Japanese airport investment opportunities · Airport flight passengers Kansai or Itami Airport...

Ministry of Land, Infrastructure, Transport and Tourism

Japanese airport investment opportunities

Hiroki Yasui

Director for Policy Planning and Coordination

Airport Governance Reform Unit

Japan Civil Aviation Bureau (JCAB)

The Ministry of Land, Infrastructure,

Transport and Tourism (MLIT)

http://www.mlit.go.jp/en/index.html

1

1. Circumstance, Trend and Target

2. Airport concessions in Japan

3. Upcoming transactions


Circumstance around airports in Japan

Shifted focus of airport policy

“development to management”

Deregulation and the proliferation of LCCs

Vastly expanded Open Skies Agreements

Positive support by Japanese government

2

● Decreasing of population ＋ Centralization in urban areas

● Capturing a rapidly growing demand in Asia


3

52%,1,314

50%,2,016

55%,2,427

58%,3,809

55%,4,302

60%,5,477

62%,5,701

62%,5,949

62%,5,941

64%,5,905

63%,5,947

64%,6,216

65%,6,136

66%,5,959 66%,

5,546 66%,5,456

67%,5,258

64%,5,490

63%,5,792

62%,5,879

61%,5,908

28%,711

25%,1,013

22%,960

20%,1,312

21%,1,652

18%,1,674

18%,1,679

17%, 1,620

16%, 1,532

16%1,461

15%,1,434

14%,1,335

14%,1,287 13%,

1,205 13%,1,072

13%,1,033 12%,

945

13%,1,124

13%,1,243

14%,1,340

14%,1,377

14%,1,376

5%, 118

6%, 259

5%, 239

6%, 378

7%, 532

7%, 650 7%, 637

7%, 645 7%, 648 7%, 632 8%, 712

7%, 674 7%, 644

7%, 597

6%, 513 6%, 484

6%, 460

6%, 498

6%, 571 6%, 563 6%, 577 6%, 610

16%, 402

19%, 754

17%, 751

16%, 1,026

17%, 1,324

15%, 1,398 15%, 1,441

15%, 1,452 15%, 1,428

14%, 1,281 14%, 1,356

15%, 1,472 15%, 1,418

14%, 1,305

15%, 1,256 15%, 1,248

16%, 1,243

17%, 1,488

18%, 1,643 18%, 1,738 18%, 1,738

19%, 1,918

2 545

4 042

4 378

6 525

7 810

9 198 9 458

9 666 9 549 9 279

9 449 9 697

9 485

9 066

8 387 8 221

7 905

8 600

9 249 9 520 9 606

9 812

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

10 000

50 55 60 2 7 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

（万人）

（年度）

国内航空旅客数の推移

羽田便利用者

関空または伊丹便利用者

中部または名古屋便利用者

その他

Other

Chubu or

Nagoya

Airport flight

passengers

Kansai or Itami

Airport flight

passengers

Haneda

Airport flight

passengers

61%,5,824

Trends in domestic air passenger transport

Numbers of Domestic Air Transport Passengers

The demand for domestic air passenger transport in Japan started to decline in FY2007 due to increased fuel prices. As a result of the global economic recession after

the Lehman crisis in 2008 and the Great East Japan Earthquake in 2011, the demand continued to decline. However, the demand started to increase again in FY2012

due to LCCs starting to compete with major airlines.

Approximately 60% of domestic airline users start from Haneda Airport.Total number of passengers in

FY2016: 98.12 million

Haneda Airport flight

passengers

Kansai or Itami Airports

flight passengers

Chubu or Nagoya Airports

flight passengers

Other

(10,000 persons)

1975 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 (FY)2014 2015 201620162016


