ArrowArtboardCreated with Sketch.Title ChevronCrossEye IconIcon FacebookIcon LinkedinShapeCreated with Sketch.Icon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Economy

Typhoon leaves Kansai Airport operator questioning future responsibility

Confusion threatens potential privatization of other gateways in Japan

Kansai Airport was left flooded by Typhoon Jebi last month.    © Reuters

OSAKA -- Kansai Airport was crowded as usual on Oct. 3, with Chinese tourists traveling for China National Day. Annie Han, a 32 year-old visitor from Shenzhen, had toured Osaka, Kyoto and Nara for six days with her boyfriend. "I love Japan because it is clean and people are kind," she said.

One month has passed since Kansai International Airport took a heavy hit from the Typhoon Jebi on September 4. As Japan's third-largest airport by passenger numbers, behind Haneda and Narita near Tokyo, it is the gateway to the western Japan.Yet already, the number of foreign travelers is rapidly recovering after the storm. According to the Immigration Bureau of Japan, passenger traffic at Kansai Airport was back to last year's levels by September 21, when operation was fully resumed. Since then it has bounced between 17% below and 17% above last year's levels until the airport shut down again for another typhoon on September 30.

Kansai has reopened once again, but these typhoons have revealed some fundamental, longer-term problems with its infrastructure.

The airport's sea walls were unable to protect the airport in the first deadly storm. Typhoon Jebi washed over the barriers and severely flooded Terminal-1 and Runway A, as well as the electric substation.

Much of Kansai Airport's critical infrastructure is located in the basement, including its disaster response center and electric substation, which were completely immersed in the water. Three out of six power transformers installed on the first basement floor of the Terminal 1 were damaged, and electricity failed in most parts of Terminal 1. This led to a large-scale blackout.

Yoshiyuki Yamaya, CEO of the airport's operator Kansai Airports at the center, admits their “prediction was optimistic for typhoons.” (Photo by Eri Sugiura)

The storm also took its toll on the road-rail bridge, which was damaged after it was hit by a tanker. The incident left approximately 8,000 people stranded in the airport without sufficient electricity and telecommunication.

The 3,750-meter-long bridge connecting the mainland to the airport, built on an artificial island, is also a conduit for critical infrastructure including electricity, gas, water and telecommunication. After the tanker collision, the network for fixed and mobile phones was disrupted, according to telecom company NTT West.

Kansai's operating company, Kansai Airports, will reveal the extent of the damage at its interim earnings in November. The question of who will pay, however, remains open.

Kansai Airports is a joint venture between Japan's Orix and France's Vinci, and has been operating the facility since April 2016. Under its contract, Kansai Airports should be liable for the costs of recovering from natural disasters up to a cap of 10 billion yen ($87 million). Anything more should be paid for by the state-owned New Kansai International Airport Company, which is the ultimate owner of the airport's buildings.

However, the question is whether Kansai Airport had sufficient protection in place before the storm.

"It is a huge risk to keep infrastructure in the basement and centralize lifelines of Kansai Airport in one place, especially when it is a floating airport," says Toshiyuki Uemura, professor at School of Economics of Kwansei Gakuin University. He suggested that Kansai Airports should have done more to "recognize and prepare when [it] took over operation of the airport".

Yoshiyuki Yamaya, CEO of Kansai Airports, said on Oct. 3 the company was "willing to consider putting electric substation on the ground, although it might cost a substantial amount."

He avoided clarifying who would have to pay and how much. "If any disaster occurs, [not only the operating firm but] competent people have to cooperate together," he said. "It is important to communicate on a daily basis with the government and [the state-owned] New Kansai International Airport Company."

Yamaya emphasized that the extent of the damage was "beyond expectation". Kansai Airports had formulated its Business Continuity Plan only for earthquakes and tsunamis, but not for typhoons , he said.

The discussions between Kansai Airports and the government are likely to be intense, given the nature of the operating contract which sets out the terms for sharing the cost after a disaster, but not the price of preventing one.

But time is running out. Kansai Airport, built in 1994, is sinking. Last year the airport sank 30 centimeters. The operating company is raising the seawall, but further measures will be needed to prevent flooding and that too will cost.

Resolving the ambiguities over liabilities will be crucial not just for Kansai's future but for the many regional airports which have followed its privatization.

Kansai is considered a model of success. The airport had piled up a 1.3 trillion yen ($11.3 billion) deficit to 2016, when Kansai Airports took over its operation. Last year, Kansai Airports, which also operates Itami Airport in the west of Japan, delivered an operating profit of 52.9 billion yen, up 40% on the previous year. Profitability has been driven by a wave of inbound tourists and sales in the airport duty-free shops.

The turnaround has encouraged airports in Sendai and Takamatsu to privatize, while seven airports in northern Hokkaido, and others in Hiroshima and Fukuoka are preparing for the process.

Yet the vulnerabilities revealed by Typhoon Jebi may prompt some to reconsider the terms for potential operators.

Two days after the typhoon hit, it was not Yamaya from Kansai Airports but Prime Minister Shinzo Abe who announced a partial resumption of domestic flights the next day.

"It is very odd that the government intervenes to the management of a private company," says Uemura from Kwansei Gakuin University. It was a clear lack of leadership on the part of the airport, he said. "This symbolizes the frustration of the government and the confusion of the management team," he concluded.

You have {{numberReadArticles}} FREE ARTICLE{{numberReadArticles-plural}} left this month

Subscribe to get unlimited access to all articles.

Get unlimited access
NAR site on phone, device, tablet

{{sentenceStarter}} {{numberReadArticles}} free article{{numberReadArticles-plural}} this month

Stay ahead with our exclusives on Asia; the most dynamic market in the world.

Benefit from in-depth journalism from trusted experts within Asia itself.

Try 3 months for $9

Offer ends September 30th

Your trial period has expired

You need a subscription to...

See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

See all offers
NAR on print phone, device, and tablet media