Japan must address cost issues to build competitiveness

The International Air Transport Association (IATA) made the following statement following a meeting with Seiji Maehara, Japan? Minister for Land, Infrastructure, Transport and Tourism.

IATA fully supports Minister Maehara vision to increase the competitiveness of Japan air transport sector with more efficient infrastructure. To turn the vision into reality, urgent action is needed to address cost issues. Today marks the start of a new dialogue with the Japanese government which will play a critical role in rebuilding Japan aviation competitiveness, said Giovanni Bisignani, IATA Director General and CEO.

Bisignani urged the government to re-think the JPY2,400 per tonne charge for international operations at Haneda Airport. Charges must follow ICAO principles. That means transparent charges, no cross subsidization and consultation with users. International and domestic operations use the same infrastructure.

There is no justification for international charges to be higher. In fact, the increased traffic should reduce unit costs, said Bisignani.

Metting such a high charge for Haneda ignores the natural impact of added capacity to reduce unit costs. And it misses a great opportunity to drive efficiencies at both Haneda and Narita which should compete on costs and services to serve the Tokyo market.

Moreover, these airports must be able to compete for hub traffic at Hong Kong, Incheon, Shanghai and Beijing to serve the growing Chinese market. But that won happen with costs double that of successful airports like Singapore? Changi, said Bisignani.

IATA called for a more coherent aviation policy. nfrastructure must meet the demands of passengers. Airlines cannot continue to pay for airport infrastructure that is developed for political purposes. We need, for example, to sort out the situation in the Kansai region. The five runways of Itami, Kansai and Kobe serve 36 million passengers a year. Singapore runs its successful hub serving 37 million passengers on just 2 runways and with much cheaper costs, said Bisignani.

Japan is a mature market on the doorstep of the world? fastest growing aviation market-China. Over the last decade the Chinese international market has grown from 500,000 seats per week to 1.4 million, while Japan has remained virtually unchanged with weekly international seats growing from 1.2 million to 1.3 million. Japan must urgently put its aviation house in order to compete in the Asia-Pacific market. The open skies bilateral with the US was an historic achievement.

I encourage the Government to continue to push for liberalization and join IATA Agenda for Freedom initiative to free up antiquated restrictions on market access and ownership. With the country largest international carrier in bankruptcy, in parallel to liberalization, the government must aggressively and urgently address cost issues to rebuild competitiveness. IATA is closely monitoring the restructuring of Japan Airlines.

IATA continues to work closely with Japan Airlines in the restructuring process. Financial guarantees provided by Japan Airlines have allowed for business as usual through IATA? global financial systems. Tough decisions will need to be made quickly to cut costs and close the gap with regional competitors. Japan expensive airport infrastructure costs impede improved competitiveness and must also be addressed as part of building a successful future for the company?said Bisignani.

Bisignani also praised Japan industry airports and airlines for working together to meet the 100% Bar Coded Boarding Pass target at the end of 2010. ?apan has always been a leader in new technology for passenger processing. Now this leadership must be extended to freight operations with support from all stakeholders including customs to increase the adoption of e-freight. Its reduced costs and faster processing times will make a much-needed contribution to the competitiveness of Japan? air freight sector,?said Bisignani.