473%,607

67%,901

72%,1380

69%,2279

60%2663

57%,3046 58%,

2777

62%, 319765%, 2903

62%, 3457 61%, 3472 61%, 3569 62%, 361163%, 3385 64%, 3417 63%, 3540 63%, 3414

62%, 3774 61%, 388560%, 4091

56%, 445656%, 4814

8%, 145

22%, 294

20%, 382

16%, 533

21%, 937

24%, 1,285

23%, 1,098

20%, 1,044

19%, 854

20%, 1,116 20%, 1,114 19%, 1,123 19%, 1,101

19%, 1,011 18%, 957 19%, 1,041

19%, 1,011

19%, 1,143 19%, 1,205

20%, 1,352

22%, 1,728

22%, 1,915

1%, 9

2%, 26

3%, 50

6%, 194

8%, 348

8%, 437

9%, 414

8%, 420

7%, 332

8%, 449 9%, 533 9%, 547 10%, 556

9%, 498 8%, 430

8%, 451 8%, 438

7%, 449 7%, 447

7%, 450

6%, 490

6%, 524

8%, 66

9%, 118

6%, 118

9%, 284

11%, 467

10%, 534

10%, 488

10%, 505

8%, 364

9%, 518 9%, 532

10%, 567 10%, 563

10%, 514 10%, 532

10%, 581 11%, 577

12%, 703

13%, 792

14%, 956

16%, 1,230

16%, 1,401

827

1 339

1 930

3 290

4 415

5 302

4 777

5 166

4 453

5 540 5 651 5 806 5 831

5 408 5 336 5 613

5 440

6 069 6 329

6 849

7 904

8 654

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

50 55 60 2 7 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

（万人）

（年度）

国際線航空旅客数の推移首都圏空港（成田空港・羽田空港）

関西空港

中部空港

地方空港

Demand for international air passenger transport in Japan registered a record high in FY2016, despite a temporary decline since 2001 at the time of the 9/11 terrorist

attacks, the Lehman crisis and the Great East Japan Earthquake.

Passengers using airports in the capital area (Haneda and Narita Airport) account for 60% of the total number.

（昭和）（平成）

Trends in international air passenger transport

Airports in

the capital

area

(Haneda

and Narita)

Kansai

Airport

Chubu

Airport

Local

airports

Airports in the capital area

(Narita and Haneda)

Kansai Airport

Chubu Airport

Local airports

Numbers of International Air Transport Passengers(10,000

persons)

Total number of passengers

in FY2016: 86.54 million

1975 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 (FY)2014 2015 2016


5

Foreign visitors to Japan

○ The number of foreign visitors to Japan rose to a record high of over 28 million in 2017 with a national ambition

to increase further.

million

5,2 6,1 6,7 7,3 8,3 8,4 6,88,6

6,2 8,410,4

13,4

19,724,0

28,7

40,0

60,0

0

4

8

12

16

20

24

28

32

36

40

44

48

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2020 2030

Target


Total

2,869Asia: 2,434（84.8%）

East Asia: 2,129（74.2%）

South-east Asia: 292（10.2%）

② Republic

Of Korea

714

(24.9%)

③

Taiwan

456

(15.9%)

① China

736

(25.6%)

Other

110

(3.8%)

5 major

European

countries

100 (3.5%)North

America

168

(5.9%)

Indonesia

35 (1.2%)

Australia

49 (1.7%)

Spain

10 (0.3%)

U.K.

31 (1.1%)

Canada

31 (1.1%)

Vietnam

31 (1.1%)

Philippines

42 (1.5%)

Singapore

40 (1.4%)

Malaysia

44 (1.5%)

India

13 (0.5%)

France

27 (0.9%)

Germany

20 (0.7%)

Italy

13 (0.4%)

Russia

8 (0.3%)

④ Hong

Kong

223

(7.8%)

⑤U.S.A.

138

(4.8%)

⑥Thailand99 (3.4%)

6

Note 1: Figures in parentheses are shares of overall visitors.

Note 2: “Other” includes other countries in Asia and Europe.

Note 3: Totals may not be the same as the sum of individual values, due to rounding.

