Sample Essay: Kansai International Airport – Osaka, Japan

In the 1960sKansai International Airport – Osaka, Japan –79.2, a new airport near Osaka was proposed by the planners. This proposal was   mainly because of the great imbalance in economic development, between Tokyo and Kansai region. The Kansai region was losing its economic opportunities mainly due to the lack of transportation facilities. The already existing Osaka international airport could not be expanded because it was situated in densely populated suburbs. The protests, from the people of Kansai area have forced the planners to take a decision to build a new airport (Osaka Journal; Impatient City’s Mission: Steal Tokyo’s Thunder). During the 1980s and 90s an international trade friction was created due to the controversy related to the bidding and construction of the airport (Some Minor Gains on Trade Conflicts). However this controversy did not help to ensure the participation of foreign bidders.  Afterwards, there was an allegation that the departure hall counter space was not allocated in proportionate to the volume of passengers. There was also complaint that the Japanese carriers were allocated with more than sixty per cent of the space (Osaka Notebook). Utilizing the practical experience of the construction of Kansai Airport, the expertise was applied to the construction of Hong Kong international airport (Sinking Feeling at Hong Kong Airport).

The terminal construction of the Kansai international airport began in 1991.By taking into consideration of the sinking of the Island, the terminal building was supported by specially designed adjustable columns. For reducing the total cost, the government officials suggested that the length of the terminal may be reduced. However the architects refused to accept such a suggestion (Osaka Journal; Huge Airport Has Its Wings Clipped). The airport was opened in 1994.  An earthquake which struck Japan in January 1995 had its epicenter 20km away from the Kansai international airport. However the airport remained safe due to its efficient earthquake engineering. Later, this airport also survived a high speed typhoon in 1998. In 2001, the American society of civil engineers presented the airport with the “Civil Engineering Monument of The Millennium” award (Civil Engineering Monument of the Millennium).

Inclusive of the cost involved in the land reclamation and the construction of two runways, the total cost of the airport has crossed $20 billion. The Island sinking factor, contributed in the increasing of the total cost (Condition of the Settlement).  In the early years of its operation, the operational cost of the airport was very high due to the high rate of terminal rent and also due to the utility bills for onsite concessions. (Will Fees Sink New Osaka Airport?). The government came under pressure from the business community of Osaka to bear the burden of construction cost. They argued that such a measure will make the airport more attractive for the passengers and airlines. As a result, increased number of flights is operating now on account of the government sponsored discounts. (Osaka Journal; Pride and Price: The $14 Billion Airport).

Continuous monitoring of the economic environment is a pre condition for any strategic decision. Strengths of the organization must be sorted out .It may be the strength based on human resource, or strength based on infrastructure. The technique of SWOT analysis, if conducted with minimum errors, will contribute a lot to get a clear picture of the position of the business status of the company or organization. Promotion schemes may fail due to one or more of the following factors such as the faulty administration, failure to match the scheme to the objective, lack of proper planning, Poor customer relations, or lack of creativity.

The importance of customers in air transport service stems from the fact that most services imply active customer and organization interface. Service personnel are important in all organizations but more so in an organization involved in providing services. The behavior and attitude of the personnel providing service are important influential factors on the customer’s over all perception of the service. Costumers are important because they are sources of influence for other costumers.

Strength:  As an international transportation hub, the Kansai International Airport has an important position in the air transportation sector. In the contexts of emerging global economic environment, and the development of new international airports through out Asia, there is increased scope for the development of the Kansai International Airport (Kansai International Airport-KIX, Osaka, Japan). Japan has the second largest domestic air transport market in the world after the US market.

