"SFO to cut its fees and rents"

Tuesday, May 11, 2004

SFO to cut its fees and rents 
Action designed to aid cash-strapped airlines, airport 
By David Armstrong
The San Francisco (CA) Chronicle


San Francisco International Airport will slash fees and charges for
commercial airlines in the coming fiscal year in a bid to make itself
more attractive to the nation's money-strapped carriers. 

The move, approved by the San Francisco Airport Commission last week,
will take effect July 1, when SFO begins its 2004-05 fiscal year,
Airport Director John Martin said Monday. 

Led by an 8.4 percent cut in terminal rents and an 18.2 percent slash in
landing fees, the cuts will drop the airlines' estimated cost per
enplaned passenger at SFO by 9 percent, from $17.23 in fiscal 2003-04 to
$15.71, SFO figures show. Cost per enplaned passenger, one who gets on
the plane at that airport, is the most commonly used aviation industry
statistic. 

"After the attacks of 9/11, airports were under tremendous pressure to
help reduce costs for the airlines,'' Martin said. 

Many large carriers, notably United Airlines, the bankrupt carrier that
handles about half of all flights and passengers at SFO, are still
losing millions of dollars. 

The lower airport rates, Martin said, are designed to help SFO help the
airlines while also boosting the airport. SFO, long saddled with high
fees and overhead from major construction projects such as the 2000
International Terminal and the 2003 BART extension, has been an
expensive place to operate. 

"Certainly, lowering your costs will only help you,'' observed Standard
& Poor's ratings analyst Mary Ellen Wriedt. "However, they're taking
down from a very high level. It's still a moderately high" cost. 

Wriedt cautioned that SFO still faces major challenges, in part because
of United's poor financial position. But, she said, "It's important for
the airlines to see the airport is trying to contain costs. That will go
a long way, given that airline margins are so shallow.'' 

SFO was hit hard by the drop in traffic after Sept. 11, and by the Iraq
war, the dot-com implosion and the SARS outbreak. 

However, SFO's statistics show a 5 percent increase in international
traffic in March from March 2003, lifted by an industrywide increase in
flying ahead of the peak summer travel season. 

According to the Travel Industry Association of America's annual
forecast, released Monday, "The long-awaited travel industry recovery is
in full swing and will remain so through 2004 and 2005. Overall spending
by domestic and international travelers is expected to grow 6 percent
this year alone,'' fueled by growth in both leisure and business travel
in all modes of transportation.

Attached Photo:

Airport Director John Martin says the fee cuts will help the airlines
and the airport.

John_Martin.jpg