Freeze aid to Kansai Airport

Review team: Freeze aid to Kansai Airport

THE ASAHI SHIMBUN

2009/11/17

An appeal for a 16-billion-yen subsidy to help the debt-ridden operator of Kansai International Airport is the latest budget request to face the ax, after a review team on Monday said the handout would be unlikely to produce the desired impact.

On the fourth day of budget request assessments, members of the Government Revitalization Unit said the subsidy should be frozen until authorities produced a clear division of roles for Kansai and its two neighboring airports.

If their proposal is adopted, airport operator Kansai International Airport Co. (KIAC) could face a funding shortfall, which may affect its business-improvement plans and hinder the transport ministry's aviation policies.

It remains to be seen how Prime Minister Yukio Hatoyama's administration will deal with the proposal when it compiles the fiscal 2010 budget toward the year-end.

KIAC is saddled with about 1.1 trillion yen in interest-bearing liabilities. The subsidy has previously helped cover part of the interest payments.

The amount requested by the Ministry of Land, Infrastructure, Transport and Tourism would be a substantial increase from the 9-billion-yen handout given this fiscal year. Officials say it would also help the airport slash its high landing fees and make it more competitive with overseas rivals.

But reviewers said it was doubtful the use of taxpayer money for fee cuts would lead to a significant rise in demand.

"Its demand projection was too optimistic, leading to its huge deficits," one reviewer said. Kansai Airport is located close to Osaka Airport at Itami and Kobe Airport.

"The subsidy is no more than a life-prolonging step," said another.

Nine out of the 14 reviewers assessing the project supported the freeze. Two called for abolishing the subsidy, and three favored cutting it below 9 billion yen.

The group also proposed a cut of about 10 percent for 46.7 billion yen in requests to build, expand and maintain local airports. Reviewers said spending must be focused on projects with urgent needs.

The government has come under fire for using the budget to support the opening of unprofitable airports.(IHT/Asahi: November 17,2009)