Streamlining Key to Chubu Airport's Finances

February 20, 2004

Streamlining Key to Chubu Airport's Finances
Japan Times, Japan

NAGOYA (Kyodo) "The shape of a folded paper crane is
all right, but who will really see it from the sky?"
asked Yukihisa Hirano when the design team gave him an
initial blueprint for the passenger terminal building.
 
The passenger terminal building at Central Japan
International Airport emphasizes straight lines and
right angles.  

Hirano is president of the company that will operate
Central Japan International Airport, which is
scheduled to open next year in Aichi Prefecture.

The blueprint showed building wings in the form of a
crane's wings, although for Hirano, who moved to the
company from Toyota Motor Corp., the design seemed
extravagant and offered limited utility.

As a result, the terminal was redesigned as a simpler
structure with straight lines and right angles, saving
the company 1 billion yen in construction costs.

Central Japan International is being built near
Nagoya, on a man-made island in Ise Bay. Runway work
has almost been completed, and landing and takeoff
trials are to begin in June.

The initial cost of the airport was estimated at 768
billion yen, but 60 billion yen has been saved through
efficient work to reclaim land, 34 billion yen thanks
to lower interest rate payments and 6 billion yen by
decreasing the number of fuel storage tanks.

It hopes to turn a profit within the first five years,
liquidate cumulative debts within 15 years and pay
back all interest-bearing debts within 30 years.

The operator wants to avoid a repeat of the
cost-related problems that Osaka's Kansai
International Airport faced -- and still faces.

The passenger terminal building at Kansai was built to
give the impression of a soaring bird, although the
Osaka Prefectural Government expressed doubt about the
design, worrying it wouldn't be cost-effective.

That airport's construction cost came in 1.5 times
higher than the initial budget. Maintenance costs
remain high.

Chubu airport hopes to do better, and construction
expenses have been cut drastically through continuous,
direct negotiations with contractors.

The president, the directors of the management
planning and sales departments, and other executives
of the airport-operating firm are from Toyota, a
company known for its drastic cost reductions.

But cost cuts are not the only point of focus. The
company is taking early aim at attracting cargo
transport business.

The cargo terminal will be about 1 km long, and planes
will be brought in close for loading and unloading to
ensure efficiency.

The old Nagoya airport has seen poor performance in
terms of air cargo.

A Nagoya Customs survey showed that 75 percent of
imports of goods on a weight basis to be consumed in
the Chubu region and 83 percent of exports of
commodities produced in the region are handled at
Narita and Kansai airports.

The new airport hopes to grab a significant slice of
that business.

Kenji Mizutani, a professor at Chukyo University,
said: "The Chubu region is a production base. The new
airport is close to both highways and the bullet
train, and very convenient."

If landing and takeoff fees are lower than at Narita
and Kansai, the new airport can expect to secure
enough cargo transport demand to ensure a healthy
revenue stream, industry analysts said.


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