"Oakland's growing pains: Discount carriers bring crowds to East Bay's airport"

Friday, August 1, 2003

Oakland's growing pains 
Discount carriers bring crowds to East Bay's airport 
By David Armstrong
The San Francisco (CA) Chronicle


Oakland International Airport was a bucolic little airport in the mid-1980s.
You could park right outside the terminal and stroll inside, encounter
virtually no lines and be airborne in no time. 

No more. The airport has grown rapidly in recent years, lifted by its
alliance with low-fare carriers, the only names in the aviation industry
that continue to grow in the era of heightened security alerts and a
slumping economy. 

The question now is, will success spoil Oakland International as it faces
increasing congestion indoors and out with, some passengers say, a decrease
in comfort. 

"I used to really like this airport, it was actually relaxing," said Bert
Steffens, waiting for AirBART, the shuttle bus that connects the Coliseum
BART station to Oakland International. "I still come here because I go to
L.A. a lot, and Southwest goes there and is cheap. But it's getting to be a
headache." 

Oakland airport officials acknowledge that with success has come new
problems. But they say they're determined to upgrade the customer experience
at the airport, which has grown along with Southwest Airlines, the low-cost
airline that carries 55 percent of Oakland's fliers. 

"We truly do have unacceptable lines," said Steven Grossman, the airport's
director of aviation, referring to crowding in parking spaces, at curbside
and inside the terminals. "It's a major, major challenge, but we are taking
steps to deal with that." 

Oakland, which handled 11.6 million passengers in fiscal year 2001-02, saw
13.4 million passengers in fiscal year 2002-03, which ended June 30,
according to Grossman. The 16.3 percent increase exacerbated existing
problems, though it marked Oakland -- still a distant second behind San
Francisco International Airport, with its 31 million passengers -- as the
only Bay Area airport that gained passengers in the past year. 

In recent months, Oakland created a third curb for airport shuttle buses,
opened a new entrance from 98th Avenue to ease traffic, and will soon
increase security lines to nine from seven in Terminal One, Grossman said. 

The first phase of the airport's $1.4 billion expansion plan, which calls
for a new parking garage with 4,000 public parking spaces and 2,000 rental
car spaces, has been approved, he said. The airport also plans to open 600
new parking spaces in the former United Airlines maintenance facility, which
closed June 30, when bankrupt United moved most maintenance jobs across the
bay to SFO. The long-term plan is to convert the facility into a new
terminal and is expected to cost from $300 million to $500 million and be
completed by 2010, he said. 

The airport, anticipating that United would file for Chapter 11 bankruptcy
protection, voided United's lease agreements 30 days before the carrier
declared bankruptcy in December, Grossman said. "That way, we retained
control of the facilities, and not a bankruptcy court." 

Grossman said Oakland also plans to build an extension to Terminal Two,
which houses Southwest, a popular, money-making airline that pulled out of
SFO just over two years ago and increased its daily departures at Oakland to
122. The extension should be finished by 2006. 

"We need to look at increased terminal capacity," agreed George Turner,
Oakland International's marketing director, at an airport luncheon and
briefing Thursday. "Quite frankly, we're running out of room to grow
comfortably." 

The airport needs the extra space to offer expansion opportunities to
existing tenants and attract other airlines. SFO and San Jose are trying to
gain market share in the low-cost carrier market. SFO, for instance, has
courted ATA Airlines, which announced Monday introductory low fares from San
Francisco to Newark, N.J. 

Oakland airport has also seen its annual security costs soar from $4.4
million before the Sept. 11 terrorist attacks to $11.9 million this year,
Grossman said. 

Oakland airport's finances are considered sound, said Fitch Ratings'
managing director of airport ratings, Dan Champeau. Fitch, a New York credit
rating agency, has given Oakland airport an AA- rating, with a stable
outlook, he said. 

Mineta San Jose International Airport has a good A+ rating, while SFO has an
A rating and has dropped twice in the past year due chiefly to SFO's debt
load, Champeau said. 

Oakland airport benefits from being coupled with the Port of Oakland's busy
ocean cargo seaport, which helps back its revenue bonds and gives the
airport a diverse revenue stream, Champeau said. 

Theoretically, Oakland airport's reliance on one airline could be a problem,


Champeau said. "Having one dominant carrier is potentially a credit risk.
But if you have to ally with just one, Southwest -- the highest-valued U.S.
airline -- is the one you'd want to align yourself with." 

Oakland has attracted several other carriers in recent years. JetBlue, the
sleek, low-fare airline from New York, entered Oakland in 2001 and now has
15 daily departures, many of them non-stop, cross-country flights -- once
rare in Oakland, which has specialized in short-hop regional trips. On
Thursday, Delta Air Lines said it will start two new daily nonstops between
Oakland and Atlanta, effective Oct. 1. 

San Francisco continues to dominate the long-haul market, especially
international travel, with more than 90 percent of Bay Area international
flights. SFO also made access easier by opening a BART line to SFO in late
June. Travelers taking mass transit to Oakland airport must buy a $2 ticket
to ride AirBART buses or $1.50 to take AC Transit lines. Wait times and bus
rides together can add up to 30 minutes. 

Oakland Airport thrives on Low-fare carriers

  Low-cost carriers are the only segment of the airline industry 
  still growing in the 3-year-long downturn. LCCs are also driving 
  growth at Oakland International Airport, which has the most daily 
  departing flights of the three major Bay Area airports.
 
  Oakland:           146

  Southwest:         122 
  JetBlue:            14 
  American West:       7 
  SunTrips(x):         3
.
  San Jose:           83

  Southwest:          71 
  America West:        7 
  Frontier:            3 
  ATA:                 2 
.
  San Francisco:      31

  America West:       13 
  ATA:                10 
  Frontier:            4 
  Midwest Express:     4 
.
(x) SunTrips is a low-fares charter airline
Sources: the airports and the airlines 


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