Japan opens door to business aviation

 - January 30, 2007, 10:34 AM

Japan’s Aichi Prefecture recently completed construction of the Central Japan Airport (RJGG) to accommodate airline demand for slots that was straining Nagoya Airport beyond capacity. While the new airport, more commonly called Centrair, is big news, it’s what the government did with the old Nagoya Airport that is even more significant.

Rather than level the old airport, the prefecture government recognized the value of business aviation and opted to buy it from the central government and dedicate it to business aviation and commuter airlines. The military also continues to use the east side of the airport as an air base facility. What the Aichi Prefecture did is provide space for immediate use by business aircraft and leave plenty of room for future growth.

At the rededication ceremony on February 17, Masaaki Kanda, governor of the Aichi Prefecture Assembly, recognized the contribution of Nagoya Airport to international and domestic airline flights since it was established in the 1950s.

“The new Centrair airport opened today with a lot of fanfare, and Nagoya Airport opened quietly. But the mission of Nagoya Airport is important,” Kanda told a crowd of several hundred people. “In the U.S. and Europe cities often have several airports that complement one another. Now, here in Nagoya, we have the same situation with a new, major airport for international and domestic airline operations and a dedicated airport for business and commuter aviation.

“I believe it is important to provide good airport opportunities to all segments of aviation, and our two airports will contribute to society by serving different roles. The Aichi Prefecture supports both airports and is dedicated to serving all of aviation. We hope these two airports will foster more economic opportunity and trade for our region.

“Nagoya Airport is expected to play an important role for commuter airlines, international business aircraft, news gathering, air ambulance and search-and-rescue,” he said. “We expect Nagoya to serve many functions, including welcoming businesspeople from abroad who arrive here in corporate aircraft to attend the World Exposition 2005.”

Ichiro Ukai, mayor of Kasugai City, also addressing the audience, said, “I see two important roles for Nagoya Airport. First, it will establish good relations with the community of executives who use business aircraft for international travel; and second, it will strengthen the unification of local cities in Japan.”

The second role is not as inconsequential as it might seem. Japan is an island nation made up of some 3,500 islands.

At about 1,800 miles long, Japan is approximately the same length as the Eastern seaboard of the U.S., but about three-fourths of the country is uninhabitable, in part because about 75 percent of the world’s active volcanoes, approximately 190, are located there. They are intermingled with more than 200 inactive volcanoes, making transportation historically challenging.

So it is that only about 10 percent of the landmass is occupiable and another 15 percent suitable for agriculture. Combine that with limited natural resources, and Japan is a primary importer relying on airborne and waterborne shipping.

Airport History
Misao Nagae, general manager of new business development and overseas operations programs for Nakanihon Air Service, explained that Japan has a central government and is composed of 46 prefectures. “Each prefecture has its own local, autonomous government similar to the U.S. Aichi Prefecture, where Nagoya is located, is one of Japan’s three major metropolitan regions. It is a global manufacturing hub located in the center of Japan and has excellent access by land, sea and air.”

Nagae said that every year since 1997 the Aichi Prefecture has boasted the highest value of industrial shipments of all the prefectures. The region engages in a broad range of production encompassing automobiles and other transportation equipment industries, as well as textiles, ceramics, machine tools, aerospace and information and communication. Moreover, a number of international enterprises have production bases in Aichi.

The original Nagoya Airport was built by the Japanese military toward the end of World War II and initially had a 4,800-foot runway. At the end of the war flying was, for the most part, banned in Japan until 1951, when commercial flights were allowed to resume. In 1952 Japan Air Lines began offering scheduled service to Tokyo, Nagoya and Osaka. Nagoya didn’t even have a passenger terminal at the time.

In 1957 the Nagoya Airport Terminal Building Co. was formed to operate and manage a newly constructed passenger terminal, a novelty at the time as there was only one other passenger terminal in all of Japan, at Tokyo Haneda Airport.

In 1958 the runway was extended to nearly 9,000 feet. Six years later, the airport added a dedicated domestic terminal to deal with the increasing traffic.
Runway 34/16 is the only runway at NGO. The ILS system in use before the February rededication was the oldest in Japan and was decommissioned after the airliners relocated to Centrair the night of February 16. A new ILS 34 has already been installed but will not be available for actual IFR operations until next February 17. Until then, pilots will have a PAR 16/34, VOR/DME 16/34 or Tacan approach available. The airport is open from 7 a.m. to 10 p.m. local time and available with prior request at other times. A third-party operator sells both 100LL and jet-A.

