Thursday, September 20, 2012

Narita airport's exorbitant landing fees still drawing flak from carriers

CHIBA — The high cost of using Narita International Airport continues to draw criticism from airlines.

Narita's landing fees, which account for the bulk of that cost, are more than double the fees at South Korea's Incheon Airport and Singapore's Changi Airport, which are competing for the title of Asia's main air travel hub.

Narita International Airport Corp., which runs Narita airport, has tried to justify its high fees by citing its huge debt load, a legacy of cost overruns from its construction. As of the end of March 2012, the company was saddled with ¥666.2 billion in debt.

Narita airport is also incurring ¥7 billion annually from security measures needed to counter acts of sabotage from the airport's opponents, even though such activities have subsided since the anti-Narita movement's peak in the 1970s and 1980s.

Despite these financial problems, Narita airport is raking in steady earnings due to its pre-eminence as the international gateway to Tokyo. For the business year ending March 2013, the airport's operator expects to earn a net profit of ¥12.6 billion on operating revenue of ¥188.4 billion.

A disgruntled airline official suggested that Narita airport is enjoying unfairly juicy profits.
"Does an airport, which is a public facility, need to earn that much profit?" the official asked.

Adding to the annoyance of airlines is the cost of the general security checks that they must bear when using Japan's airports. In other countries, this cost is usually covered by governments.

Amid the chorus of complaints, Narita airport has taken some action over the past several years to placate air carriers.

In 2005, the airport introduced a new fee system that rewards the use of low-noise aircraft with reduced fees. This led to fee cuts averaging around 20 percent.

After the global financial crisis in 2008, Narita airport introduced a provisional discount of around 7 percent that was in place from November 2009 to March 2011. In the business year ended in March 2012, the airport discontinued the discount but cut fees for the use of other airport facilities as a compromise.

In the current year, this fee arrangement has been maintained as a provisional measure. Still, in the eyes of airlines, Narita has apparently failed to do enough.

An airline official urged the airport to cut its landing fees further, arguing that this will benefit Narita itself. Lower fees will help it attract more flights and passengers and increase income received from airport tenants, such as restaurants and shops, the official said.

Ultimately, the threat of competition from Tokyo International Airport at Haneda may be the key to whether Narita will whittle down its prices.

Whereas Narita has only two runways, Haneda completed is fourth runway in 2010. The addition of the new runway has paved the way for an increase in international flights to and from Haneda, which has better access to downtown Tokyo than Narita but has served mainly as a hub for domestic flights.

However, Narita can count on a steady stream of traffic, at least for now, according to Kazusei Kato, a professor at Nihon University's College of Economics.

Narita airport "is unlikely to swallow a landing fee reduction until the number of landing slots for international flights at Haneda increases sufficiently to pose competition," Kato said.

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