"Narita privatization to channel billions to Kansai"

Monday, November 4, 2002

Narita privatization to channel billions to Kansai
Japan - Kyodo News


TOKYO, (Kyodo) - The New Tokyo International Airport Authority, the
operator of Narita airport, will return 200 billion yen of its capital
to the central government when it goes private in fiscal 2004 to help
heavily indebted Kansai airport, according to a ministry draft made
available to Kyodo News on Sunday.

The draft said the new corporation will return the money using profits
earned from airport operations over several decades. The Ministry of
Land, Infrastructure and Transport intends to use part of it to repay
some of the 1.5 trillion yen debt owed by Kansai International Airport
Co.

The draft said the private entity will be capitalized at about 100
billion yen, one-third of the capital the state originally contributed
to the authority. The amount, roughly 10% of the authority's assets, is
set to limit the amount of dividends to be paid out to shareholders.

The draft also notes the private entity intends to sharply increase
non-flight-related income by running duty-free shops directly, for
example. The added income would be used to reduce the airport's
notoriously high landing fees.

The state-owned authority would be listed on a stock market in three to
four years after it goes private under the draft's plan, ministry
sources said.

The draft eyes turning Narita -- Japan's largest international airport,
located in Chiba Prefecture -- into one exclusively serving long-haul
flight services to such places as Europe.

Long-distance flights are more profitable than short-distance ones
because they need larger jets, enabling the airport to charge higher
landing fees and higher fees for using fueling facilities.

Narita's shorter-haul flights, such as those bound for other Asian
cities, are likely to be diverted to Haneda airport, which operates
domestic flight services near central Tokyo. Haneda will have its fourth
runway completed in 2009 and is expected also to cater to regular
international flights.

The desire to earn greater income from non-flight operations, as
expressed in the draft, derives from it being difficult to allocate
additional flights to the airport. At present, 90% of the landing slots
available at Narita have been used.

The draft thus eyes a foray into operating hotels and other commercial
facilities to earn more than 50% of its income from non-flight
businesses. Currently, the airport authority earns about 70% of its 150
billion yen income from landing fees and other flight-related
operations.

On Oct. 10, the ministry scrapped its original plan to combine the
building projects of three major airports -- Narita, Kansai and Chubu --
under a public concern and form a private firm for each airport to run
its respective facilities.

Kansai airport is located in Osaka Bay. Chubu airport, being built in
Aichi Prefecture, central Japan, will be completed in 2004.


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