The few corporate aircraft that came to Nagoya before February 17 had to park at the far end of the airport in an area where there was room for just one or two transients. Passengers and crew were picked up by car and driven to immigration.

Today there is room for up to five Global Expresses, and that number is slated to increase to eight after August 1, when renovations are complete. More important, business aircraft will be able to park directly in front of the general aviation facility. While the facility is currently somewhat unpolished, it is slated to be modernized by the same date.

Nagae said that existing airports in Japanese metropolitan areas have focused on airline operations. As a result, a variety of restrictions have been imposed on the use of facilities and operations by small aircraft. “The Aichi Prefecture wishes to promote the emergence and concentration of a variety of additional aviation businesses here while also making Nagoya Airport friendly to business aircraft arriving from outside Japan,” he said.

Nagae, who has been deeply involved in the planning of Nagoya Airport’s rededication to commuter and business aircraft, said the prefecture stressed making the airport as convenient for international business aircraft as possible. “At conventional airports in Japanese metropolitan areas, passengers on business flights must go to immigration and customs through a large passenger terminal together with passengers from scheduled flights,” he said.

“Here, we have a special passenger terminal area for business flights completely separated from the commuter airline passengers. This will provide much greater privacy, security and speed of handling.” According to the Prefecture, NGO will
also serve as a wide-area disaster response base allowing emergency response aircraft to deploy from central Japan to other countries.

Airport Operators
There are two operators located on NGO: Nakanihon Air Service and Aero Asahi. No one from Aero Asahi was available to be interviewed. Aero Asahi is the Toyota Motor Group’s aviation company and operates three divisions: an airborne survey division, a surveying and geographic information division and an aviation business division.

Finally, the aviation business division is involved in aerial photography, agriculture, construction, corporate flight service, charter, electronic news gathering, environmental research, geological survey, logging, maintenance and repair and pilot training. The company primarily operates Citation Ultras.

Nakanihon Air Service Company was founded in 1953 as a charter and regional airline using a DC-3 and Convair 440. The company sold off the regional airline to All Nippon Airways because “business wasn’t all that good and our parent company was the largest shareholder,” Nagae said.

Today, Nakanihon offers both fixed-and rotary-wing charter. It has 94 pilots on staff (75 dedicated to the helicopter operation and 19 to fixed wing) and 18 airplanes, 57 fleet helicopters and eight managed helicopters. Some of the aircraft are remotely based serving other communities.

The company’s fixed-wing fleet includes two Citation Vs, two Beech King Air 200s, a King Air 100 and a Twin Commander 695. There are two Cessna Caravans, a Cessna 404 Titan, a Cessna 303 Crusader for flight instruction and a Cessna 172 used for airborne public relations. The 172 is outfitted with an external speaker system that can be used for election advertising, traffic safety and so on. There are also two Cessna 206s outfitted for photography and mapping.

Nakanihon has a Bell 430 each in Nagoya, Tokyo and Osaka for electronic news gathering, and a Bell 427 in Nagoya. The company also has a Eurocopter AS 355N, AS 350B3, EC 135, AS 332 Super Puma, Hughes 369, Bell 206 and Fuji Bell 204 based in various locations. In addition to electronic news gathering, Nakanihon
is involved in fishery enforcement, logging services, heavy-lift operations, aerial survey and air ambulance. Nakanihon pioneered helicopter emergency medical service in Japan in 1984 with a Bell 206L LongRanger. The air-conditioned helicopter was outfitted with a stretcher, medical equipment and both oxygen and compressed air.

The company has five EC 135 Doctor-Heli contracts with the Japan Central Government and several prefectures, with aircraft based at four hospitals. The company also uses the Citation V to repatriate patients and to transport heart transplant donations; a King Air 200 also flies organ transportation missions.

Nakanihon is a Japan Civil Aviation Bureau (JCAB) certified repair station that employs 194 mechanics, including two FAA-certified A&Ps. They do major airframe and minor engine work with NDI paint and avionics back shops.

Takehiko Kaito, president of Nakanihon, pointed out there is currently no Japanese equivalent to a U.S. fixed base operation. “The idea of the FBO is new to Japan. Nakanihon works with the airport to provide ramp space, customs and ground handling,” he said.

“In the future we would like to offer FAA-approved maintenance and the more conventional FBO-related services. The prefecture has given us a place; now we must convince the international business community it is wanted in Nagoya,” he added.

