The Finance Ministry will reject the Transport Ministry's request for a 2 billion yen budget allocation for fiscal 2001 to help revamp the management of the loss-making Kansai International Airport, government sources said Wednesday.

The Transport Ministry has been lobbying for the allocation of government subsidies to Kansai International Airport Co. in an effort to enable the ailing airport operator to reduce landing fees and improve the airport's international competitiveness.

Exorbitant landing fees have long been blamed for scaring away foreign carriers, resulting in a low number of flights.

The Finance Ministry, however, is opposed to injecting public funds into the operating firm, which it believes should carry out drastic restructuring of its management before requesting government aid, the sources said. Suffering from the burden of heavy debt repayment -- a legacy of the massive cost of constructing the offshore airport -- KIAC, a third-sector firm, holds accumulated losses exceeding 150 billion yen.

KIAC had initially hoped to start turning a profit in fiscal 1999, five years after its opening. The company posted 23.7 billion yen in pretax losses, however, marking a fifth consecutive loss-making year. KIAC is nevertheless proceeding with its second-phase construction to build a second runaway, at a cost of 1.5 trillion yen.

Concerned by the worsening state of the firm's financial health, the Finance Ministry has urged drastic management reforms, including calls on local businesses to shoulder an additional financial burden in order to reduce KIAC's debt burden.