Annually, about twenty million passengers pass through the Kansai International Airport. This airport has flights operating to and from more than seventy domestic and international airports. The enormous structure of the terminal area of Kansai international airport is equipped with a variety of facilities and services. This airport is providing comfortable parking area through two multi level parking lots which are located adjacent to the terminal. For serving a range of Japanese and international food, the terminal building of the airport consists of more than thirty restaurants. Moreover this building accommodates coffee shops, bars, and several stores providing extensive shopping opportunities. The airport clinic is well equipped with facilities to provide first aid medical services (Osaka Kansai International Airport (KIX) Information).  The Airport is connected with the nearest cities of Osaka, Kyoto, and Kobe through various train and bus lanes. The Kansai airport and Kobe airports are connected by a high speed ferry. A bus shuttle service connecting the airport terminal and the ferry pier is more convenient for the passengers (Kansai International Airport).

Opportunities: The dynamic changes occurred in the global economic environment has affected the air transport sector significantly. One important aspect is that the service sectors such as banking and insurance is expanding continuously. The trends in the flow of labor force have changed due to the revolutionary changes in the human resource planning in the organizations all over the world. The support of information technology made the global economic forces to have easy access over the work force any where in the world, from every where. However the trends in certain fields such as the tourism sector are favorable for air transport industry. Due to the liberalized norms and rules in the global market, competition is promoted in every field. In the case of air transportation, the environment favorable for competition will result in the entry of new operators in the industry and thereby increasing the volume of air transportation. As a result major air ports will have increased level of business. More people will opt for the air travel at a reduced fare. Reduced freight charges will increase the cargo movements. These all changes will promote the trade between nations by stimulating the scope of exports and imports. In the era of globalization and evolutionary restructuring of global market, the passenger as well as cargo movements   have increased significantly. Air transport activities have been liberalized in many countries and especially in developed and fast developing countries (Air transport Industry). Air transport market in the Asia pacific region is expected to experience significant expansion in its volume of traffic. Studies show that from the 28.3% of the world’s air passenger traffic as per 1999, the share of Asia pacific region is expected to reach 30.5% in 2014. (Definition of low cost airline-Asia pacific region).The continuous developments and advancements of technology are posing both as opportunities and threats for the air transport industry. This is applicable in the case of the Kansai International Airport also.

Weaknesses: As this airport is located on an artificial island in the Osaka bay it is always facing the danger of sinking (Kansai international airport is stunning-but sinking into debt and desolation. Care for a date? – Upfront).During 2000, it was announced that the airport was sinking into depths at a faster than expected rate. Simultaneously fall in revenues from the level of expectation deepened the financial burden. To stop the submerging of the existing structure, the authority was forced to spend huge amount of money for keeping the structure intact. As a result, by the end of 2000, more than 27 billion yen were spending on passenger terminal. The debt of KIX during 2001 was about 15 billion Yen. With all these debts, the airport is overburdened with interest bearing debts of about one trillion yen. The volatile factors such as Islamic terrorism and the spread Asian viruses hampered the industry during 2001, and the financial situation of KIX got adversely affected (Kansai international airport is stunning-but sinking into debt and desolation. Care for a date? – Upfront).

In the modern global economic context, the trade relationship between the Asia pacific region and the developed western world has resulted in the increased volume of air traffic. All the fast developing economies of the world, continuously strive for removing the economic barrier. But the aviation relationship was not keeping pace with large commercial objectives. By representing more than 50% of the air transport business the economies of North America and Western Europe are playing major roles in this sector (The Airline Industry).  An economic crisis will result in a significant fall in the demand for the services provided by the airline companies. The increasing price of fuel is another important adversity for the airline industry. I the fuel price is not reduced the operational cost for the airline companies will remain high and they will be struggling hard to run the business.  (Airlines May Weather Financial Crisis Well).

