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Regional airports moving to sell management rights to private sector

  • 2015-11-30 15:00:00
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(Ekonomisuto: November 24, 2015 – p. 86-87)

 

 Many operators of regional airports are looking into the possibility of selling their concessions to the private sector.

 

 Kansai International Airport and Osaka International Airport are at the forefront of this trend. They currently come under the direct management of the New Kansai International Airport Company (NKIAC), in which the government has a 100% stake.

 

 The NKIAC was examining bids for the purchase of its management rights to airport and commercial facilities in the two locations. On November 10, the contract was awarded to a consortium led by Orix and Vinci Airports, a French airport operator, for 2.2 trillion yen, the lowest bid price. A new management firm will be launched in April 2016.

 

 Kobe Airport may also outsource its management to the consortium. The Kobe municipal government, which manages the airport, is seeking the integrated operation of the three airports and preparing to negotiate the sell-off of concessions. It is planning to introduce a necessary ordinance as early as the end of the current fiscal year to make this happen.

 

 The Ministry of Land, Infrastructure and Transport currently has in mind selling the concessions of all state-managed airports. Candidates include the Sendai, Takamatsu, Fukuoka, Shin-Chitose, Shizuoka and Hiroshima airports.

 

 Many state-managed airports outsource the management of commercial facilities to local semipublic organizations. This suggests local governments have a greater say in the sale of concessions. In the case of the Fukuoka and Hiroshima airports, for example, the prefectural governments are leading negotiations.

 

 The Hokkaido government had been long reluctant to sell the concessions of the Shin-Chitose airport, but it changed course in 2015 and began looking into a possible sale. In addition to Shin-Chitose, there are 12 regional airports in Hokkaido. The local government seems to be considering working out policies to breathe life into these airports and build networks among them. As passenger traffic into Shin-Chitose is on the rise, the sale of its concessions is considered to be attractive to private companies.

 

 Meanwhile, the list of airport candidates for concession sell-offs does not include Haneda. This is because it is estimated that it would take a considerable amount of time to work out a deal if the concessions of the airport go on sale. Another reason could be that Tokyo Airport Terminal Co., a listed company on the First Section of the Tokyo Stock Exchange, manages the terminal buildings at Haneda.

 

 Semipublic organizations have been long tasked with financing infrastructure projects. But the government, public entities and local governments face difficulty in investing more, as they are burdened with debts, which are larger than in other countries.

 

 It costs a huge amount of money to upgrade public infrastructure facilities. The sell-off of airport concessions is attracting the attention of local governments as a possible solution, for this approach is expected to allow the private sector to take business risks and source the necessary funds. (Summary)

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