Kaito said that he sees the dedication of the airport to business aviation as a tremendous opportunity for new business. “We expect more Japanese companies will have the idea to use business jets. We also expect more foreign-registered aircraft to come to Nagoya, and that means there will be a lot more opportunities to do business.”

Kaito and Nagae agreed that one potential area of growth for Nakanihon is aircraft management. “We think there are many companies that see the benefit of owning a business aircraft but don’t want to worry about having to operate it themselves,” Kaito said. Nagae suggested that culture is one reason Japanese companies are reluctant to own and operate aircraft.

“I think in Japan the idea of corporate aviation is still so new that shareholders see it as a wasteful perk,” Nagae said. “I think a form of fractional ownership has a good chance of taking root here. It may make jet use more acceptable to the shareholders.”

Marubeni Aerospace, based in Tokyo, is a subsidiary of Marubeni, the fifth largest trading company in Japan. According to Toshiro Tamaki, the assistant general manager of the sales and marketing group, the company has been the exclusive sales agent for Gulfstream aircraft in Japan since the early 1980s.

Historically Japan has not been business-aircraft-friendly, and most Japanese corporations that own aircraft base them in places such as the U.S. West Coast and China. Tamaki said there are no GIV or GV operators in Japan.

“In 2000 we chose Guam to be our operating base and stationed two GIVs there,” he said. “We operated them as N-registered aircraft under Parts 91 and 135. They were eventually sold; we closed down the Guam operation, essentially stopped operating our own aircraft and began focusing on building a charter brokering business. We have good relationships with operators throughout the region and can arrange a charter pick-up and drop-off anywhere.”

The Market for Business Aircraft
Today, Marubeni Aerospace is actively promoting the concept of aircraft ownership in Japan as a result of the government’s increased support for business aviation. “I try to explain to charter buyers the value of ownership,” Kaito said, “but you have to understand there is no basis for general aviation in Japan. It’s not like the U.S., where people see aviation all the time. Here, there is no contact with general aviation and we have to teach people what it is and what the benefits are.”

Last year Marubeni Aerospace formed an alliance with Van Nuys, Calif.-based The Air Group and now has access to two GVs based at that bustling business aviation airport. According to Kaito, the aircraft fly 400 and 800 hours a year. “They fly so much that we don’t think of them as having a home base,” he said. “They’re always flying between the U.S. and Japan. We have seen a definite improvement in the business aviation climate, and it is our 10-year goal to own our own aircraft again and open an FBO in Japan.” If a company such as Marubeni Aerospace did, it would be just fine with the Aichi Prefectural government.

Katuhiko Hukuma, director general of the department of planning and promotion for the Aichi Prefectural government, is a strong advocate of business aviation in Japan and in Nagoya in particular.

“The Central Government recognized that Nagoya Airport’s runway was too short and the airport was too small for anticipated growth, so it built Centrair,” Hukuma said. “We at the Prefecture saw many manufacturers in the Nagoya area and many more moving into the area, and felt there would be an increasing demand for access to this area by foreign business aircraft. After much discussion we decided to buy the airport from the Central Government. We paid $230 million, and I know there has been some criticism about how the airport will pay for itself.”

Hukuma said there are three revenue generators for the airport: business aviation; commuter aircraft operated by J-Air; and the military, which pays for every takeoff and landing. “We understood from the beginning that this would be an investment in the future and that it would take a long time for the airport to pay for itself,” he said.
“The Prefecture Government felt Nagoya Airport was an important component in supporting business development for the entire prefecture. Business aviation is still in its infancy in Japan, but now we have the space for it to grow. The heads of companies understand that time is money, so we feel they will begin to purchase aircraft now that there is the space to accommodate them.”

Hukuma said business aircraft manufacturers have already been talking with companies in the area about joint ventures. “We are all working together to support growth, and we’re talking with some aircraft operators about space for them to build a facility. We would be interested in having someone open an FBO here in the style that is so common in the U.S. and Europe.”

Airport Improvement Plans
Kenji Sugiura, the Aichi Prefecture’s associate director of the Civil Aviation Administration Division, laid out the short-term plans for NGO. He said the five-story, 662,000-sq-ft international terminal will be converted into a shopping mall. He added, “And the three-story domestic terminal, which is about 270,000 sq ft, will primarily serve the commuter airlines. About 1,700 sq ft of it is being developed to support business aviation but there is ample room for growth. If traffic increases we have the room to expand the facilities appropriately.”