Due to the increased volume of freight flights, the airport started experiencing limitation of space. This situation has demanded the expansion of the airfield and accordingly the second phase of runway expansion was taken up during 2003, and it was opened on August 2007. For the future expansion the airport is planning to expand the airport size to 13 square kilo meters. Along with this, there is also planning for the constructions of 3500 meters long third run way. But unfortunately due to economic reasons, these plans were halted by the government of Japan. However, after the second phase of expansion of runway, the airport is capable of handling its operation throughout 24 hours a day. (“Kansai opens it’s Second Runway”, Airports – September/October 2007 (Key Publishing), P7)

Threats: Kansai international Air port, Osaka is facing competition from other strong competitors in the Asia pacific region. Some of the most important airports in the region are Chek Lap Kok international air port Hong Kong, Pudong Airport at Shanghai, Changi airport Singapore, and Kuala Lumpur International airport Malaysia. (Aviation Environment in the Asia pacific region, p23-25).For example the international air port of Hong Kong, functioning as a regional hub in south East Asia is situated in a geographically advantageous position and therefore can reach half of the world’s population within five hours of flying. In this situation Hong Kong enjoys sufficient demand for low cost airline operation. With well planned infrastructure and with a capacity to handle 35 million passengers annually the Hong Kong airport is the finest one in the world (Air lines of Hong Kong, p 50, 51). Analytical study of a wide range of socio cultural factors is important for locating the factors which can cause potential threats and opportunities. In this context, demographic movements and attitude towards quality of life are important socio cultural factors. In the aviation industry the role of advanced technologies are felt in general and especially in the areas such as in the case of distribution system and entertainment improvement. As a firm with global operations, the business of Kansai International Airport is influenced by more complex environmental situations which are affected by macroeconomic factors. (Aviation Environment in the Asia pacific region, p23-25)

Conclusion: Air transportation is more a necessity than a luxury, in the modern world of dynamic economic and technical activities. In this context, the new opportunities must have to be explored by the authorities of Kansai International airport. The airport will be able to expand its volume of air transport operation into new areas. As per the changed environmental conditions, the airport authorities can redesign their strategies with an aim of accommodating new ideas and approaches in every field of management, including that of men and material. The issues causing troubles to Customers and employees must be addressed without any delay.

In the current economic environment, interest rate is also an important macroeconomic factor which is crucial for the airlines industry. If the financial aspects of the company are not handled with care, the organization may fall into dept trap. Lower credit ratings will automatically get translated into higher interest charges. It is an accepted fact that it is difficult to have a deep cut in the airport operation costs. The management must work out all the possibilities of maintaining the financial health of the company, especially during the time of economic slowdown.(Impact of Air Carriers Emerging from Bankruptcy). By making use of the reduced interest rate in the current financial market the companies in the airlines industry can tackle the financial crisis in a better way.  The industry can safeguard itself from bankruptcy by reducing its operational costs, along with the reduced demand for service. But such a situation will create increased level of unemployment in the industry. More unemployment in the economy will create its own problems across the economy by reducing the demand for all the products and services. To come out of such a condition, it is necessary to stimulate the economic forces in such a direction to create more job opportunities. Tourism is one of the important industries in the modern world, which can contribute for the promotion of air transportation and thereby creating more job in that sector. Such mobility will encourage the industry to overcome a crisis of economic slowdown.

Both for the passengers and for the cargo movement, air transport is an easy and comfortable mode of transportation. In the era of globalization and in the evolutionary restructuring of global market, the passenger movement as well as the cargo movement has increased tremendously. In this context, some innovative and customer friendly strategy can make the airport attractive for the passengers. For example the attractive facilities available at the Kansai international airport include an option for joining a tour to the vicinity of the airport, if the passenger has a minimum five hours to spare before the connecting flight (Transit tours from Kansai Airport). This facility will be attractive for the passengers because they will have the option of spending their spare time in a useful manner, instead of hours of unnecessary waiting at the airport. Therefore the Kansai International airport is exploring its opportunities to the optimum level through innovative strategies, with an aim of attaining optimum level of efficiency in its business.

