Kansai airport: a beautiful loser: Kansai international airport is stunning—but sinking into debt and desolation. Care for a date? - Upfront

Japan, Inc., Sept, 2003 by Dominic Al-Badri

AESTHETICALLY, THE MAIN TERMINAL building of Kansai International Airport (KIX) is one of the most appealing structures of its kind--not just in Japan, but anywhere in the world. Designed by Italian architect Renzo Piano, the four-story structure is a 1.7 kilometer-long aluminum and glass frame topped off with a roof which arcs in the shape of an undulating wing. Over the past few years, using the airport has become an increasing pleasure--if you enjoy the misfortune of others. Fewer and fewer airlines are landing at or taking off from KIX, due to a steep decline in passenger demand. Peak travel times aside, the place often feels virtually deserted. Indeed, when catching a recent red-eye to Bangkok, I felt like the only traveler in the whole airport. Designed to offer a liberating sense of space and freedom, the terminal's strength becomes its weakness when deprived of its lifeblood--the myriad passengers who should be scurrying to and fro, forming the background hubbub and endless shuffle of any truly international airport.

KIX has been newsworthy ever since its conception as an offshore airport in Osaka Bay in August 1974. As civil engineering feats go, the airport is prize-winningly impressive: located on a 1,300-acre, man-made island linked to the main island of Honshu by a 3.5-kilometer railway suspended over the water. Whether it really is "one of the three man-made objects which can be seen from space," as some locals like to brag, is a matter for astronauts. For the layman, arriving and departing at the airport is a treat--similar, though for different reasons, to the thrill associated with coming in low over Kowloon when landing at the old Kai Tak Airport in Hong Kong.

Scurrying

But since opening for business in September 1994, the airport's operator, Kansai International Airport Co. (KIAC), has lurched from crisis to crisis. KIX opened its runways just as the Japanese bubble hangover started to kick in. Projected operating costs and profits had been based on what turned out to be over-optimistic forecasts calculated in much healthier economic times. By 1996, foreign airlines, already grumbling about the highest airport landing fees in the world, began scaling back their operations. Before the end of the decade, numerous big-name carriers had ceased flying into KIX entirely. In the mid 90s, there were three daily non-stop flights to London aboard three different airlines. Now there is just one. There are still no flights to New York. As one veteran foreign travel agent based in Osaka put it: "The idea of turning KIX into a hub for Asian destinations will remain unfulfilled. Period."

Even with such ominous clouds on the horizon, stage-two construction plans (which call for the building of an additional 4,000-meter runway on a new artificial island by 2007, at a projected cost of [yen] 170 billion) were initiated in 1999.

Submerged

The following year, it was announced that the reclaimed airport island was sinking into the murky depths faster than expected. As the debts from lower-than-expected revenues started to deepen as well, vast amounts of money suddenly had to be spent on keeping the existing structure from being literally submerged. By the end of the year it was estimated that some [yen] 27 billion had been spent on shoring up the passenger terminal.

Figures for 2001 revealed that KIX was again in debt, as it has been during each year of its operations--but this time to the tune of [yen] 15 billion. Overall, the airport has interest-bearing debts of a staggering [yen] 1 trillion. These are supposed to be paid off by 2027, though some economists project that it will be nearer to the year 2035, a time so far in the future it is almost impossible to imagine what demands will then be made on the nation's transport infrastructure.

KIAC officials somehow continue to put a brave face on things. Their grin-and-bear-it attitude persists, even though the expected number of take-offs and landings at the airport in 2007 has been revised to 136,000 by the Land, Infrastructure and Transport Ministry--well below the KIAC-projected 160,000 necessary to justify the construction of the second runway. The government doesn't expect this figure to be reached until sometime around 2012. And the numbers were reached prior to any accounting of the long-term effects of Middle Eastern turbulence and rogue Asian viruses.

Desperate

Affected by both the recent invasion of Iraq and the SARS double whammy--plus the lingering post 9-11 fear of flying--Japan Airlines (JAL) has reduced flights to numerous Asian destinations amid declining demand. A Taiwanese doctor who later contracted SARS was found to have visited Kansai in May, just before falling ill. This was the closest Japan got to SARS, but the media hysteria was enough to put most Kansai residents off traveling abroad. So desperate had things become for certain Asian airlines that it was possible to fly, during the peak summer holiday season, from KIX to Australia for less than [yen] 60,000 roundtrip. The damage caused to KIX's finances has been heavy.