Sugiura said business aircraft operations have 333,333 sq ft of ramp area
with direct, close access to immigration, and waiting-room facilities that exit to an automobile access point; the facility is certainly convenient if not elaborate. Commuter aircraft operations have 622,000 sq ft of ramp space adjacent to the old domestic terminal, and there is an additional one million sq ft of ramp space dedicated to general aviation aircraft that will be used by operators on the airport such as Nakanihon Air Service. If business aircraft need more space they can drop
off their passengers at the bizav area then park in the general aviation area.
“I believe business jet operators will find our landing fee structure appealing,” Sugiura said. “It is based on an aircraft’s mtow in metric tons (see sidebar on next page). For instance, a Gulfstream G550 is approximately 42 metric tons. If that aircraft were to land at Narita it would pay ¥100,800 ($965). (One yen is approximately one U.S. penny so a fairly accurate rule of thumb is to move the decimal point two places to the left.) Here at Nagoya it is ¥63,200 ($605) and we have no limitations on how long an aircraft can park. It makes Nagoya ideal for international conferences and other major events such as Expo 2005 Aichi.”

Takayuki Hashizume, chairman of the Japan Business Aviation Association (JBAA), attended the dedication ceremony and was pleased that the prefecture was supporting business aviation. “I would like to thank the Aichi Prefecture for an important step in the future of business aviation in Japan. For the past few years the government has become more tolerant of business aircraft, but the major city airports such as Narita Airport in Tokyo are crowded with airline traffic and have little or no room for business aircraft. Airports such as Narita, Hokkaido Airport, Chitose near Sapporo City, and Sendai Airport in the Miyagi Prefecture have given business aircraft access but they are not set up well to deal with them.”

Hashizume said there are other business aviation airports in the planning stages, such as Osaka’s new Kobe Airport for business and regional aircraft, slated to open toward the end of next year. Another scheduled to open at about the same time is the new Kita Kyushu on Kyushu Island; it too will be for business and regional aircraft.

Promoting Business Aviation in Japan
Hashizume said JBAA began nine years ago to promote business aviation to Japanese companies and the people. “I think the bigger problem now will be to explain to the people of Japan about the importance of business aviation. Many of our corporation shareholders are union employees and they find it difficult to understand the benefit of a business jet. We have been working with NBAA for ideas on how to effectively promote business aviation,” he explained.

Stephen Anderson of the American Consulate Nagoya, Japan, said he’s been assigned to Japan before and has kept up with what’s happening in the country for many years. “I returned two years ago and have been active in the development of the new airport project. In the course of doing that we wanted to identify new markets,
so for the past year-and-a-half we’ve had business aviation as a top priority. We realize it will be valuable to Japanese business for U.S. companies to be able to gain access for commerce. The Japanese government has placed a priority on foreign investment, and business aviation is an important aspect of development.”

Michihiko Yokoi, a commercial specialist in the Consulate, said, “The government is definitely trying to make things happen. For example, it recently announced a reduction from 10 to three days in the lead time required for notifying Japanese regional airport officials for landings from overseas. NBAA worked closely with the consulate and Japanese officials to improve access to the airports, and that decision comes as part of a three-year Japanese government plan to promote regulatory reforms that support commerce and business investment.”

Anderson sees two major developments over the past few years that encourage business aviation in Japan: “First, China has become a major area of investment. There are many Japanese companies involved in China. Also, Japan is an excellent destination for aircraft arriving from the U.S. and going on to China. The second factor is the aversion of the Japanese people to risk. Given current events, there is an increasing emphasis upon travel safety and business aviation is an important answer to that concern.”

Centrair Airport

The Central Japan Airport (RJGG), more commonly known as Centrair, went into service on February 17. It was built offshore in Ise Bay on reclaimed land and has a 24-hour runway. Centrair is Japan’s third major international airport after Narita and Kansai. By the end of this month the airport is scheduled to serve 314 international flights a week, primarily to 25 Asian countries including China and South Korea. There is also service to Chicago, San Francisco and Vancouver, Canada.

One of the most significant aspects of Centrair is the proximity of the domestic and international terminals. They are side-by-side, making transferring between flights unusually fast and simple.

In addition to the traditional airport businesses, there are non-traditional businesses on the airport such as shops, restaurants and services including a public bath where bathers can enjoy panoramic views of landing and departing aircraft.
A 28-minute train ride connects the airport terminal to Meitetsu Nagoya Station in the heart of Nagoya’s business district. The airport is also accessible by car and from Mie Prefecture by ferry.