The government will reduce its capital in a new special-purpose company that will operate Narita airport in order to use the money for Kansai International Airport Co., it was learned Sunday.

Government funds in the Chiba Prefecture airport will be slashed by some 200 billion yen so that the money can be used to help reduce the debts of the Kansai airport.

According to informed sources, the idea is part of an overall plan to privatize the New Tokyo International Airport Authority.

The first step will be to submit a bill to the regular Diet session, convening in January, to turn the authority into a special-purpose company in fiscal 2004. Company shares would be held by the government.

At present, the government has provided roughly 300 billion yen to the airport authority. The sources said this amount will be reduced to some 100 billion yen when the new special-purpose company is established. The remainder will be returned to the state from the new firm’s profits over a period of several decades.

The Land, Infrastructure and Transport Ministry wants to use this money to assist the operator of Kansai International Airport, which is mired in some 1.5 trillion yen in debt, the sources said. The ministry also plans to discuss the issue with the Finance Ministry.

The plan also calls for the special-purpose company to increase revenue from businesses not directly linked to flight operations. The company would operate, for example, duty-free shops so that landing fees at Narita — often criticized for being the highest in the world — can be reduced.

Approximately 90 percent of Narita’s slots are currently in use. Government officials feel that this makes it difficult for the new company to generate more revenue from landing fees since there is little room to increase the number of flights to and from the airport, the sources said.

In addition to duty-free shops, the government also hopes the new company will take part in the running of hotels and commercial facilities. The government would like to see revenue from such businesses, which currently account for some 30 percent of total revenue, rise to the 50-percent level found among major airports in the United States and Europe, according to the sources.

The government aims to have the special-purpose company go public in three to four years, they said.

The government also hopes to have Narita specialize in long-haul flights connecting Japan with Europe and the U.S. This is contingent, however, on a fourth runway being completed at Tokyo’s Haneda airport in 2009, the sources said. Haneda would then be better prepared to handle scheduled international flights, and the government would start authorizing those between Asian destinations, they said.

Narita would also have to expand its newest runway, now 2,180 meters long, to 2,500 meters. Long-haul flights are said to be more profitable for the airport.

Discord among current operators forced the transport ministry On Oct. 10 to abandon plans to simultaneously privatize Narita, Kansai and Central Japan International Airport, which is scheduled to open near Nagoya in 2005.

Under a plan devised in September 2001, the government wanted to set up one firm to operate the runways at the three airports, while three separate companies would manage the terminal buildings.

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