Note 4: Adapted by the JTA based on material prepared by the JNTO

(Unit: 10,000 people)

Breakdown of int’l visitors by country/region of

origin

2017


Growth in numbers of international visitors after the

substantial relaxation of visa requirements

2016.01～12 2017.01～12

Number of visitors to Japan from Russia

After the substantial relaxation of visa

requirements (January 1, 2017)

41% year-on-year increase

Approx. 55,000 people

Approx. 77,000 people

0万

5万

10万

15万

20万

25万

2013.10～2014.09 2014.10～2015.09

Number of visitors to Japan from the Philippines

After the substantial relaxation of visa

requirements (September 30, 2014)

54% year-on-year increase

Approx.158,000

people

Approx.243,000 people

Date Country

2013 July 1

Thailand

Malaysia

Philippines

Vietnam

Indonesia

2014

July 3 India

September 30Indonesia

Philippines

November 20 Vietnam

December 1 Indonesia

2015 January 19 China

2016

January 11 India

February 15Vietnam

India

October 17 China

2017

January 1 Russia

February 1 India

May 8 China

2018January 1 India

August 1 Philippines

250,000

200,000

150,000

100,000

50,000

0

80,000

60,000

40,000

20,000

07

Strategic relaxation of visa requirements


6.5 6.4 6.3 6.3

12.7

10.1 10.0 9.7 9.8 9.9

20.021.0

24.8

0.05

1.90.9

2.6 2.61.5

4.25.5

20.0

9.1

0

50

100

150

200

250

300

H18(2006) H19(2007) H20(2008) H21(2009) H22(2010) H23(2011) H24(2012) H25(2013) H26(2014) H27(2015) H28(2016) H29(2017) H30(2018)

当初予算補正予算

Japan Tourism Agency

was inaugurated

(Oct 2008)

(Units: billions of yen)

Initial

budget

Supplementary

budget

30

25

20

15

10

5

0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 8

Change in JTA budget


9


2. Airport concessions in Japan



Shin-ChitoseHakodate

Wakkanai

Sapporo

ChitoseKushiro

Misawa

Sendai

Niigata

Hyakuri

Haneda

Yao

Komatsu

Naha

Miho

Takamatsu

TokushimaKochi

Matsuyama

Hiroshima

Kitakyushu

Fukuoka

Oita

)Kumamoto

Nagasaki

MiyazakiKagoshima

Iwakuni

Narita

ChubuItami

Kansai

Asahikawa

Obihiro

Kobe

Shizuoka

Memanbetsu

Airports in Japan

National airports (19)

Defense / Civil airports (9)

10

Corporate airports (4)

Local airports (65)

97 airports

127 million people


Four types of airport management system in Japan

11

① National airports (ex. Haneda(Tokyo), Hiroshima)Ownership: MLIT

Operation: a) Aerodrome (development and maintenance of runways, navigation aids, etc.)

⇒ MLIT

b) Non-aerodrome (construction and maintenance of terminal buildings, services

to air passengers, etc.) ⇒ Private sectors

③ Local airports (ex. Kobe, Shizuoka)Ownership: Local governments (Prefectures, Cities)

Operation: a) Aerodrome ⇒ Local governments

b) Non-aerodrome ⇒ Private sectors

※ Air traffic control is conducted by MLIT in every airport

② Corporate airports (ex. Narita, Kansai)Ownership: Private sectors

Operation: a) Aerodrome ⇒ Private sectors


④ Defense / Civil airports (ex. Tokushima, Ibaraki)Ownership: Ministry of Defense (MOD)

Operation: a) Aerodrome ⇒ MOD


19 airports

4 airports

65 airports

9 airports


Aim of airport concession

i) Separated management

➢MLIT

: Aeronautical activities

(Runways, Apron…etc)

➢Private companies

: Non-aeronautical activities

(Terminal Buildings…etc)

ii) Profit pooling of multiple airports

The revenue and expenditure of 28 national

airports are managed together in a single

accounting system.

Current system

・Integrated management of the whole airport.

・Incentivized individual airports working closer

in tandem with the local community to promote

growth.

After concession

12

⇒ developed network

⇒ stimulated air transportation industry

⇒ Improved accessibility

Revitalization of

local communities


Framework of airport concession

13

SPC

Integrated operations under

private management Provision of

operating right

- Ownership and

operations of the

runways and related

facilities (aprons,

taxiways, lights, etc.)

