Outline of

"How Airports Should Be Improved - A Demand for Drafting an Improvement Plan with Emphasis on Large Scale Airport"

May 16, 1995

(Japan Federation of Economic Organizations)

  1. Basic Perception
  2. There exists in Japan a very large demand for air transportation, both domestic and international. It is essential to secure the necessary funds and to revise the airport improvement system in order to enhance the capacity to handle expansion of air transportation during the period of the "7th Five-Year Plan for Airport Improvement" (FY1996-2000) and to form a multiplex air network through the collaboration of a number of large-scale airports that can meet domestic and overseas needs in such aspects as connections between domestic and international carriers, cargo-handling and fees.

    It is necessary to make effective use of the limited funds. Also vital to draw up an airport improvement plan that is oriented toward centralization and also to establish a cooperative link between the government and private sectors, and between the central and provincial governments. To be consistent with needs of the new era, it is also necessary to keep in mind to recycle profits that result from development.

  3. The Need for Airport Improvement to Meet Needs of the 21st Century
    1. Sustain a vigorous economic society is essential, and the role Japan is expected to play in international society is expanding. And to create a transportation infrastructure that meet needs of the 21st-century, priority should be given to establishing a large-scale airport that can become a base for international competition and co-existence, as well as for regional development and promotion of industry. According to one estimate, if the airport capacities of the three major metropolitan areas (Tokyo, Nagoya, Osaka) are expanded to satisfy the needs, air demand (on the basis of the number of departing flights from the three areas) in the year 2010 will be 1.6 times the present for domestic flights and 2.7 times for international flights. To handle this demand, the following will be necessary:

      In the Tokyo area: Completion of the second stage construction of New Tokyo International Airport (Narita), the construction of a third Tokyo airport, and increase in the number of departures/arrivals at Tokyo International Airport (Haneda) through improving traffic control technology.

      In the Kansai area: Completion of the second stage construction of Kansai International Airport.

      In the Chubu area: Completion of Chubu New International Airport.

      In addition,
      If Hokkaido's New Chitose Airport will be expanded as a regional gateway, accelerate consideration of building new international airports in the Tohoku area, realization of building Kyushu International Airport, and improvement of airports in Chugoku, Hokuriku and other areas are accomplished, it will be possible to construct an efficient air network in Japan.

    2. If the consolidation of large-scale airports progresses and if airlines engage in free competition against the background of ample airport capacity, it would not only bring out the effects of deregulation of air rates, charges and operational services but also make possible further and sweeping deregulation, thus multiplying the benefits to users.

    3. The expansion of airport capacity has a big ripple effect on the economy. If (i)-(iii) above are achieved by the year 2010, we can expect that it will stimulate new annual production of about 3.95 trillion yen as a result of an increase in travel demand.

  4. Securing Funds for Airport Improvement and Revision of the System
    1. The present way of dividing the cost burden of public works should be revised, and funds from the general account of the national budget should be allocated on a priority basis to the consolidation of a large-scale airports.

      In view of the fact that airport construction is a long-term project, the use of interest-carrying funds, such as treasury loans and investment funds, should be carefully considered. Furthermore, it is necessary to reconsider the loan conditions, such as the term and the time for starting repayment of the principal, regarding loans already provided for airport construction and improvement.

    2. It is vital that a framework regarding the recycling of the profit resulting from development be quickly established. Specifically, it is necessary to pluralize the ways of raising the necessary funds, by such means as the integration of businesses within the airport terminal and peripheral businesses, securitization and issue of tax-free bonds, and introduction of a system to exempt tax on investment income in order to promote private-sector investment. It is equally important to take into consideration the burden to be borne by the community that will receive benefits, direct or indirect. The recycling of development profit through regional government tax collection should also be realized.

    3. It is necessary generally to lower the fee for airport use for both international and domestic carriers by increasing appropriations from the budget's general account for airport improvement, thus lessening the user's burden. It is also necessary to reduce the cost of airport construction and operation, and to increase the number of departures/arrivals by expanding capacity, thus lowering the unit price of landing and other fees.

    4. In the case of Kansai International Airport, for which the third-sector formula (joint public-private project) was adopted, 70 percent of the construction cost was financed with interest-carrying funds. As a consequence, its landing fee is among the highest in the world.

      Therefore, in the construction of a large-scale hub airport in the future, consideration should be given to the adoption of the so-called "top-bottom separation formula" of separating the entity that undertakes the acquisition and development of land from that which undertakes the construction and management of the airport. Moreover, it is also necessary to effect a wide-ranging transfer of authority to the third sector, which will continue in future to be the vehicle for using the vitality of the private sector.

    5. Airport capacity must also be expanded by increasing the number of departures/arrivals at existing airports by adopting advanced air traffic control technology. It is hoped that, from the standpoint of reducing the cost of constructing an airport at sea, floating body technology should be used. In drawing up airport projects, studies should be conducted for adopting new technology and there should be flexibility to revise plans in accordance with advances in technology.

    6. The framework for improving airports according to the Airport Consolidation Law is no longer consonant with the today's conditions. From now on, work should be pushed to design a framework that is in accordance with the new division of functions between airports and improved cooperation between the government and the private sector.

  5. Specific Points Regarding Airport Consolidation of Each Region
    1. In the Tokyo capital area by stepping up the second stage construction of New Tokyo International Airport (Narita), the wishes of more international airlines to use the airport and of current users to increase their flights should be materialized, and consideration should be given to improving connections between international and domestic flights as demanded by passengers. Also, a survey should be conducted to find a possible site for a third airport in the greater Tokyo area. For this, a council of interested parties, comprising the central government, municipal governments and civic groups should be established, and efforts should be made to reach a consensus on how to solve the shortage of airport capacity in the area. As for Tokyo International Airport (Haneda), advances in air traffic control technology should be adopted to increase the number of departures/arrivals.

      In the Kansai area, the second stage construction of Kansai International Airport should be materialized. For this, funds from the general account should be used and an implementation body based on local understanding should be established, such as investment by local autonomous bodies and the adoption of the "top-bottom separation formula."

    2. In the Chubu area, regarding the Chubu New International Airport concept, construction should be started during the 7th Five-Year Plan for Airport Improvement after obtaining the agreement of the parties concerned regarding how it will be financed and managed.

      In the Kyushu area, the construction of Kyushu International Airport should be pushed after obtaining agreement of the local community regarding project site and scale of the project. In addition, it is necessary to bolster the functions of New Chitose Airport as a regional gateway and to launch a study toward realizing the concept of a new international airport in the Tohoku district. Furthermore, steps to improve airports like Komaki Airport and Hiroshima Airport, which are already used by international carriers and constitute regional bases, should be continued and they should be used to greater effect.

    3. The future improvement of regional airports should be carried out autonomously by each local government concerned on the basis of its own judgment of priorities and by taking into account the balance between air transportation and other modes of transport and the local development strategy. In the case of the construction of a new local airport, the project should be undertaken by the local government that is able by itself to recycle the profit resulting from the development.

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