Stage 2 of the Kansai International Airport project and its funding mechanism
Stage 2 of the Kansai International Airport project built the second runway and the second terminal. Despite increased construction costs compared to Stage 1, the expected revenue of the airport as a whole will not double, thus the profit ratio is lower. This situation required a new system for securing construction funds. Stage 2 was divided into two sub-projects, each having a separate method of funding. The construction of regular airport facilities, such as the runway and terminal, was classified as "super-structure," and left under the control of the existing Kansai International Airport Co., Ltd. The national government will provide 20% of total construction cost for this sub-project, while local businesses will contribute 10% as capital investments. The remaining 70% will be raised through ordinary loans. The reclamation of the airport site, work comparable to land procurement for regular airports, was classified as "foundation work," and the Kansai International Airport Land Development Co., Ltd. was newly established to undertake this task. The national government will provide 20% of total reclamation costs, while local governments offered 10% as capital investments. The governments will also extend interest-free loans to the new company, with the central government covering one-sixth of total costs, and local government covering one-twelfth. In short, the proportion of funds the company must secure through loans is kept at 45% of total project cost.
Construction of Chubu International Airport
Chubu International Airport (Chubu Airport) is planned to construct in the Nagoya metropolitan area (Chubu Region) of which population is Japan's third largest. The demands on the existing airport in Nagoya (Komaki Airport) are projected to exceed its capacity early in the 21st century. The 1998 budget formally defined the planned Chubu International Airport as a Type 1 (international) airport, and gave the green light to the project. The 7th Seven-year Airport Development Plan acknowledges this airport as one of the "Three New Major Projects." The funds for building this airport will be secured in a way similar to that of Kansai International Airport. Chubu International Airport Co., Ltd. will be established, and the central government, local government, and the private sector will provide capital and interest-free loans. Forty per cent of total construction costs will be covered by interest-free funding. Chubu International Airport Co., Ltd. is expected to utilize the management ability of the private sector better than did Kansai International Airport Co., Ltd.
