is something that travel agents in Nagoya like Mori would welcome.

"An airport shouldn't be just a place where cargo and passengers pass through. It should be the gateway to the region, and be used as the hub to develop tourism and conventions. If Chubu can do this, the hospitality sector, which includes hotels and restaurants, will also grow," he said.



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