Monday, March 13, 2017
Sacramento International Airport hopes for service to Asia, Europe
By Richard Chang
The Sacramento (CA) Bee
Travelers walks through the Sacramento International Airport Terminal B in Sacramento, Calif. Once considered unrealistic due to limited market demand, nonstop flights to Beijing, Shanghai, Tokyo, London and Frankfurt could become reality, thanks to technological advances in aircraft and fierce competition in the aviation industry.
Hiking the Great Wall of China. Sampling sushi at a Tokyo fish market. A weekend shopping trip to London.
Travel to those far-flung locales could soon be easier, if airlines begin nonstop service from Sacramento International Airport to Asia and Europe. Once considered unrealistic due to limited market demand, nonstop flights to Beijing, Shanghai, Tokyo, London and Frankfurt could become reality, thanks to technological advances in aircraft and fierce competition in the aviation industry.
Airlines traditionally consolidated their international passengers at major gateways, such as San Francisco and Los Angeles, because the long-haul jetliners seat several hundred passengers. The financial limitations for such flights from a smaller city like Sacramento didn’t make sense.
Times have changed. Fuel-efficient jetliners like the midsized Boeing 787 Dreamliner cover large distances and carry fewer passengers. The operational costs are significantly less compared to older siblings like the Boeing 747 and 777, longtime workhorses of international travel.
“This opens up a whole wealth of new opportunities for us,” said Mark Haneke, air service development marketing manager for Sacramento International Airport, during an interview. “It’s really a game-changer for the industry.”
Haneke has been busy lobbying foreign carriers to start nonstop service from Sacramento. While Haneke has spoken with representatives of Air China, China Southern Airlines, China Eastern Airlines and Hainan Airlines, he cautioned that any commitment to new service is still at least three years out.
“I was encouraged that they were willing to have a discussion. It’s about building a repertoire and a reputation,” said Haneke, who met with the representatives during annual industry conferences such as the World Routes event that took place in Chengdu, China, last year.
He has targeted Chinese carriers in particular, a sector that is expanding at a rapid pace. In recent months, Chinese airlines have announced and launched an array of flights to the United States from second- or third-tier cities in China.
While much of the new service is fueled by booming demand, there is an element of urgency, since the Chinese government only allows one Chinese carrier to operate any given international route. Thus, airlines are rushing to grab new routes, even if they are to lesser-known cities.
Last year, Hainan Airlines launched service on a Boeing 787 from Los Angeles to Changsha in Hunan, a landlocked province where Mao Zedong was born. Xiamen Airlines, a new entrant to the U.S. market, began flying from Seattle to Shenzhen, a technology and manufacturing hub outside Hong Kong. From San Francisco, China Eastern Airlines started the first-ever U.S. flights to Qingdao, a coastal city in eastern Shandong province with views of the Yellow Sea.
Sacramento International Airport could represent a good alternative for an up-and-coming Chinese carrier that wants to gain a foothold in the Northern California market, Haneke said. He explained that Sacramento is well-positioned to take some market share from Bay Area airports, owing to geography. Officials have long emphasized the convenience and ease of flying out of Sacramento as opposed to coping with long lines and traffic at San Francisco, Oakland or San Jose airports.
“The data that you see for Sacramento is very understated,” Haneke said. “The reality is we have a lot more demand. We have large ethnic pockets of Chinese, Filipinos, Indians and Vietnamese. We’re a very diverse area in terms of people.”
Sacramento’s airport currently has only three nonstop international destinations – Guadalajara, Cabo San Lucas and Mexico City (the latter two are seasonal). Though the airport draws from a catchment area of 4 million people in the region, oftentimes passengers drive to San Francisco International Airport to catch a nonstop flight to Asia, Europe and beyond.
Offering even one flight to a major Asian hub like Tokyo, Shanghai or Beijing could provide a one-stop connection to other cities on the continent that would be attractive for passengers who would otherwise drive to San Francisco, Haneke said.
Lillibeth Bishop, a Los Angeles-based spokeswoman for Air China, said the Chinese flag carrier does not have long-term plans to start flying to Sacramento. Representatives for China Southern, China Eastern and Hainan did not respond to requests for comment. Many airlines in China are state-owned.
“You don’t go into a market in order to just lose money. You hope there’s viability based on data,” Bishop said, noting that it takes several years of research before an airline commits. “It’s a data-driven decision.”
Jan Brueckner, an economics professor at UC Irvine and aviation expert, said Sacramento has a tough case to make for major international nonstop service, even with winds blowing in favor of healthy competition.
“My guess is that Sacramento can’t support an Asian flight, given that San Francisco is so close,” Brueckner said, noting the high frequency of scheduled flights at the Northern California hub.
But he added, “They can gamble because airplanes are highly mobile things. All you need is a ticket counter and gate. It’s easy to pull out.”
Mineta San Jose International Airport and Oakland International Airport are celebrating some success with inaugurating international destinations. San Jose, a former American Airlines hub, once touted service to Taipei and Paris back in its heyday. After the Sept. 11, 2001, terrorist attacks, American shut down the hub, which reduced traffic dramatically. Industry consolidation and the recession further hurt San Jose’s fortunes, pushing the airport to No. 3 for the Bay Area, measured by passenger traffic.
Recently, however, San Jose has regained some of its mojo – after a slew of international carriers launched or returned to the airport. They include Air Canada to Vancouver, Lufthansa to Frankfurt, British Airways to London, Air China to Shanghai, Hainan to Beijing and All Nippon Airways to Tokyo. Most of the carriers use the Boeing 787.
“Airlines are taking note of our success. They recognize they can operate in at least two markets in the Bay Area,” said Rosemary Barnes, a spokeswoman for San Jose’s airport.
Oakland’s airport scored its own coup in 2014, when it lured Norwegian Air Shuttle, a low-cost carrier. With one-way fares to Europe as low as $239, Norwegian has attracted a sizable following of price sensitive leisure customers who may not want all the bells and whistles of legacy carriers. In June, Norwegian will begin nonstop service to Barcelona, the only connection to Spain from California.
“We’re looking to where the growth is. That is indeed international traffic,” said John Albrecht, aviation marketing manager for Oakland’s airport, adding that officials are actively searching for a carrier to begin service to Asia.
Oakland is in the middle of a $35 million renovation and expansion that will double the size of its international building to handle three flights simultaneously. In November, a $2 million club lounge for premium class passengers opened – a selling point to a foreign carrier. Sacramento does not have a lounge, though the airport has an extensive gourmet food court with local restaurants.
Haneke, the marketing manager at Sacramento’s airport, hopes to capitalize on the momentum that is building in the Bay Area and elsewhere. His message is simple: “Come to Sacramento because it’s locked up in the Bay Area.”