Airlines Seek Reduced Narita Charges

IATA JUCB currently proposes charges of JPY1950/tonne in response to NAA's insistence on maintaining an inflated price of JPY2400/tonne. Narita has long been the world's most expensive airport to operate from. 

Last year IATA airlines lost US$12 billion on international scheduled services, which is more than the industry has made in its history. By contrast, NAA made an ordinary profit of JPY10 billion in FY 2000. Many airports, including Incheon, Hong Kong and Singapore, have been quick to respond to the desperate state of the industry with meaningful reductions in charges. IATA JUCB Chairman, Peter Bysouth noted that "NAA certainly has not borne its share of the burden in helping the industry. It was hoped that NAA's recently announced rent discount was the first step in the right direction. Unfortunately, the discount is of minimal financial impact and for a limited term. NAA's refusal to budge from current prices will inflict painful long-term damage to an already fragile industry. The sad part of such a decision is its severe consequences for the competitiveness of airlines using Narita as a hub."  

IATA and NAA cost analysis for Narita remain far apart on several key issues including: 

(1) A high rate of return charged on a land valuation that far exceeds real market prices 

(2) failure to factor-in lower unit costs resulting from increased traffic expected after the opening of the second runway 

The opening of the second runway is a unique opportunity for the NAA to reduce its charges in line with reduced unit costs. IATA JUCB believes that the second runway will provide additional revenue to NAA in excess of additional costs. NAA has the advantage of the second runway being fully-subscribed with a strong revenue stream from day one. 

The airlines have long supported the opening of Narita's much delayed second runway. In 1984 airlines accepted the current charges in part to facilitate the construction of the second runway. Bysouth notes that "over the last two decades airlines have significantly reduced ticket prices, while Narita charges have remained the same. With the opening of the second runway, there is no reason that airlines should continue to have to pay these inflated prices, particularly when NAA's unit costs should be dropping." 

Reasonable charges at Narita should be part of the solution to Japan's current economic problems. A fair deal for the airlines will help keep Japan's aviation industry competitive in the wake of increased competition from other regional gateways with excess capacity and more reasonable costs, including Seoul's new Incheon International Airport. The IATA JUCB is encouraged that the wider implications of the negative impact of Narita's excessive charges have been noted by governments and Chambers of Commerce. 

In conclusion, Bysouth noted that "it is frustrating and disappointing that, after painstaking efforts by the JUCB to understand NAA's situation and to make a practical response to NAA's proposal we are still very close to where we started. 

In our discussions NAA did not object to the detail of our argument, yet they have refused to factor its strength into a lower landing charge." No date for further negotiations has been discussed. 

Notes

1. The IATA Japan User Charges Board (IATA JUCB) represents the airlines in
consultations with Japan's airport authorities concerning user charges. IATA
JUCB membership is composed of major carriers utilizing Narita, including
both Japanese and foreign carriers.

2. IATA's initial price proposal to NAA was JPY1850/tonne. This has been
revised to JPY 1950/tonne in this round of negotiations based analysis on
revised data provided by NAA.

3. Charges at Narita are the highest is the world. As an example, the
Transportation Research Laboratory's data for 2001 indicates that the
landing charges for a 747-400 at Narita are JPY 952,560. Landing fees at New
York's John F. Kennedy are US$3,325 (JPY 440,895), Hong Kong Chek Lap Kok
HKD$ 25,954 (JPY 449,004), Seoul Incheon KRW 3,155,820 (JPY 315,582) and
London Heathrow GBP 338 (JPY 65,102). Tokyo's convenient Haneda airport is
able to make a reasonable profit while offering similar services for JPY
1800/tonne.

4. IATA JUCB uses internationally agreed to ICAO principles to analyze
financial information provided by Narita.

5. Even with the IATA JUCB's proposal of JPY1950/tonne, Narita would remain
the most expensive airport in the world, after Kansai. Analysis of user
charges is not comparative across countries, but is based on the actual
costs of providing services at the airport in question.

6. Airlines are willing to pay for the cost of landing and parking services
provided, in accordance with ICAO principles.