With legislation for privatizing Narita airport set to win Diet approval Friday, the head of the operating authority pledged to do his utmost to make Japan’s main gateway more profitable so it can go public in a few years after becoming a wholly state-owned joint stock corporation.
As soon as the privatized airport achieves steady profits, Masahiko Kurono, president of New Tokyo International Airport Authority, said he is ready to lower landing fees, which are much higher than other Asian airports — to meet the demands of international carriers.
Effective April 1, the airport authority will be disbanded and replaced by a new body, tentatively named Narita International Airport Corp. The privatization comes 25 years after the airport’s 1978 opening.
“Privatization means we will be able to operate without various state restrictions. But at the same time, we must be fully responsible for our own management,” Kurono said in an interview this week.
“Having a free hand to manage, we will seek profits and reduce costs to make the airport as efficient as possible,” he said.
In seeking profits, Kurono said the new corporation will diversify into other businesses, including retailing and operating duty-free shops — activities not allowed under the authority’s current status as a public corporation.
The airport will re-evaluate how it does business with outside contractors in the construction and maintenance of facilities and streamline procedures where necessary to cut costs, he said.
Under Tokyo Stock Exchange rules, the new company will have to wait until at least April 2007 to go public. Kurono said the airport must first log enough profits over the three years starting in 2004 to show it can pay dividends when it goes public.
Narita airport had 5.7 billion yen in pretax profits and 1 billion yen in net profits on 138.9 billion yen in revenues in the 2001 business year and is estimated to have earned pretax profits of roughly 20 billion yen in the business year that ended March 31, but may have suffered a net loss of about 1 billion yen due to accounting rule changes regarding employee retirement allowances.
April-June revenues declined by 7 billion yen from the same quarter of 2002 due to the impact of the Iraq war and the SARS scare, but Kurono said he is confident the airport’s monthly revenues can be brought back to the level of a year before beginning this summer.
If all goes well and the new company proves profitable, Kurono said, preparations to go public may start even before its fiscal 2006 performance is reported, although the final decision will rest with the government because it is the sole shareholder.
Admitting Narita’s landing fees are far higher than rival Asian airports, Kurono said the new company will be ready to lower them as soon as it appears the books can be balanced.
It currently costs 950,000 yen to land a jumbo jet at Narita — three times more than the roughly 310,000 yen charged by Inchon Airport near Seoul. Kansai International Airport meanwhile charges 830,000 yen.
To this end, Kurono underscored the importance of extending Narita’s second runway by 320 meters to its planned 2,500-meter length as soon as possible, after resolving a long-standing dispute with landowners opposed to the construction.
Lengthening the runway and getting it operational will be key to future profitability and thus a major factor in efforts to go public, he said.
The second runway opened in April 2002 but local farmers have refused to give up their land on the extension site.
“It’s best to complete the (second runway) in accordance with the (original) plan,” Kurono said, stressing that he would continue efforts to settle the dispute through talks with the landowners.
However, he said the airport also has the option of extending the runway from the other, northern, end, should the talks with the landowners fail or bog down.