References:

1. (Osaka Journal; Impatient City’s Mission: Steal Tokyo’s Thunder) Retrieved July12, 2009, from the World Wide Web:

http://www.nytimes.com/1989/12/09/world/osaka-journal-impatient-city-s-mission-steal-tokyo-s-thunder.html>

2. (Some Minor Gains on Trade Conflicts) Retrieved July12, 2009, from the World Wide Web: http://www.nytimes.com/1987/05/02/business/some-minor-gains-on-trade-conflicts.html

3. (Osaka Notebook) Retrieved July12, 2009, from the World Wide Web: http://www.nytimes.com/1992/08/24/business/worldbusiness/24iht-nobo.html

4. (Sinking Feeling at Hong Kong Airport) Retrieved July12, 2009, from the World Wide Web: http://www.nytimes.com/1992/01/22/news/22iht-hang.html

5.  (Osaka Journal; Huge Airport Has Its Wings Clipped) Retrieved July12, 2009, from the World Wide Web: http://www.nytimes.com/1991/07/03/world/osaka-journal-huge-airport-has-its-wings-clipped.html

6. Engineering Monument of the Millennium) Retrieved July12, 2009, from the World Wide Web: http://www.asce.org/pressroom/news/pr041901_kansai.cfm

7. (Condition of the Settlement) Retrieved July12, 2009, from the World Wide Web:

http://www.kiac.co.jp/en/tech/sink/sink3/index.html

(Will Fees Sink New Osaka Airport?) Retrieved July12, 2009, from the World Wide Web: http://www.nytimes.com/1994/08/05/business/worldbusiness/05iht-airport.html

(Osaka Journal; Pride and (Ouch!) Price: The $14 Billion Airport) Retrieved July12, 2009, from the World Wide Web:

http://www.nytimes.com/1993/12/16/world/osaka-journal-pride-and-ouch-price-the-14-billion-airport.html

10. (Kansai International Airport-KIX, Osaka, Japan) Retrieved August 10, 2008, from the World Wide Web: http://www.airport-technology.com/projects/kansai/

11. (The Airline Industry) Retrieved July12, 2009, from the World Wide Web: http://adg.stanford.edu/aa241/intro/airlineindustry.html

12. (Airlines May Weather Financial Crisis Well) Retrieved July12, 2009, from the World Wide Web: http://industry.bnet.com/travel/1000262/airline-outlook-not-so-bad/

13. (Air transport Industry) Retrieved July12, 2009, from the World Wide Web: http://encarta.msn.com/encyclopedia_%20761552091/Air_Transport_Industry.html

14. (Aviation Environment in the Asia pacific region, p23-25) Retrieved July12, 2009, from the World Wide Web: http://74.125.153.132/search?q=cache:Dx1QAtA6BVoJ:sunzi.lib.hku.hk/hkuto/view/B2992277X/ft.pdf+SWOT+ANALYSIS+FOR+Kansai+International+Airport+-+Osaka,+Japan&cd=4&hl=en&ct=clnk&gl=in

15. (Osaka Kansai International Airport (KIX) Information) Retrieved July12, 2009, from the World Wide Web: http://parking.essentialtravel.co.uk/worldairport/japan/osaka.htm

16. (Kansai International Airport) Retrieved July12, 2009, from the World Wide Web: http

17. (Kansai international airport is stunning-but sinking into debt and desolation. Care for a date? – Upfront) Retrieved July12, 2009, from the World Wide Web: http://findarticles.com/p/articles/mi_m0NTN/is_47/ai_108722609/

18. (“Kansai opens it’s Second Runway”, Airports – September/October 2007 (Key Publishing), P7)
19. (Transit tours from Kansai Airport) Retrieved July12, 2009, from the World Wide Web: http://www.kansai-airport.or.jp/en/transittour/index.html

20. (Impact of Air Carriers Emerging from Bankruptcy) Retrieved July12, 2009, from the World Wide Web: http://ostpxweb.dot.gov/aviation/domav/dotspecterstudy.pdf

21. (Air lines of Hong Kong, p 50, 51) Retrieved July12, 2009, from the World Wide Web: http://74.125.153.132/search?q=cache:Dx1QAtA6BVoJ:sunzi.lib.hku.hk/hkuto/view/B2992277X/ft.pdf+SWOT+ANALYSIS+FOR+Kansai+International+Airport+-+Osaka,+Japan&cd=4&hl=en&ct=clnk&gl=in