[Archive Home][Date Prev][Date Next][Index]
Airport News, "Japan's airport folly lands Asian gateway in debt"
Monday, December 13, 1999
The Guardian: Japan's airport folly lands Asian gateway in debt
Europe Intelligence Wire
When Kansai international airport was completed in 1994, it was hailed as an
architectural marvel - a 24-hour gateway to Asia that would revitalise
western Japan.
Five years on, the terminal building remains as spectacular as ever. But the
artificial island on which it perches is sinking into Osaka Bay, its
business strategy is in tatters and its financial position looks
increasingly like a black hole.
Weighed down by debts of about 1,000bn yen ( pounds 6bn), the airport has
not only struggled to reach the altitude that its backers intended - it has
barely got off the ground.
Growth has been stunted by the highest airport fees in the world, domestic
recession and a regional financial crisis.
Losses have mushroomed, and now fears about the Y2K computer bug are
expected to reduce business by 10% to 30% during the new year season -
usually one of the busiest periods of the year.
Kansai airport was conceived at the height of Japan's economic boom in the
late 1980s, and its futuristic design reflects the towering ambi tions of
the country during that period. Designed by the renowned Italian architect
Renzo Piano, the vast steel and glass structure, with its distinctive
skeletal frame, fills many passengers with awe.
But its existence has been plagued from the start by over-running costs and
subsidence.
The island rests on a bed of soft clay into which it is sinking far faster
than anyone had anticipated. The island has subsided 11.5m (38ft), even
though the airport authority has spent a small fortune trying to arrest the
process.
The airport's finances rest on even less stable ground. It has still to make
a dent in its debt burden, and last year it posted a pounds 141m loss.
Despite a strong yen, which makes overseas travel cheaper, the number of
flights departing and arriving has fallen for two years in a row.
The authority has done little to ingratiate itself with airlines. At its
opening, Kansai was promoted as Japan's first 24-hour airport. But the only
airline to fly after midnight - Thai Airlines - was forced to change its
schedule because customers complained about a lack of late-night facilities.
Airlines face astronomical charges to use Kansai. Each time a jumbo touches
down, its owners must pay pounds 5,450. It is the most expensive airport in
the world if the costs of hangar space and common facilities are included,
according to the Foreign Airlines Association in Japan (FAAJ).
Yet the potential rewards are small in comparison with Tokyo. The Kansai
region was hit harder by the recession and its recovery is slower. With few
major corporations or government offices, there is little demand for first
class and business seats, which provide the biggest profits for airlines.
'It is difficult to make any money out of Kansai. Even at the best of times,
it is not very attractive for airlines,' said Douglas Hayashi, an aviation
industry analyst at HSBC Securities Japan.
The FAAJ, which represents 41 major carriers, has demanded that Kansai cut
its landing fees by half. Other airlines have reduced their flights or, like
British Airways, cut their services to the region all together.
Kansai also faces a growing number of competitors. Work began last week on a
second runway at Narita, Tokyo's main airport. There are plans to expand the
capital's second airport, Haneda, and to build a third floating airport in
Tokyo Bay. International airports are being built in central Japan and even
in Kobe - within sight of the Kansai terminal.
Many of these airports are white elephants but they keep unemployment down
and the ruling Liberal Democratic party in campaign funds from its friends
in the construction industry. Given this logic, there is little sense of
crisis at Kansai airport, which is 95% state-owned.
Nor is it seen as strange that much of the revenue from Kansai's expensive
landing fees is used to fund the construction of rival airports.
Despite its woes, Kansai began construction this year on a second 2.5 mile
runway, which is due to open in 2007. Airport officials say that the pounds
9bn second stage is neces sary, as demand is expected to increase with the
completion in 2001 of a new Universal Studios theme park in Osaka.
But the airlines fear that the extra slots will mean higher prices.
Travel agents see little reason to be optimistic. An executive of the Japan
Travel Bureau told the Asahi Shimbun newspaper: 'There is a need for the
airport to revise its whole strategy and start from scratch again.'
Link Kansai Airport http://www.kansai-airport.or.jp/ index-e.html
*****************************************
California Aviation Coalition: Airport News List E-mail Commands
To subscribe to the Airport News List, send an email, from the email account you wish to receive your posts on, addressed to listserv@californiaaviation.org and place the following in the first line of the body of the message:
Subscribe airport YourFirstName YourLastName YourJobTitle YourAirport/Company
To unsubscribe from the Airport News List, send an email, from the email account you have been receiving your posts on, addressed to listserv@californiaaviation.org and place the following in the first line of the body of the message:
Unsubscribe airport YourFirstName YourLastName
If you have problems either subscribing or unsubscribing, email stepheni@cwnet.com