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