MLIT

InvestorsAcquisition of

shares

Terminal building

company

Financial Institutions

MLIT

- Air traffic control

bidding

Pre-determined

MLIT monitoring

Before After


Transaction timeline

14

• Market soundingT-21m

• Publication of the implementation policyT-14m

• Publication of the application guidelineT-12m

• Screening process by the government

• First screening committee

• Competitive dialogue

• Second screening committee

T-9m

• Selection of preferred negotiation right holderT-0m

• Grant of the operating rightsT+3m

• Commencement of the terminal building operationsT+6m

• Commencement of the airside operationsT + 9m

Upon the commencement of the airside operations, government staff will be reduced but

may be utilized for a period of 3 – 5 years.

Handover period

Training provided

by the government

* Example; timeline for actual transactions will be tailored accordingly


Main characteristics of Japanese

concession

Not simply a privatization

• integration of airsideoperations with landside operations

• Need to replace MLIT employees

Structure

• Concession rights designated on runway (and parking).

• No holding periods

• Investment incentive throughout the concession

Local initiative

• Many of the larger airports are owned by a central government

• Decision to utilize the concession scheme is deeply influenced by the local governments

Bidding process

• Bids based on 1) price and 2) proposal

• Proposals on Air service development, Service quality, Operations, Safety etc.

• Items unique to each airport added based on the situation

• Third party selection committees

• Takeaway from prior transactions have been incorporated to ensure

a smoother process and better incentives.

• Understanding of historical and cultural aspects are key to success.

15


(2)Shin-Chitose(5)Hakodate

(3)Wakkanai

(20)Sapporo

(21)Chitose (4)Kushiro

(26)Misawa

(6)Sendai

(7)Niigata

(22)Hyakuri

(1)Haneda

(27)Yao

(23)Komatsu

(19)Naha

(24)Miho

(9)Takamatsu

(25)Tokushima(11)Kochi

(10)Matsuyama(8)Hiroshima

(13)Kitakyushu

(12)Fukuoka

(16)Oita

(15)Kumamoto

(14)Nagasaki

(17)Miyazaki(18)Kagoshima

(28)Iwakuni

Overview of transactions

“National Airports” (19)

administered by the National Government

“Military Airports” (9)※※It’s open for private aviation within an extent

that doesn’t hinder the defense activities

16

Sendai Airport (private operation started)

Number of passengers : 3.4mil in 2017

Location: Miyagi Pref. (population 2.3mil)

Takamatsu Airport (private operation started)


Location: Kagawa Pref. (population 1.0mil)

Fukuoka Airport (Agreement signed)


Location: Fukuoka Pref. (population 5.1mil)

Kansai Airport (private operation started)


Location: Osaka Pref. (population 8.8mil)


17

(2)Shin-Chitose(5)Hakodate

(3)Wakkanai

(20)Sapporo

(21)Chitose (4)Kushiro

(26)Misawa

(6)Sendai

(7)Niigata

(22)Hyakuri

(1)Haneda

(27)Yao

(23)Komatsu

(19)Naha

(24)Miho

(9)Takamatsu

(25)Tokushima(11)Kochi

(10)Matsuyama(8)Hiroshima

(13)Kitakyushu

(12)Fukuoka

(16)Oita

(15)Kumamoto

(14)Nagasaki

(17)Miyazaki(18)Kagoshima

(28)Iwakuni

“National Airports” (19)

administered by the National Government

“Military Airports” (9)※※It’s open for private aviation within an extent

that doesn’t hinder the defense activities

Sendai Airport (private operation started)


Location: Miyagi Pref. (population 2.3mil)

Takamatsu Airport (private operation started)


Location: Kagawa Pref. (population 1.0mil)

Fukuoka Airport (Agreement signed)


Location: Fukuoka Pref. (population 5.1mil)

Kansai Airport (private operation started)


Location: Osaka Pref. (population 8.8mil)

Overview of transactions

Airports in Hokkaido (2020 commencement)

Number of passengers : around 28mil* in 2017

Location: Hokkaido Pref. (population 5.4mil)* Total of 7 major airports

Hiroshima Airport (2021 commencement)


Location: Hiroshima Pref. (population 2.8mil)

Kumamoto Airport (2020 commencement)


