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Cablegate: Kansai International Airport (Kix) Upbeat On

VZCZCXRO1463
OO RUEHFK RUEHGH RUEHKSO RUEHNAG RUEHNH
DE RUEHOK #0036/01 0510048
ZNR UUUUU ZZH
O 200048Z FEB 07
FM AMCONSUL OSAKA KOBE
TO RUEHC/SECSTATE WASHDC PRIORITY 0696
INFO RUEHKO/AMEMBASSY TOKYO IMMEDIATE 7855
RUEHKSO/AMCONSUL SAPPORO PRIORITY 0169
RUEHNAG/AMCONSUL NAGOYA PRIORITY 2276
RUEHFK/AMCONSUL FUKUOKA PRIORITY 0157
RUEHNH/AMCONSUL NAHA PRIORITY 0180
RUEHBJ/AMEMBASSY BEIJING 0403
RUEHUL/AMEMBASSY SEOUL 1109
RUEHGH/AMCONSUL SHANGHAI 0016
RUEHGZ/AMCONSUL GUANGZHOU 0108

UNCLAS SECTION 01 OF 02 OSAKA KOBE 000036

SIPDIS

STATE PASS TO DEPARTMENT OF TRANSPORTATION FOR EDWARD
OPPLER

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: EAIR ECON JA
SUBJECT: KANSAI INTERNATIONAL AIRPORT (KIX) UPBEAT ON
UPCOMING AVIATION BILAT


1. (SBU) Summary: Speaking with Embassy Economic
Counselor and econoff in Kyoto ahead of the first U.S.-
Japan bilateral aviation talks in three years,
President Murayama and Executive Vice President Hirano
of the Kansai International Airport Company (KIAC) said
that MLIT was prepared to allow "Open Skies" at KIX and
Chubu airport if the U.S. were to show flexibility in
allocation of new Narita slots. The officials also
lamented a decrease in KIX-U.S. service and urged the
USG to seek more rights at KIX. They noted KIX's good
connections with East Asia but did not see much
substance behind Prime Minister Abe's "Asia Gateway"
initiative and doubted Haneda could become a round-the-
clock airport. End Summary

--------------------------------------------- -
"Open Skies" at KIX? Possible in All But Name
--------------------------------------------- -

2. (SBU) The KIAC officials said that in the April 3rd
talks to be held in Washington, the GOJ Ministry of
Land, Infrastructure and Transportation (MLIT)
negotiators would be "flexible" on the issue of new
passenger and cargo slots and beyond rights for both
Kansai International Airport (KIX) and Chubu
International Airport were -- without accepting the
name "Open Skies." President Atsushi Murayama said that
in the future, MLIT will allow KIX to become an Open
Skies airport. In return MLIT would seek USG
cooperation when new slots became available as Narita's
second runway was completed.

3. (SBU) Noting that the USG would not take slots away
from U.S. carriers, ECOUNs asked if MLIT was talking
numers of slots or percentages, Hirano answered the
issue was percentages. ECOUNS noted that American
carriers were moving toward point-to-point service
rather than traditional hubs. This has major potential
for regional airports like KIX, if beyond rights are
offered. In particular, service from the U.S. to KIX
would be more feasible if more U.S. carriers had rights
beyond KIX. With KIX's second runway opening in July,
Murayama was confident that KIX had enough capacity for
future expansion of its aviation business.

----------------------------------------
Co-Terminals for Cargo at Haneda and KIX
----------------------------------------

4. (SBU) Given this excess capacity, Senior Executive
Vice President Tadakuni Hirano said that his airport
would launch co-terminal service with Haneda. This
would allow cargo planes to land at and take off at
Haneda with a lighter cargo load, given its shorter
runways (see below) then pick up more freight at KIX
for beyond service without using slots at Narita.
Hirano said ANA and JAL were already operating Haneda-
KIX-Shanghai service in this fashion. He thought the
GOJ was likely to accept such co-terminal plans.
Murayama opined that moving cargo services from Narita
to Haneda would free up many slots for other flights.

-------------------------------
MLIT: U.S. Too Modest About KIX
-------------------------------

5. (SBU) Hirano recounted that MLIT has told KIAC the
USG is "too modest" about asking for more slots at KIX.
Ecouns answered that based on its extreme positions in
past aviation talks, we had little indication that MLIT
would agree to expanded service at KIX. Hirano clearly
believed there was evidence the GOJ would offer more
concessions on regional airports than previously
thought, and urged the USG to reconsider.

----------------------------
Confusion over Asian Gateway
----------------------------

OSAKA KOBE 00000036 002 OF 002

6. (SBU) The executives were unclear about PM Shinzo
Abe's proposed Asian Gateway concept, which mentions
tourism, cultural exchanges, and more air linkages with
the mainland. They were skeptical that Haneda could
become a 24-hour airport, for example, citing noise and
fishing rights issues as the main stumbling blocks for
that airport. They also noted that Haneda's new runway
is too short -- only 2.5 km, which makes it almost
impossible for jumbo jets to utilize the runway.
Murayama thought that KIX was the only logical
candidate for increased Asian air service. KIX will be
able to operate around-the-clock from July. 40 percent
of KIX business comes from routes to the PRC, and a
full half when Taiwan routes were included. Compared
to the paltry 25 cargo flights to the U.S. per week,
KIX has over 140 cargo flights to China over the same
period, many by newcomers. They noted that former U.S.
MLIT negotiator Mr. Ide was now working on the Asian
Gateway in the Cabinet Office.

--------
KIX Woes
--------

7. (U) KIAC is clearly worried about what the
precipitous drop in flights to the mainland U.S. means
for its bottom line. In 1999, 1.6 million passengers
traveled to the U.S., but that has dropped to the
current annual level of only 400,000 people. Only two
carriers offer 14 flights per week to two cities. They
are launching a study group to try to turn around this
trend.

8. (SBU) Murayama complained about hypercritical
Ministry of Finance bureaucrats who remain unwilling to
commit funds to help make KIX more competitive. He did
say that in the next fiscal year, MOF will fund KIX
construction of a cargo handling facility for the
second runway. He strongly advocated raising the
entire cap on Japan air services, not just KIX. The
two executives also outlined their public outreach
strategy pitched to the national press instead of just
reporters based in Osaka.

RUSSEL

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