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The Diet enacted legislation Friday “privatizing” New Tokyo International Airport, initially putting the airport in Narita into the hands of a 100 percent government-owned company, which will be turned into a private concern in 2007.

The legislation renames the airport, which serves the Tokyo metropolitan area, as Narita International Airport.

The airport bill cleared the House of Councilors with the backing of the ruling coalition and the Democratic Party of Japan. The House of Representatives approved it May 22.

A new special stock company to be wholly owned by the state will take over the operation of the airport from New Tokyo International Airport Authority on April 1. The authority, which has been running the airport since it opened in May 1978, will be disbanded.

The government has set 2007 as the target date for turning the airport company into a publicly traded firm.

The government has put up 300 billion yen in capital for the airport authority. Under the privatization plan, the government capital will be split into 150 billion yen as capital and capital reserves for the new company and 150 billion yen as an interest-free loan to the new company.

Under the terms of the privatization bill, the new airport operator will be allowed to diversify its business and operate commercial facilities and hotels.

Nonaviation services currently account for 30 percent of the airport authority’s revenue. Airport officials hope to raise the share of such services to more than 50 percent.

On those prospects, Masahiko Kurono, president of the New Tokyo International Airport Authority, said: “We are thinking about duty-free shops. For other types of business, such as hotel management, I think we ought to be cautious.”

Business strategy aside, a major problem facing the privatized airport authority is extending the length of the second runway, which opened for business on a provisional basis last year in time for the 2002 World Cup soccer finals.

The second runway, which is 2,180 meters long, is too short for jumbo jets. The original plan was to build a 2,500-meter second runway, but that has been stalled by disputes with landowners who have waged a long-running campaign against the airport.

The airport, 60 km east of Tokyo, was originally designed as the main international gateway for Tokyo to replace Haneda airport, a stone’s throw from the center of Tokyo but unable to handle increased traffic.

The Tokyo Metropolitan Government, however, has recently been lobbying hard to turn Haneda into a rival international airport, particularly for flights to neighboring parts of Asia.

That prospect worries Narita officials. “The impact would be huge if flights to South Korea, Shanghai and Taiwan are switched to Haneda,” a senior Narita airport official said.

Narita airport is also facing enormous pressure to lower its landing fees, the world’s highest.