Japan progresses airport concessions

The Japanese government has announced a minimum price for the concession of Kansai Airport and released guidelines for Sendai Airport concession bidders.

The Japanese government’s plans to sell operational rights for three airports are moving forward with the issuance of a minimum price for Kansai Airport and the release of pre-qualifying conditions for bidders on the Sendai Airport project.

The Ministry of Land, Infrastructure, Transport and Tourism’s Civil Aviation Bureau and New Kansai International Airport Co (KSIA) have also decided on a minimum price for the acquisition of operational rights on two airports in neighbouring Osaka.

The total price for the rights to operate Kansai International Airport and Osaka International Airport will amount to Y2.2 trillion, including Y1.2 trillion of debt for construction works on both airports, local press reported.

The Osaka Prefecture is due to shortly announce preconditions for bidding and will issue more detailed guidelines for applicants around October. It will start evaluations after the bidding in early 2015 and will select a successful bidder in the summer.

Meanwhile, in Sendai, on the north-eastern coastal region, the same Ministry, conjointly with the Miyagi Prefecture, is scheduling important milestones to steer the airport’s sale of operational rights.

It has set a deadline for the bidders’ application submissions of 5 December this year, and local press reported that the Ministry has targeted the signing of a final agreement by November of next year.

A handover of operations is targeted for March 2016 for a maximum of 65 years (30-year contract, renewable once and with a five-year extension in case of force majeure).

Whereas no price has yet been announced for the Sendai Airport project, Australia’s Macquarie has already expressed interest.

The sales of rights to operate airports and other public facilities are expected to generate Y2 trillion to Y3 trillion ($19.44 billion to $29.16 billion) in revenue over three years through fiscal 2016, with the aim of helping to compensate for the ambitious public works spending the country has been engaging in since Prime Minister Shinzo Abe took office a year and a half ago.

These steps follow by only a few days Abe’s unveiling of his tripartite economic reform programme’s third “arrow”, which includes a plan to cut the nation’s 35.64 percent corporate tax rate to 29 percent over the next few years, aiming at reassuring investors.