Location: Kumamoto Pref. (population 1.8mil)


Airport Ranking by passenger numbers

18

airport2016 pax

(Million)

% of

intn'lStauts Note

1 Haneda 85.7 20% Terminal building listed

2 Narita 39.0 81% Corporate airport

3 Kansai 28.7 76%Concession started Bundled with Osaka

4 Fukuoka 24.0 26%Concession to start in 2019

5 Shin Chitose 23.1 15% In 2nd phase of bids 7 airports bundle

6 Naha 21.2 17%

7 Osaka 15.7 0%Concession started Bundled with Kansai

8 Chubu 11.5 48%

9 Kagoshima 5.4 6%

10 Sendai 3.4 8%Concession started

11 Kumamoto 3.3 5% In 2nd phase of bids

12 Miyazaki 3.2 4%

13 Nagasaki 3.2 2%

14 Kobe 3.1 0%Concession started in 2018 Follows Kansa - Osaka

15 Matsuyama 3.1 1%

16 Hiroshima 3.0 17% Implementation Policy in FY2018

17 Shin Ishigaki 2.5 3%

18 Takamatsu 2.0 15%Concession started in 2018

19 Ohita 1.9 7%

20 Hakodate 1.8 11% In 2nd phase of bids 7 airports bundle

* Transaction completed

* Pipeline


19


2. Airport concession projects in Japan



Hiroshima airport (Overview)

20

(‘000)

Route Network

• The Hiroshima metropolitan area houses c.2.1 Million inhabitants making it the 8th biggest metropolitan

area in Japan.

• While Tokyo routes make up c.60% of the traffic, competition is fierce with the bullet train (taking less than

4hours between Tokyo and Shin-Hiroshima station). LCC flights to Narita have reinvigorated the Tokyo

routes.

Traffic Trends

0

500

1000

1500

2000

2500

3000

3500

2013 2014 2015 2016 2017

Haneda Narita Other Dom Intn'l

北京Ｂｅｉｊｉｎｇ

大連Ｄａｌｉａｎ

ソウルＳｅｏｕｌ

上海Ｓｈａｎｇｈａｉ

台北Ｔａｉｐｅｉ

香港Ｈｏｎｇｋｏｎｇ

シンガポールSingapore

札幌（新千歳）Sapporo New- Chitose

仙台Sendai

成田 Narita

東京（羽田）Tokyo（Haneda)

沖縄（那覇）Okinawa（Naha)

Route Network


Hiroshima airport (Financials, Schedule)

Financials Schedule

• FY 2018

– Implementation policy

– Application guideline (RFP)

• FY2019

– Bidding and Screening

– Selection of Preferred negotiation

rights holder

21

469

304375

-196

320

961

871

1027

1040

1119

-400

-200

0

200

400

600

800

1000

1200

1400

1600

2012 2013 2014 2015 2016

EBITDA

Aero Non Aero

Million JPY


Hiroshima airport (Growth potential)

Tourist demographic Inbound tourism trends

22

AmericasAmericas

Oceania

Oceania

Europe

Europe

China

China

Hong Kong

Hong Kong

Taiwan

Taiwan

KoreaKorea

OthersOthers

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Hiroshima Japan

Country share of Inbound Touists

• Hiroshima is an unique tourism destination with high recognition in the Western countries as well as in Asia.

This demand is currently served predominantly by high speed rail.

< Source : Hiroshima Prefecture>

0

500

1000

1500

2000

2500

3000

2011 2012 2013 2014 2015 2016 2017

Hiroshima Prefecture Inbound Tourists (‘000)


Hiroshima airport (Growth potential)

23

Catchment area

population'000

drive

time

Hiroshima prefecture 2,844

Okayama City 719 1:30

Matsuyama City 515 2:20

Kurashiki City 477 1:10

Takamatsu City 421 2:10

Matsue City 206 2:10

Izumo City 172 2:00

Shunan City 145 1:45

Tsuyama City 104 2:30

Tatsuno City 77 2:10

Soujya City 67 1:20

Tamano City 60 1:45

Hamada City 58 1:50

Total 5,865

・Hiroshima airport(HIJ) is located 50km east of the city of Hiroshima sitting in between the larger international airports of

Fukuoka(FUK) to the west and Kansai(KIX) to the east.

