Consul General Daniel R. Russel

"Airports and Regional Development in the USA"
Hyogo-Kobe International Summit 2006
Kobe Portopia Hotel
February 23, 2006

First let me begin by acknowledging Hyogo Governor Ido, Chamber of Commerce Mr. Atarashi, Consular Corps Dean McLellan, and MOFA Ambassador Amae.

I am by no means an expert on the subject of airports and Regional Development, but I can speak to the situation in the two places in the United States that I know best: New York (home) and Washington DC (work).

Coincidentally, both cities have 3 main airports: In NYC, we have JFK, Newark and LaGuardia (domestic). In Washington, we have Dulles, Baltimore-Washington, and National (domestic). Both places have given complete control of the airports to a private airport authority. In this system, the two or three governors each appoint members of a board of directors to run the authority. In both cases, the airports authorities receive no/no financial support from the taxpayers – they are financially self-supporting. They use landing fees, rents, duty-free and other concessions like restaurants and parking to generate revenue. They issue bonds on the commercial market to raise capital for new development projects. And in both cases the Authorities not only run the airports together, they also develop and manage related infrastructure and services such as toll roads, trains, harbors, buildings, cargo storage and transfer facilities, and more. They have their own police & fire departments – saving the taxpayers that expense also. 

The key point is that there is a single, private administration that runs the airports jointly and that is also responsible for related infrastructure and services. This eliminates what we call “stove piping” and dramatically improves efficiency and reduces waste. The airports are run by businessmen as businesses, and yet are accountable to local authorities. This means that local government is doing what it should be – looking after the public’s best interests – not becoming amateur businessmen. By running three airports together they get economies of scale and avoid unproductive competition. And because of their diversified operations, the airports can ride out temporary downturns in the travel sector. 

Not all cities in the US have multiple airports or use the airport authority system, but many do – and it seems to contribute significantly to regional development. Amb. Schieffer recently spoke to 3 Kinki governors about the example of Dallas Fort Worth -- DFW – where two bitter rival cities joined to create a shared airport that is now one of the major transportation hubs in the US. In the case of Washington, Dulles airport was branded a “disaster” and “white elephant” when it was built, but over the past 20 years – like DFW – it has created a high-tech corridor of shopping malls, IT firms, cargo and logistics facilities, and consulting businesses near the airport. 

But let me talk a bit about the case of NY (the Port Authority of NY and NJ). 

I know that relations between Hyogo/Kobe and Osaka and Kyoto have always been perfect, so you probably won’t know what I am talking about when I tell you that NY and NJ have traditionally hated each other! (Ditto Virginia, Maryland and DC) A hundred years ago or so, the police from NY & NJ once had a gun battle in the middle of the Hudson River! They share geography and population – many people work in NY and live in NJ. Finally the two states formed an association to run the harbors and eventually it built the tunnels (Lincoln/Holland) and the bridges (GW) that connect the states. In the 1940’s it took control of all the airports, in the 1950’s it took over the NY-NJ commuter train system, in the 1970’s PA built the world trade center twin towers by bringing together local government and private business. And in the 1980’s, PA began a joint program of industrial development aimed at helping the region keep manufacturing firms and jobs. Instead of the community building airports, here you have the airports developing the community! They developed industrial parks and waterfront development along with improved transportation infrastructure to connect the three airports by rail, boat and road with each other, with the nearby cities, and with the harbor – which is now an international Megaport.

PANYNJ directly employs about 7,000 people, but they estimate that indirectly about 167,000 jobs support the 3 airports and the aviation industry in the NY area. 

The AA in Washington is much smaller – and much newer – it was created less than 20 years ago. Since then, without spending any tax money, they have built new terminals, purchased land and constructed two new runways, and built a major highway. 

Naturally there are significant structural and legal differences between the US and Japan, and differences between the NY-NJ region, or the Washington-VA-MD region and Keihanshin. 
However, it seems to me that some kind of integrated team approach to airports in the Kansai would be highly desirable. At a minimum, as we say in English, you shouldn’t “reinvent the wheel”. 
You are very wise to explore best practices and research what other cities and states are doing to connect airports and regional development. 
If Hyogo and Kobe can work with Osaka to find a way to recreate some of the successes of Airport Authority model, I would expect the impact on the region to be extremely beneficial.

Thank you very much.