"Colossal construction costs shackle Japan's Kansai Int'l Airport"

Wednesday, August 25, 2004

Colossal construction costs shackle Kansai Int'l Airport
The Associated Press


OSAKA, - After making a dazzling debut with the objective of becoming a
hub of Asia almost 10 years ago, Kansai International Airport is in a
situation akin to being in a fog with poor visibility.

The nation's first 24-hour airport, with a 3,500-meter runway built on a
manmade island off Osaka, observes its 10th anniversary on Sept. 4 but
the management of Kansai International Airport Co. is shackled by the
debt from the colossal construction cost of some 1.5 trillion yen.

The cost, originally estimated at 1 trillion yen, rose because of ground
subsidence and cost overruns on building luxurious facilities.

In addition, it has not achieved its goal of becoming a hub airport for
Asia, a role that is increasingly being played by South Korea's Inchon
International Airport, which was inaugurated three years ago.

Flights from Japan arrive in Inchon one after another, creating a scene
that was supposed to have taken place at Kansai airport. Many Japanese
travelers stay in the transit section of Inchon Airport on their way to
European and U.S. cities and they stop there en route back to Japan.

Inchon is convenient for international flights from local Japanese
airports. There are 23 such flights a day compared with 16 from Kansai.

Passengers have to spend about an hour from the center of Osaka to get
to Kansai airport. This puts it at a disadvantage in domestic flights
because of the existence of Osaka Airport in Itami, Hyogo Prefecture,
west of Osaka, only 30 minutes from the center of the city.

Flights from local airports to Inchon are more convenient for transit
passengers bound for Europe and the United States than either Kansai
airport or Narita airport in the Tokyo area.

To add to Kansai airport's woes, the managers of Kobe Airport, scheduled
to open next year, have announced plans to invite international charter
flights, while Central Japan International Airport south of Nagoya is
due to be inaugurated next February.

Twelve local governments, including the Osaka prefectural government,
have invested more than 150 billion yen in the company that manages
Kansai airport, but are far from getting any dividend.

Nozomu Takahashi, a professor at Kansai University, said local governing
bodies are irresponsible because they invest in projects but do nothing
afterward.

The Osaka municipal government joined in the joint public-private sector
operation of Osaka City Air Terminal in a magnificent building with
Greek-style columns and marble stone floors.

It opened in 1999 in downtown Osaka to offer check-in service to
passengers using Kansai airport.

But airlines withdrew from the airport in the face of stagnant business.

The city air terminal building has now taken on a somewhat tawdry
appearance, becoming a home to "izakaya" pubs and "100 yen" stores.

Aviation commentator Kazuki Sugiura said those concerned with Kansai
airport "built a bigger container than necessary. Unless they admit the
error, there will be no rehabilitation" of the airport.

Critics say the airport is a classic example of the malaise afflicting
provincial areas in which local entities relied on central government
budgets and subsidies and built showcase facilities without rigidly
examining potential demand.

Osaka Gov. Fusae Ota and some members of local economic circles went to
Tokyo on Aug. 3 appealing to Finance Ministry and other officials for
money to carry out the second phase of Kansai airport's construction,
including a 4,000-meter runway.

They put the priority on getting the budget and kept the bottom line
fuzzy, such as how they plan to restructure the airport, according to
sources in the know.

A good thing about Kansai airport, however, is that its warehouses are
only about 10 minutes away by truck or bus, compared with Narita, whose
warehouses are located 10 kilometers from the airport.

"This is a good airport for doing work," said Kamikazu Hatano, manager
of the Kansai airport branch of Nippon Express Co., Japan's leading
transport company.

"We can immediately sort out freight unloaded in front of our eyes,"
Hatano said. Since the airport is open 24 hours a day, freight that
arrived at night can be delivered the next morning.

But the cargo volume handled at Kansai airport remains stagnant because
of the high charge for keeping freight, which is 10 yen per kilogram,
compared with 3 yen at Narita.

A manufacturing company official said it is a vicious circle as
"companies distance themselves from the airport and the airport loses
its convenience due to a reduction in the number of flights."

Tadakuni Hirano, vice president of Kansai International Airport Co.,
visited China in June as a member of a delegation dispatched by the
Kansai Economic Federation and appealed to Chinese officials to approve
flights from Kansai airport to Chengdu, Xian and Changchun.

Kansai maintains a stronger flight network with China than that of
Narita. The number of foreigners overall flying into Japan via Kansai
airport last year rose 5 percent from five years ago but the number from
China increased 73 percent.

The Osaka customs office reported record highs in the volume of trade
between the Kansai region and China both in exports and imports during
the first half of the current fiscal year.

Industry sources said that whether Kansai airport is able to establish
itself as a "window" to China depends on whether a wind from the China
mainland will be able to blow away the fog enveloping the airport and
the economy in the Kansai region. 


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