An Airport Run by Toyota Way of Business in Nagoya, Japan
Toyo Keizai Online reported on what is happening at Chubu International Airport or Centrair in post-pandemic days.
Centrair is a case of airport management reform advocated by the government of Japan for a concession method where the ownership of the airport remains in the hand of the government but operations of runways and terminal buildings consigned to the private sector.
This approach has been adopted for expecting the vitality of the private sector could change conventional airport management where money-losing was accepted as a matter of fact.
In pre-pandemic years, growing inbound tourism demands and expansion of low-cost carriers were positive news for regional airports including Centrair, located south of Nagoya. But COVID-19 stopped this trend and airport management is now getter harder with community economics having been hit much harder. Accordingly, airport management of today calls for the foresight to catch the change of time and bold decisions and actions.
'We discuss matters only with business management rules, making cash flow to neutral and making profit….What should we do? What our customers and local community want us in post-pandemic days? We simply try to go faster than the rest of airports for a goal of profitability,' said Riki Inuzuka, president and CEO of Central Japan International Airport Co., Ltd. Inuzuka, who took the seat of the CEO of Centrair, just seven months ago, saw two records of high and low in international flights in three months, namely January with the highest and April, the lowest, both in 2020.
Centrair was inaugurated in 2005 and took the attention of the industry as the cutting edge airport in Japan in terms of environmental policy, customer service quality, exploration of commercial facilities. However, after a decade or more, the other airports in Japan have caught up or surpassed Centrair. Mere reduction of airport landing charge has no appeal now, Inuzuka said.
Centrair saw a series of new features including Flight of Dreams, an aviation theme part by collaboration with Boeing, Terminal 2 for LCCs, International exhibition halls since 2018. Inuzuka envisions going a step further.
Turning to black
Construction of Centrair, an airport built on an artificial island off the coast as Japan has so limited space on land to build an airport, adopted market principles from the design stage and the five CEOs have all been from Toyota Motor. With Toyota's way of production adopted to the construction, they could save over JPY170 billion, a well-known story in Japan, but also they pioneered airport management in Japan for the adoption of “visible management” and advanced strategy for prioritizing revenues from commercial sales.
Except for two years of losing money in 2008 and 2009 when the Lehman shock brought with the economic slump, Centrair recorded profitability in ten consecutive years.
Inuzuka, back in 2009, was department head of corporate planning at Toyota Motor when the global car giant reported a historic record of deficit in the worldwide recession. He faced many risk events at Toyota including recalling vehicles.
'I always recalled what the top officers back then at Toyota had done when I faced a critical moment for the survival of this company. Regardless of whether profitable or not, Toyota always seeks to eliminate fat. Coronavirus of today gave us a good chance to rethink the profitability of each and every element of our airport operations,’ he said.
Back in 2009, when the business turned to red with a passenger ship of 9 million, Centrair could record black with a further decline of 8.9 million passengers in 2011. This past record suggests to secure fundamental corporate strength to ‘turn to profitable even with 9 million passengers,’ he said.
Human Resource as Key Factor
The airport management company started with a mix of those from local governments and others from private firms. The company consists of 200 full-time employees and those loaned staff from local governments account for only 10 percent today. As those staff hired after the start of the airport are getting higher in the company, Inuzuka said HRD by Centrair way is getting more tangible recently.
‘As airport management calls for higher public service, it cannot be sustained with the same sensitivity of a private firm. National support is absolutely necessary. Based on that, how should we pursue a similar approach to private business practice to sustaining our operations in healthy status? After all, I feel we can do it as long as we gather those who love airports, love doing business, love aircraft…, ‘ Inuzuka talked of his vision.
It doesn't matter where people came from, it also does not matter how an airport is administered either by private ownership, the third-sector or not. All matters are sharing of goals and objectives of working among the management and employees, he emphasized. ‘We will not miss a direction.’
