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Soapbox - Japan Aviation Management Research

Soapbox - Kazunori Morisaki, Senior Analyst, Japan Aviation Management“The international cost competitiveness of Haneda and Narita must be strengthened”

Last year was an eventful one in Japan’s aviation industry. Capacity increases of 45% were implemented at Tokyo’s two metropolitan airports, Haneda and Narita.

In addition, the Japan-United States Open Skies Agreement, which includes Narita and Haneda, came into effect from November 2010. Japan had previously concluded Open Skies agreements with nine other countries and regions but Narita and Haneda were excluded from these agreements due to a lack of slots. That has changed. In future, the two key airports serving metropolitan Tokyo will be part of all Open Skies agreements.

But the Tokyo gateways still need to do more to make Japan more attractive to airlines in terms of cost and convenience.

Narita has been privatized in an effort to bring a more commercial focus. In October 2010, Narita Airport Corporation agreed on an expansion of international slots from 220,000 to 300,000 by 2014 at the earliest. The local communities around Narita have also proposed a reduction of Narita’s curfew so that it may close later at night and open earlier in the morning. According to reports, Narita Airport Corporation—still known in initial form as NAA—also plans to construct a low-cost terminal with the target date of 2013.

However, a key impediment to Tokyo airports’ competitiveness is their high user charges. In 2005, Narita lowered its landing fees by 11% in real terms. And in 2011, Narita is proposing lower fees for new entrants and discounts for incumbents who expand frequencies. But the cost base remains high. User charges at Tokyo’s metropolitan airports for medium-sized aircraft are up to 1.5 times higher than at Incheon and twice as high as at Changi.

Haneda still clings to the old Narita level of $29.19 (JPY2,400) per tonne. Its accounting methods are far from transparent. There have been some improvements, though. In October 2010, the fourth runway began operation. In line with the completion of the new runway, a total of 60,000 international annual slots were distributed: 30,000 for daytime and 30,000 for midnight/early morning use. It allowed Haneda to operate as an international airport for the first time in 32 years.

Japan’s Ministry of Land, Infrastructure, Transport and Tourism (MLITT) also plans to distribute 60,000 slots for daytime use in 2013. However, Haneda’s newly opened international terminal is designed with only 30,000 daytime slots in mind, so the total number of slots in 2013 will only be possible if the terminal is expanded. Furthermore, MLITT will have to extend one of Haneda’s two 3,000-meter runways to 3,360 meters to respond to an increase of long-haul traffic to/from Europe and the United States. Currently, long-haul flight operations are limited to late night and early morning only.

One possible solution to make Japan’s airports more cost competitive is to simplify the management setup. Until now almost all Japan’s airports have been separately managed by two entities—one taking charge of the runways (MLITT) and often running up huge deficits—and the other managing facilities including terminals and parking, which are traditionally very lucrative. This opaque and wasteful system must be rectified.

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