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Saturday, July 21, 2007

Kansai cargo hub hopes ride on its new runway

Staff writer

OSAKA — With the scheduled Aug. 2 opening of a second runway, financially trouble Kansai International Airport is hoping to be revived as a major Asian freight hub.

Since the offshore airport opened in 1994 with one runway, it has touted itself as a passenger and cargo gateway to Asia. Over the years, the number of passenger flights to Asia, especially China, has increased as flights to Europe and North America were cut back.

However, the airport has about 1.2 trillion yen in accumulated debt and many people in the central government and the international air industry had opposed the construction of a second runway, on a second artificial island, due to concerns that taxpayers and the airlines would bear the costs.

The runway debuts despite lower passenger demand than first anticipated and criticism from major airlines about the airport's already high fees.

An independent committee of experts tasked with looking at the future of the airport proposed in June that the second runway be used for the expected increase in cargo flights.

The committee predicts that by 2017, international passenger demand at Kansai airport will have increased by about 1.8 times the current annual figure to between 17 million and 20 million people. The volume of international freight, however, will increase three times to between 1.4 million and 2.5 million tons a year.

In fiscal 2006, about 11.2 million passengers used Kansai airport, and about 750,000 tons of international cargo passed through.

The Kansai airport authority was originally supposed to build a passenger and a cargo terminal along with the second runway.

But those plans were suspended pending further discussion after the Finance Ministry ordered the project to be scaled back.

The panel is proposing that now a small passenger terminal for discount carriers from other parts of Asia and a bigger cargo terminal than was initially planned along with supporting facilities be built over the next five or six years.

The aim of the bigger cargo area would be to make Kansai airport Japan's "first international cargo hub airport."

"We can't aim to do the same thing as Narita (airport). We need to aim to be an independent airport," Kansai airport President Atsushi Murayama told a recent news conference.

The proposal's emphasis on freight was no doubt influenced by U.S. cargo carrier DHL. In June, DHL opened up a 5 billion yen facility at the airport. It is five times bigger than the previous building.

The committee's proposed plan has already come under fire for being overly ambitious in its goals and vague on how the airport can achieve them. Neither does the plan address how the cargo business will grow at an airport that is regularly rated one of the world's most expensive.

Transport Research Laboratory, a British research institute, noted in a June report that Kansai was the world's sixth-most costly airport for airlines, while Narita was ranked 17th. Narita's ranking has dropped due to an average 20-percent cut in landing fees in 2005, the institute said.

Junko Masutani, a Kansai airport spokeswoman, said the new proposal was now being discussed with the various airlines to get their input, and revisions would likely be made before being submitted to the central government.

"The specifics of the proposal may change before we submit it to the central government, as we add suggestions from the airport's users," Masutani said.

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