The consolidations cut service to smaller airports. In 2003, Oakland International averaged 15 United departures a day, airport spokesman Brian Kidd said. Today, United has four daily flights at Oakland.
The Bay Area is "the third-largest air market (in the United States), after New York and Los Angeles," he said. "But that doesn't mean it gets distributed proportionately."
Oakland, he added, was particularly hard hit when Burlingame-based Virgin America launched service at SFO in 2007, which caused competitors to beef up service in San Francisco to the detriment of other airports.
Changes in flight plans have been devastating for San Jose International, which incurred $1.5 billion in debt to modernize its facilities on the assumption the improvements would increase air traffic to Silicon Valley. Airport officials, in planning for the worst-case post-construction business scenario, anticipated a 2 to 4 percent drop in airline business, said Bill Sherry, Mineta San Jose International Airport's director of aviation. Instead, the revenue drop-off from fewer passengers was about 35 percent.
"No one, from the rating agencies to the bondholders to our financial consultants, envisioned we'd lose 35 percent of our traffic," he said.
"We had to take some extraordinary measures," Sherry said. Those included slashing airport expenses by $50 million a year, including restructuring debt and outsourcing services such as janitorial, landscaping and curbside security.
It also meant cranking up marketing efforts, including tapping the Silicon Valley Leadership Group, which represents companies from Apple (AAPL) to Cisco Systems (CSCO), to lobby airlines such as ANA to bring new service to San Jose.
Increasing numbers of airports are trying to steal service from one another, said Debby McElroy, executive vice president of Airports Council International, a trade organization that sponsors an annual conference that is something akin to speed dating for airports and airlines. Airport officials make pitches not only to win new air services, but also to retain those they already have, she said.
With the U.S. airline industry still in recovery, airports are aggressively courting international carriers, which are rolling out new aircraft and routes. To land the ANA San Jose-Tokyo flight, San Jose offered the airline numerous incentives -- including no fees for its first year, a 66 percent fee discount its second year and 33 percent discount the third.
Bender said the incentives are a good way for secondary airports to snag a new carrier. And it can pay big dividends when the new flight is an international route, he said. Studies show that travelers from Asia, for instance, spend as much as $2,000 when they travel, giving a good boost to the local economy.
Seth Young, director of the Center for Aviation Studies at the Ohio State University, said San Jose and Silicon Valley, with its large population, tech economy and wealthy enclaves, is in a strong position to attract more flights once the economy and airline industry have fully recovered.
"If you make those investments (in airport upgrades) there is always a risk of the investment not turning out," he said. "But if you don't make those investments, there is no chance of taking advantage of increased demand in the future. If airlines are going to service a major market like the Bay Area, there will be need for additional capacity."
Distributed by MCT Information Services
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