"Airport Battle Heats Up; SFO Offers Discount Landing Fees"

Tuesday, August 5, 2003

Airport Battle Heats Up; SFO Offers Discount Landing Fees 
KTVU-TV Ch 2, Oakland (CA)


SAN FRANCISCO -- In an effort to attract low-fare airlines to cross the Bay
from Oakland to San Francisco International Airport, Airport Director John
Martin Tuesday announced a new landing fee discount program to promote
competition and increase revenues. 

Martin said the program, if approved by the airport commission, would grant
a 50 percent discount for landing fees to airlines who add flights to new
destinations or to compete in cities where low-fare airlines have begun to
fly. 

For example, for ATA Airlines, the only low-fare airline currently flying
out of San Francisco, the discount could bring the price of a flight from
Newark, N.Y. to San Francisco down from $565,000 to $282,000 each year.  

"We think we're going to see an increase in flight activity from what we
would've seen had we not put this program in place," Martin said. 

The discount would be granted to airlines who meet the eligibility
requirements between July of this year and April of 2004. Martin, who's been
discussing the idea privately with the chief executive officers of several
airlines since June, said low-cost flights make up only 9 percent of those
out of SFO, whereas other airports average 27 percent. 

If adopted, the program would bring the airport in direct competition with
Oakland International Airport and Mineta San Jose International Airport,
where the cost to airlines is currently less per passenger than in San
Francisco. 

Martin said SFO will also work to reduce the per passenger cost, currently
at about $18, down to $10-$12 in the next few years. 

Times have been tough for the San Francisco airport. Major construction
projects had just finished when the dot com bust and the Sept. 11 terrorist
attacks occurred. 

In the past two years, passenger traffic has declined by 27 percent, with 30
million people arriving or departing in 2002. Staffing was reduced by 15
percent, with 90 employees laid off. The mysterious SARS outbreak also hit
the airport hard - it is one of three major U.S. hubs to Asia - when the
federal government placed warnings on travel to countries like China and
Taiwan. 

But in June, things took a turn for the better, Martin said, with passenger
traffic picking up, bankrupt United Airlines increasing its seat
availability by 12 percent and the SARS epidemic lifting. 

"We have seen SFO turn a corner, activity is picking up and I think we're
through the worse of it," Martin said. 

But Martin wants to see continued growth and hopes to gain a greater share
of the profitable low-fare market that has benefited Oakland and San Jose
with the landing fee discount program. Martin said his proposal will benefit
passengers the most. 

"We need lost-cost carriers serving (currently underserved) cities because
we believe all carries will be compelled to lower their fares," Martin said.
"The big benefit to the public is going to be lower fares in a competitive
market." 

Lower fares mean increased demand and more revenues from airport concessions
that bring in $7.90 per passenger, according to Martin. 


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