Soon under new management

A law aimed at utilizing business management know-how from the private sector to operate Japan’s airports has entered into force. Under the law, the central and local governments may entrust airport management to private companies while retaining ownership. We urge the central government to select an airport to apply the new management method to at an early date so its effectiveness can be evaluated.

Under the law, central and local governments will continue to own airports for national security reasons and to ensure they can be used during large-scale disasters. Leasing airports for 30 to 50 years, private-sector bodies will manage airports’ central functions, including runways, as well as other facilities such as airport buildings and parking lots. They will be allowed to set landing fees as they see fit and pay rent to the central government.

According to accounting settlement analyses by the infrastructure and transport ministry for fiscal 2011, only nine airports were able to generate enough profits from landing fees to cover the expense of runway maintenance. When profits from airport building and parking lot operations were included, the number of airports regarded as operating in the black doubled.

The new airport management bodies are expected to make serious efforts to increase sales of goods at shops inside airport buildings and to use the profits from them and other facilities, including parking lots, to lower landing fees. Lower landing fees, in turn, are expected to attract low-cost carriers to the airports.

Airport management bodies may push business cooperation with low-cost carriers and tourist companies to increase the number of airport users. This would help revive local economies. For example, Chubu Centrair International Airport, run by a private company, already attracts large numbers of non-passengers by organizing various events at its facilities.

The Miyagi prefectural government is eager to make Sendai airport the first airport to operate under the new law, as it wants the airport to serve as a symbol of recovery from the 3/11 disasters. The new management body for the airport is likely to be chosen by the end of March through competitive bidding. Other candidates for application of the law include Fukuoka, Hiroshima, Takamatsu and Shizuoka airports.

Some local governments have questions about the new method of operating airports, including how it will help to strengthen local economies. The successful operation of Sendai airport by a private entity would be indispensable to gaining their support.

To encourage competent private entities to try managing airports, the central government must fully disclose the business conditions of individual airports. Private entities also must make their airport management transparent once they begin operations.