・Due to this location, the airport has the potential to grow its catchment area serving cities in the wider Chugoku region.

・Bus connectivity already spanning 7 cities in the region.

* Cities with over 50,000 people / sub 2.5h drive time

2時間圏域

2時間30分圏域

2時間圏域（福岡空港，関西国際空港）

2.5時間圏域（福岡空港，関西国際空港）２時間圏域

２時間半圏域

福岡

北九州

山口宇部

松山

高松

関西

米子

岡山

2h line from HIJ

2.5h line from HIJ

（reference）

Bullet train 1.5h line（from FUK，KIX）

KIX2.5h line

KIX２h line

FUK 2h line

ＦUK 2.5ｈ line

Ｈｉｒｏｓｈｉｍａａｉｒｐｏｒｔ（HIJ）

< Source : Hiroshima Prefecture>


24

Commercialize the food of SetouchiSanctuary for cyclists

Commercialize the Setouchi local products recognized all over the

world

Long-stay typed cruising and resort(reference：Cruise guntû HP http://guntu.jp/cabins/type2）

Paradise of nature and art

【Onomichi City Museum of Art】 Yayoi Kusama

2004 photography by Mie MORIMOTO ©YAYOI KUSAMA

Collaboration with Setouchi DMO

Attempt to attract tourists for Hiroshima by providing foreign tourists with tours in the

Setouchi region.

Offer satisfying stay uniqueto Setouchi

Hiroshima airport (Tourism Potential)

http://guntu.jp/cabins/type2


JALB737-800（165seats）

B787-8（335seats）

B767-300（270seats）

A321（194seats）

ANAB777-200（405seats）

Spring Japan〔SJO〕B737-800（189seats）

IBEX Airlines〔IBX〕CRJ-700（70seats）

CRJ-200（50seats）

China Eastern〔CES〕A319（120seats）

China Airlines〔CAL〕B737-800（158seats）

Air China〔CCA〕B737-800（157seats）

Air Seoul〔ASV〕A321（195seats）

Hong Kong Express〔HKE〕A320（180seats）

Silk Air〔SLK〕B737-MAX8（156seats）

《Domestic》

《International》

Hiroshima airport (Aircrafts operated)

25


Airports in the Kyushu region

26

・DOMESTIC

Distance from the 3 metropolitan areas (Tokyo, Osaka, Nagoya) bring stable domestic traffic.

・East Asia

Closer in proximity to East Asia with historically deep ties.

・ASEAN

Easily reached by narrow bodies from many ASEAN cities.

1h20m

1h40m

3h20m

2h30m

50m

Flight time

Rail time

1h40m

5h～7h

1h40m

3h30m～5h30m

●Nagoya


Airports in the Kyushu region

Airports in Kyushu Current status

Airport 2017Traffic

(Million)

Status

① Fukuoka 23.8 Concession

Agreement

signed

② Kitakyushu 1.6 Study in

progress

③ Oita 1.9

④ Miyazaki 3.2

⑤ Kagoshima 5.6 Study in

Progress

⑥ Kumamoto 3.3 In bidding

⑦ Nagasaki 3.2 Study in

progress

27

①②

③

④⑤

⑦ ⑥

・The Fukuoka and Kumamoto airport concession projects stimulating the other local municipalities to study

concessions for their local airports.


Disclaimer

This publication has been prepared for general guidance on matters of interest only, and

does not constitute professional advice. You should not act upon the information contained

in this publication without obtaining specific professional advice. No representation or

warranty (express or implied) is given as to the accuracy or completeness of the

information contained in this publication, and, to the extent permitted by law, Civil Aviation

Bureau, Ministry of Land, Infrastructure, Transport and Tourism, its members, employees

and agents do not accept or assume any liability, responsibility or duty of care for any

consequences of you or anyone else acting, or refraining to act, in reliance on the

information contained in this publication or for any decision based on it.

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Japanese airport investment opportunities · Airport flight passengers Kansai or Itami Airport...

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