"SFO Uses Aggressive Marketing and Incentives To Rebound from Downturn, Competitive Response to United Bankruptcy Fuel's Dulles Growth"

Friday, October 29, 2004 
 
SFO Uses Aggressive Marketing and Incentives To Rebound from Downturn,
Competitive Response to United Bankruptcy Fuel's Dulles Growth
Press Release


San Francisco, California -- An aggressive marketing program and landing fee
incentives to airlines initiating new service at San Francisco International
Airport  helped the airport rebound from significant traffic declines of the
last several years, Kandace Bender, Deputy Airport Director for SFO told
delegates to the 16th Annual Conference of the International Aviation Womens
Association meeting here this week.
 
Bender was joined in a discussion about Managing Airports in Today's
Environment by Margaret McKeough, Chief Operating Officer of the
Metropolitan Washington Airports Authority, who said her two airports,
Reagan National and Dulles International, were 70% dominated by carriers in
volatile financial status, primarily United Airlines and US Airways, both in
bankruptcy, and Delta, fighting to avoided going into bankruptcy.
 
"We meet every day with carriers that may need help," McKeough told IAWA
conference delegates.  She noted that United had leases on almost 50% of
property at Dulles, including common areas, while 30 percent of Reagan
National and 20% of Dulles were under lease to US Airways.  Including Delta,
more than 70 percent of the airport was dominated by carriers in a volatile
financial status, said McKeough.
 
She described two airports under going change.  At National, where traffic
has not recovered since 9/11, the emergence of low fare carriers was
generating an increase of activity where traffic and challenging management
to find space for gates and ticket counters.
 
Dulles, however, has grown significantly since 9/11, in the last year along
moving from a 24th or 25th ranking to become the 5th busiest airport in the
country in one year.
 
McKeough said that traffic in August 2004 was 44% above previous year and in
July it was 38% above July 2003.  Most of the growth, she said, was in
direct competitive response to United's financial troubles and the start-up
of Independence Air, which added 300 flights daily, about doubling air
carrier operations at the airport, she said.
 
Bender said that troubles in recent years at SFO were caused by the
slow-down of the economy, the Dot.com bust, United's financial problems and
growth of low-cost service at nearby Oakland.  SARS, she said, particularly
devastated SFO, where Asian service dropped 40% as a result of the disease
in China.
 
She said, however, that the airport finally has turned the corner, seeing
the results of an aggressive marketing program and realignment of the
airport.  "Today, we are on our way back," she said.  Passenger traffic was
up 16% this year from last and in the last 16 months five new airlines have
began service to SFO.  The airport had been unable to attract any new
carriers since 1999.
 
To attract new service, the airline drastically reduced its costs, cutting
staff by 25%, was successful in improving its percentage of operations by
low-cost carriers from 10% to 15%.  SFO reduced landing fees 18%, terminal
rent fees 19% and cut the cost of enplaned passenger by 21%. 
 
Bender said new carriers and service was generated by a program to offer 50
percent reduction in landing fees for 12 months for airlines starting new
service, a program that attracted Air Tran, West Jet from Scotland, Iceland
Air and Virgin Atlantic to SFO.  Air New Zealand also began new service
recently and Vietnam Airlines is hoping to begin service to Ho Chi Mina City
in April.  America West and Frontier expanded their offerings from SFO as a
result of the incentive.
Information about membership in IAWA, including application procedures, is
available at www.iawa.org.  For additional information about the Association
or please contact Joanne Young at jyoung@xxxxxxxxxxxx or Abby Bried at
abried@xxxxxxxxxx

INTERNATIONAL AVIATION WOMENS ASSOCIATION
PO BOX 65823
Washington D.C. 20035


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