Japan airports plan set to shake up retail interests

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The current competitive situation among Japan's airport retailers and landlords is already made up of a complex network of shareholdings

The situation looks like becoming no less complex with the proposed reform of airport financing in the country.

Japan's Construction and Transport Ministry is attempting to force through a proposal to realign the country's main airports, separating construction and ownership from their management and operation, with a view to full privatisation. Although the plan will create some new commercial freedom for airports it is not clear how retail performance will benefit. And the project has come under attack from aviation body IATA and sections of the business community who say the responsibilities of management will become unclear. IATA is concerned the plans violate an international agreement on landing charges, while many are disgruntled that subsidies are being rerouted from Tokyo Narita airport to Osaka Kansai and the new Chubu International airport, scheduled for opening in 2005.

Currently, state-owned New Tokyo International Airport Authority runs Narita airport, which is expected to begin operating in the black in the near future. Two other corporations, partly financed by the government, run deficit-ridden Kansai and the under-construction Chubu airport. The three companies build, own and manage their respective airports, with varying degrees of participation in retail. Under the new plan the airport management and operation companies could freely launch retail and other related businesses as fully private companies.

Speaking to Duty-Free News International last month New Tokyo International Airport Authority (NAA) director business division II Osamu Suzuki said, "When the plan is finally approved NAA will have the freedom to take a more hands-on approach to retail like its counterparts at Osaka Kansai and Nagoya Komaki."

At Kansai, airport authority Kansai International Airport Co (KIAC) runs duty-free stores in partnership with Japan Airport Terminal Co (JATCo). Other operators at the location include Taihoh Global, ANA Trading Duty Free, Airport Senmon Daiten, Blanc de Blancs and Asahi Airport Service. Tokyo's Narita and Haneda airports are dominated by market leader JATCo, ANA Trading Duty Free and the Narita Promotion Foundation in which the airport authority is understood to have a substantial interest. JATCo owns the passenger terminal building at Tokyo Haneda airport and has a monopoly on management functions there.

A decision from the Transport Policy Council, which is discussing Japan's airport development plan, is expected soon.