"New discount carriers boost sales at SFO"

Sunday, December 30, 2007

New discount carriers boost sales at SFO
2007 saw airport reinvent, revive itself
By Tim Simmers
The Oakland (CA) Tribune


SFO - The explosion of low-fare carriers at San Francisco International
Airport in 2007 is just what the doctor ordered for bargain-hunting domestic
travelers. 

Discount king Southwest Airlines launched its largest new-city schedule in
history at SFO in August, the same month Burlingame-based discount startup
Virgin America launched its inaugural flights from its SFO hub. 

In May, JetBlue Airways, another big discounter, announced it was expanding
its Bay Area service with SFO flights to New York and Boston. 

"You can't beat it," said Frank Lolonis of San Mateo, who recently flew on
Southwest for $39 each way to Los Angeles International Airport. "With fuel
prices going up, it's hard to believe you can get fares like that today." 

A few years ago, SFO was known by air travelers as one of the more expensive
airports in the country, dominated by big legacy carriers such as United
Airlines and American Airlines. But SFOofficials started aggressively going
after more discount airlines to better compete against neighboring Oakland
and San Jose airports, which had been far more successful at attracting
low-fare carriers. 

It was an essential move for SFO. Air traffic was starting to rebound, and
low-fare airlines were taking market share from the legacy carriers. Both
business and leisure travelers were riding them. 

"The low-fare carriers provide more competition and choices for travelers,"
said Mike McCarron, SFO spokesman. In the first 10 months 
of 2007, discount-carrier traffic was up 15 percent at SFO compared to the
same period in 2006, McCarron said. 

Traffic from SFO to Los Angeles, Las Vegas, New York and San Diego has been
robust since the newly arrived low-fare carriers focused their initial
service on these destinations. 

As it became clear that Virgin America would get government approval to
begin inaugural service out of SFO, other discounters made sure they'd be
flying out of San Francisco, too. 

The fact that British billionaire and part-owner Sir Richard Branson was
backing Virgin America added urgency, analysts said. Branson's Virgin
Atlantic had pulled market share from traditional carriers in Europe. 

In recent years, Southwest and JetBlue helped fuel growth at Oakland
International Airport, making it a low-fare hub. 

"This will change SFO dramatically," said Michael Roach, principal at Roach
& Sbarra, an airline consultancy in San Francisco. "It makes (the airport) a
real competitor in the low-fare category." 

Roach said there is a large group of people in San Francisco and on the
Peninsula who would prefer to fly out of SFO. 

Virgin America launched its SFO service with flights to Los Angeles for $44
one-way and to New York for $139. It added flights to Las Vegas in October
for $44 one-way and $149 first-class. 

"The trend in the industry is pointing towards low-fare carriers, and we're
excited to be at SFO to compete," said Abby Lunardini, spokeswoman for
Virgin America. 

Southwest launched service in August with 18 daily flights, including
introductory fares of $39 one-way to San Diego, $59 to Las Vegas and $99 to
Chicago. 

One day after taking off at SFO, Southwest announced it would add eight
daily flights to Los Angeles International Airport with a one-way
introductory fare of $39. 

"We're seeing great results at SFO," said Ashley Rogers, spokeswoman at
Southwest. "Our load factors have been higher than expected, and we're
excited about the demand." 

Southwest pulled its operations out of SFO in March 2001, when it operated
14 daily flights. It cited high costs, flight delays and congestion for
leaving, and promptly expanded in Oakland and San Jose's Norman Mineta
International Airport. 

But it worked out its differences with SFO and now has doubled the number of
flights it originally had at the Peninsula airport, Rogers said. 

As part of its expansion, Southwest will begin service to Phoenix from SFO
in March. That fare, so far unannounced, will also be low, said Rogers. 

Indeed, analysts stress that low-fare carriers are still scaling up and
getting a foothold at SFO. They think it will take a year or more to see how
things shake out. 

"As they expand, you'll see the full effect of their competition," said
Gerald Bernstein, principal at the Stanford Transportation Group in San
Francisco. "So far, it's been great for consumers and the airport."


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