APAC: Hokkaido airports bidders must lower public burden

05 April 2018 - 12:00 am UTC

UPDATE: Paragraphs nine to eleven have been added to this article after it was first published. 

Bidders for the airports concession on Hokkaido Island in northern Japan must find a way to reduce the financial burden on local cities and the prefecture government.

“We’ve made an arrangement in which the public side (in Hokkaido) will shoulder a certain amount of burden,” said the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) at a Thursday (5 April) presentation of the concession’s implementation plan.  

Investors are now closely watching the 30-year concession of seven airports including New Chitose International Airport, Japan’s fifth busiest, which serves Sapporo.

Big names such as Japan’s Orix as well as France’s Vinci Airports and Aéroports de Paris have come up against a local consortium led by Hokkaido Airport Terminal (HKK).

Bidders must pay concession fees of at least JPY 72bn (USD 675m) over the period for four state-owned airports – Wakkanai, Kushiro and Hakodate, plus New Chitose, the second biggest profit earner among Japan’s 19 state-controlled airports.

Meanwhile, Asahikawa and Obihiro cities plus Hokkaido’s prefectural government will provide a combined JPY 16.7bn to the remaining three airports (Asahikawa, Obihiro and Memanbetsu) during the 30-year period. They will also spend up to JPY 27.1bn on upgrades to the city-owned airports, which are all lossmaking.

Suitors for the airports must include an explanation of how they can help reduce the public burden, the MLIT said.

A winner is expected by July 2019. The 30-year contract may be extended for a further five years.

The four owners of the seven airports have agreed to evaluate the proposals – for the concession fee and reduction in public burden of the three loss-making airports in the bundle – based on the size of each airport, specifically passengers numbers handled.

Bidders are also required to offer specific plans to promote tourism to invite more tourists.

The SPC which runs the airport would, however, be looked on to play a “facilitator” role in promoting tourism, rather than providing services beyond the scope of an airport operator normally would.