COMPLETION REPORT
Privatisation and Performance in the Airport Industry: Japan’s Experiences and Its Lessons for Malaysia

Dr. Kok Fong See
Senior Lecturer
Universiti Sains Malaysia
Executive summary
The Japanese airport industry has undergone regulatory reform since 1998. The objectives of regulatory reform areto improve airport utilisation and airport performance. Several initiatives and efforts have been undertaken by thegovernment to regulate the airport industry in Japan. A drastic change in Japanese aviation policy was observed withthe introduction of the Airport Act in 2008. The majority of Japanese airports are owned and operated by the central
and regional governments. In 2012, the Japanese government announced the privatisation of 94 local airports from2014 to 2020. The purpose of the Japanese airport privatisation plan is to enhance airport efficiency andcompetitiveness, reduce the landing fees, and attract new airport operators. Each private airport operator is given a30-50 year concession to manage an airport in Japan. Sendai Airport is the first state-owned airport privatised inJapan, and the Tokyu consortium commenced operation of the airport in July 2016. Improving airport efficiency isone of the expected outcomes of the Japanese airport privatisation plan.
Although the airport privatisation plan in Japan has been raised and discussed in the general debate, there is no
published research that specifically evaluates the performance of Japanese airports after the airport privatisation planannouncement. Moreover, the contributions of the various environmental factors to the airports’ efficiency provide
useful information on the factors driving efficiency improvements. The objective of the study is to examine the totalfactor productivity (TFP) growth of Japanese airports before and after the privatisation plan announcement. A
sample of 24 Japanese international and regional airports from 2010 to 2016 are included in the study. HicksMoorsteen TFP index method is used to estimate the overall productivity levels and their determinants in theJapanese airport industry. The results show that the Japanese airport industry enjoyed positive TFP growth over thesample period. The average TFP growth of the Japanese airport industry from 2010 to 2014 has been 1.98% peryear. Technical progress contributed the most to the TFP growth. Regional development and airport expansion arethe main drivers for productivity improvement in the Japanese airport industry.
Research activities involved in the projectWith financial support from the Sumitomo Foundation, I was involved in several academic activities during theproject period such as presenting a paper at the 2018 ATRS World Conference (Seoul, South Korea) andparticipating in the Western Economic Association International (WEAI), 14th International Conference(Newcastle, Australia) which are important venues to disseminate our research findings, explore more current global
air transport issues, and engage in research collaboration with prominent researchers in the area of air transporteconomics.

Publication of the Results of Research Project:Verbal Presentation (Date, Venue, Name of Conference, Title of Presentation, Presenter, etc.)
See, K.F. (2018) “Does privatisation as a correct path way for bringing Japanese airports toward sustainability?”,
The 22nd ATRS World Conference, July 2-5, 2018, Seoul, South Korea.
Thesis (Name of Journal and its Date, Title and Author of Thesis, etc.)
Book (Publisher and Date of the Book, Title and Author of the Book, etc.)