Haneda vs Narita
Air transport policy is clearly a priority for Japan’s new government. Within weeks of the election, Minister Seiji Maehara was creating turbulence with plans to turn Haneda airport into a 24-hour international hub.
But whether or not European executives will soon be able to fly to their home HQ from the centre of Tokyo, there is much room for improvement to Japan’s air transport policy. A lack of capacity in and out of the Kanto area, and high charges used to pay for near empty local airports, have long made Japan a difficult market for European airlines.
EURObiZ Japan spoke to the market participants who have most to gain from an improved and effective air transport policy. They stress that if Haneda is to be opened to international traffic, it must be to ensure fair competition, rather than protect domestic carriers. The Airlines Committee of the European Business Council in Japan emphasises the need for enhanced efficiency – for both airlines and consumers. It wants the DPJ government to provide new economic opportunities and to stop the gradual erosion of Japan’s significance to major airports in the region.
In November, the committee released its annual report on the state of the industry here, pointing out that while there has been “substantial progress” in the area of price liberalisation, and a degree of progress on the way in which Japan manages its airport infrastructure, there is no sign of a change to the high costs for air-transport companies operating in Japan – the most expensive place in the world for airlines.
“For the council, it is very important that the Japanese government understands that we are not making proposals on changes to safeguard and protect our own interests,” said Otto Benz, chairman of the committee and general manager for Japan of Lufthansa German Airlines.
“We aim to see things in a larger context and a more comprehensive way,” he said. “We are trying to reach solutions that are market-oriented. As the European airline industry has undergone a quite remarkable process of liberalisation in the last 15 years, we are hoping to share both the positive and negative experiences with the Japanese authorities.”
A turbulent history
The first commercial aircraft touched down at Narita airport on May 20, 1978, bringing an end to a 16-year search for a state-of-the-art facility to share the burden of increasing air transport services using Haneda. Originally, the plan was for three runways and a high-speed rail link to central Tokyo, 57km to the west, although two of the runways were immediately put on hold so as not to further antagonise landowners who had been forced to give up property for the airport to be built.
Despite the hitches, the amount of passenger and cargo traffic using Narita has grown in recent years. According to the global rankings of the Airports Council International, 35 million passengers passed through the airport in 2007, making it the 24th busiest airport in the world. Meanwhile, Haneda was in fourth place with 66 million passengers. For the following year, Narita had dropped out of the top 30 but Haneda was still in fourth place.
Singapore, Bangkok, Hong Kong and Beijing’s airports are firmly ahead of Narita in the popularity stakes.
“One of the biggest problems for the airline industry in Japan and for this country’s position in a regional context is the high cost of the infrastructure,” said Benz, pointing to the use of a “special account” into which all landing fees – among the highest in the world – are pooled before being allocated to airport-related infrastructure expenses, such as the construction of small regional airports across the country.
And while many small cities now have shiny new airport buildings, albeit rarely used, the high landing fees, combined with navigation costs as well as common user and security fees, mean that more and more foreign airlines are choosing to land at Beijing, Shanghai and South Korea’s Incheon instead of in Japan.
“The EBC urges the new government to consider a new set-up which does not force airports to contribute to politically driven development of new airports of little or no public value,” the committee states in its 2009 report. “In the long term, the government of Japan needs to reduce the costs associated with the provision of air transport in Japan by as much as 50% in order to remain competitive with other hubs in Asia.”
Equally, the committee believes it would be a mistake for the Japanese government to focus all its aviation efforts on Narita and Haneda to the detriment of other major airports in Japan, such as Nagoya and Osaka, as that would limit those cities’ access to overseas markets.
Another area of concern is the regulation of landing times at Narita and, when it is fully opened up to international traffic this year, Haneda. Not satisfied with the planned limitation of departure and arrival times for flights to and from Europe and the United States to the period between 10pm and 7am at Haneda, Benz is calling for a “level playing field” with Japanese and Asian operators by extending the operational hours. Ultimately, he points out, the consumer will benefit from the introduction of new, commercially reasonable flights by European and US airlines.
Traffic jams
And it is not just economic issues that are cause for concern among European companies. According to Michel Theoval, president of Thales Japan, an air traffic controls system supplier, there were are least three occasions in the last six years when the air traffic management system covering flights in and around the greater Tokyo region broke down. During one such incident – unreported by the Japanese media – air traffic controllers’ screens were reportedly blank for a full day, hundreds of flights were delayed or diverted, and the only way controllers had to converse with pilots in the air was by radio.
“The industry here has been convinced by the argument that the more runways that are built here, the more capacity they have,” says Theoval. “That is absolutely wrong. An airplane may only be on the runway for a couple of minutes, but sky occupancy and the failure of the air traffic management system here is the real issue.”
And while there is less threat of an accident involving aircraft passing through Japanese airspace, as they can be monitored by air traffic controllers in neighbouring regions, Theoval believes the lack of an integrated system with adequate back-up at Narita poses a genuine risk to aircraft.
“The situation is critical,” he said. “The safety of airline passengers is the main issue for the entire industry.”
Thales, one of the biggest electronics groups in Europe and a world leader in air traffic control systems, has offered to work with Japanese companies here. But Theoval believes the lack of a transparent bidding system for providing equipment to airports and the cosy relationship between the authorities and industry mean it has little chance of being able to bring its advanced technology into the Japanese market.
And with the growth in the number of flights when Haneda adds an expected extra 60,000 slots a year next year, the risk rises exponentially.
“Haneda airport will open a fourth new runway this year and have an extra 40% capacity,” said Masatoshi Otani, business development manager at Thales. “That increase will be a serious challenge to the existing air traffic management system and we strongly believe that a new system should be introduced as soon as possible to cope with all those additional flights.”
Benz said that while the average traveller would probably prefer to fly to or from Haneda airport, primarily because of its convenient proximity to central Tokyo, if the new slots are distributed equally and fairly then customers will have greater choice and there need be no discussion of Haneda replacing or superseding Narita.
Initial contacts between the European airlines here and the new administration were made November 24, allowing the European carriers to present a perspective on further steps towards the future development of aviation in Japan.
“The government has heard our opinions and we are looking forward to finding out more about their position,” Benz said. “Something is clearly moving now.”