Oakland Airport Chief Flying High

Posted on Sun, Dec. 07, 2003   
 
Oakland Airport Chief Flying High
Contra Costa Times, CA


Name: Steven J. Grossman

Age: 50

Title: Director of Aviation/Port of Oakland

Location: Oakland

Career: Grossman was appointed director of aviation in August 1992. He is 
responsible for the operation, management and marketing of Oakland 
International Airport. Under his leadership, the airport has grown from serving 
6.6 million passengers and 362,000 metric tons of air cargo in 1992 to serving 
nearly 14 million passengers and 700,000 metric tons of air cargo this year. 
Before joining the Port of Oakland, Grossman spent nine years at San Jose 
International Airport, with his last position there being deputy director of 
aviation in charge of finance and administration. Before serving at San Jose 
International Airport, he was an aviation consultant with a national 
engineering and planning firm.

Education: Grossman is a graduate of the State University College at Oswego in 
New York, and received a master's degree in urban planning in 1977 from 
Michigan State University.

Steven Grossman, the top boss at Oakland International Airport, is seeing a lot 
of blue skies. And Grossman has parlayed the smooth sailing -- despite the 
turbulence of a terrorism-threatened world -- into a lot of green for the 
airport's coffers.

Just over two years after the human and economic toll unleashed by the Sept. 11 
terrorist attacks, Oakland International Airport has become one of the Bay 
Area's economic success stories. Oakland airport is growing far more quickly 
than the San Francisco and San Jose international airports.

Oakland is now the second-busiest airport in the Bay Area, after San Francisco. 
In 2001, Oakland had 11.4 million passengers, up 7.5 percent from 2000 -- 
despite the September terrorist attacks. In 2002, it had 12.7 million 
passengers, up another 11.4 percent from 2001. For 2003, about 13.4 million 
passengers could fly Oakland, the airport estimates. That would be up 5.5 
percent from 2002 and 26 percent above 2000. Times staff writer George Avalos 
recently spoke to Grossman about the airport's success and the challenges that 
imperil that success.

Q: How has the airport managed in the two years since 9/11?

A From an activity point of view, we have done very, very well. In 2002, we 
were the fastest-growing airport among the largest airports in the country. For 
2003, we were the fourth-fastest growing airport. Passenger traffic is up 
substantially. We have grown since the events of 9/11, by about 40 percent. We 
are kind of the exception that proves the rule on airports.

Q: What are the factors that propelled your growth?

A The primary reason we have done very well is we have added the flights and 
the types of services people want to see when they are selecting an airport. 
Those include more long-haul flights, including to places like Washington, 
D.C., New York City, Atlanta, and the Hawaiian islands.

Q: Is this only recently that you've been able to make these changes in longer 
flights?

A We just didn't have the flights. It's only in the last few years that 
airlines have added that type of service to Oakland with Jet Blue and Aloha. 
It's only in the last few years that those markets have been proven. The other 
carriers have followed suit.

Q: What about fares?

A We generally offer low-fare airlines. The fares the airlines offer here are 
very, very competitive. We have Jet Blue and Southwest. Those low fares give 
people in Alameda and Contra Costa County no excuse to drive across the bridge 
to that other airport when they want to fly domestically.

Q: So this has helped you gain market share?

A If you look back four or five years ago, we represented about 12 percent or 
so of the Bay Area market. Today we are 27 percent of the Bay Area market. San 
Francisco has about 52 percent and San Jose has about 20 percent.

Q: At whose expense have you gained?

A Most of that, if not all of it, has come from San Francisco. There were 
surveys done that showed 40 to 50 percent of the people who live in our market 
area and travel who would drive to SFO. That was understandable. SFO had the 
nonstop flights that people wanted. It's a tough job to convince people to 
change planes in Chicago. Today, that job is much easier for us. We have the 
same flights people have been showing they want.

Q: What is the airport's main challenge?

A The challenges come in a number of areas. We are operating at record traffic 
levels in facilities that were designed to handle about half of what we are 
handling. The challenge is to keep these passengers here and happy until we can 
expand the airport. That expansion will start this coming year, in 2004. And 
hopefully, the first phase will be done in 2005.

Q: What are the other big hurdles?

A A second challenge is to deal with all of the security issues raised by the 
war on terrorism and working with the transportation security administration, 
not only to keep the airport as safe and secure as we possibly can but also 
keep it operational.

And we also face the challenge to really keep our costs in line with our 
market. We really cater to the low-cost, low-fare airlines. They offer the kind 
of flights and fares our customers want to see. We want to work with our 
airline partners to ensure we are keeping those costs low

Q: What will be involved in the first phase expansion?

A We will expand Terminal Two where Southwest now operates. We will double the 
size of the security checkpoint, increase the size of baggage claim, and add 
more security counters. We will expand the existing concourse; we will build a 
new concourse to allow Southwest to expand there. Finally, we will build a new 
6,000-stall parking garage right in front of Terminal One and Terminal Two. 
That will also have a ready-return for automobile rentals. We will be the only 
airport with all of the ready-return functions right across the street. About 
15 percent of our passengers use rental cars.

Q: How much will this cost and how will you finance this?

A About $500 million. A large part of that will be paid through 
passenger-generated money. They pay a fee on top of the ticket that goes to the 
airport. The terminal building is being financed with passenger fees. We sold 
revenue bonds for the parking garage. There is a fee that the rental companies 
charge. The whole airport, the whole port, is really self-financing. We get no 
tax dollars from the general fund of the city of Oakland. We actually pay money 
to the city of Oakland through a number of fees and services. This airport, 
like most around the country, is self-supporting. The users of the airport pay 
for what we build.

Q: Have you been hiring or reducing staff?

A Just this past summer, we had a layoff of people at the port. The airport 
lost about 35 positions, of which 13 people were laid off. The rest were 
vacancies. We are faced with rising costs. Our security expenses are very high. 
Other costs are rising as well. We are doing all we can to keep costs in line, 
and do show a profit for the year.

Q: Does it look like you'll manage to show a profit?

A I think so.

Q: Are you surprised the airport has taken off?

A It's not a surprise as such. A number of years ago, we decided from a 
business perspective, that our niche in the market was to cater to low-cost, 
low-fare airlines. That has been the segment of the market that has prospered 
the most in these trying times. Granted, there is a certain amount of good 
fortune in that.

We know the market will change again. The higher-cost market segments, such as 
business travel, will come back. So airports like SFO and San Jose will revive. 
But at this point, Oakland has been a very under-served airport. Our cost 
structure was such that the low-cost carrier could make money in Oakland.

Q: Beyond what you have planned now, will there be further expansions?

A Yes, there will be more. We have the closure of the United Airlines 
maintenance base. That's a place where we're looking at future terminal 
construction. We will start a master study in 2004.

Q: What other kinds of routes would you like to land?

A We'd like to get service to the Boston area. We'd like to get service into 
the Florida market. We would like to get into Canada. We would like more on the 
East Coast, more service to places like Philadelphia, Baltimore and Cincinnati. 
That's where the marketing effort will be focused.

Q: How do you attract a carrier?

A We go directly to the airline. We're one of the pioneers in marketing of an 
airport to an airline. We do the technical studies to show that this area and 
this airport can support the airline and the routes it serves. We then make one 
or more trips to an airline headquarters to make our case. We have a number of 
instances where that program generated a sale. The airlines are getting to know 
us through this process. And we hear from the carriers that their Oakland 
operations are their most profitable, and we try to build on that.
 
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