Competitive winds whipping across Osaka Bay are making it difficult for the operators of Kansai International Airport to get their bearings.

New domestic airports are nipping at the heels of Kansai International Airport Co. just as the company is attempting to see off the challenge of international rivals.

All this in an increasingly turbulent business environment.

Pummeled by severe acute respiratory syndrome (SARS), operating revenue during the six months through September declined by 9 billion yen from a year ago.

Things have picked up since autumn thanks to increasing traffic on China routes. The total number of international flights this winter is scheduled to mark the second highest since the airport opened in 1994.

But the next two years are going to be a rough ride.

New Tokyo International Airport at Narita will be privatized next spring. Chubu International Airport and Kobe airport are both scheduled to open in 2005.

And if another airport in Osaka Bay is not bad enough, Osaka International Airport at Itami is already poaching business.

The job of steering a profitable course falls to Atsushi Murayama, who became president of Kansai International Airport in June.

The former vice president at Matsushita Electric Industrial Co. has initiated a management shake-up and cost-cutting program.

In an effort to attract more flights, discount landing fees were introduced in fiscal 2002. The company is also considering discounts for small passenger planes.

Despite these incentives, domestic airlines are shifting their business to Itami airport, which is more conveniently located for central Osaka.

Itami is also more convenient for transit passengers, offering almost three times as many domestic flights per day.

The number of routes linking Kansai airport to other Japanese destinations stood at 15 in January, down from 34 in 1996.

The new airport at Kobe will target tourist and business traffic when it opens sometime in fiscal 2005.

Skymark Airlines Co., a budget operator, has already said it will use Kobe as its hub for the Kansai region.

In February last year, local businesses and governments in the Kansai area formed a panel to try to work out ways to coordinate the interests of the Kobe, Itami and Kansai airports. So far, nothing has come of the meetings.

Murayama argues that the number of flights at Itami should be limited to prevent a further loss of business from Kansai International Airport.

He plays down the threat posed by Kobe, which will have a far smaller capacity than the Kansai strip.

Chubu airport, which is scheduled to open off Chita Peninsula in Aichi Prefecture in February 2005, is not so easy to dismiss.

Chubu airport operators are determined to grab a share of the cargo business originating in its backyard, currently funneled through Narita, Kansai and Nagoya airports.

The amount of international cargo handled at Kansai airport has been on the slide since fiscal 2000.

``About 20 percent of cargo is from the Chubu region,'' Murayama says. ``We have to take steps to prevent those clients from switching to Chubu airport.''

Murayama is Kansai airport's first president from the private sector. More than half the 400 employees at the operator are from central and local governments and public corporations.

The former electronics executive says his priority is to change the bureaucratic mindset of the employees, something he feels is beginning to happen.

``I have repeatedly referred to customer satisfaction,'' he says.

Murayama has already begun reforming the personnel management and the wage system.

The unprofitable Takashimaya Department Store in the Aeroplaza passenger terminal building will be closed in the spring, and the airport operator is also considering realigning its subsidiaries.

Uncertainty about the airport's business fortunes has cast a shadow over the construction of a new 4,000-meter runway. Work to reclaim land for the second runway is expected to finish by early 2005.

Murayama wants the new runway to go ahead and open in 2007 as scheduled regardless of whether business recovers in time.

``Is it all right that the international airport has only one runway?'' he asks.

Murayama worries about losing competition to other Asian destinations, such as South Korea's Inchon airport and Hong Kong airport, both of which have more than one runway about 4,000 meters.

Murayama says that as the economy is increasingly globalized, airports will contribute more than highways to national interests.

``We will find solutions to the problems at Kansai airport only if (the government) becomes aware of which serves the national interests better,'' he says.(IHT/Asahi: January 8,2004) (01/08)