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August 25, 2008
Oakland has rare drop in air passengers
San Francisco Business Times - by Eric Young
After soaring for a decade, Oakland airport’s passenger numbers are coming back to earth.
Officials at Oakland International Airport said they expect passenger volumes to decline about 10 percent this year, prompting the airport to shelve plans for a new terminal.
The airport attributed the drop-off to a series of events, including the bankruptcy of several airlines, the soaring price of jet fuel and a plodding economy.
The airport set a record last year with 14.6 million passengers passing through its gates. This year, the airport expects to end closer to 13.1 million passengers, a number the facility surpassed in 2003.
Oakland’s fate contrasts with San Francisco’s airport, the largest in the Bay Area. San Francisco International Airport officials said they expect passenger counts to increase 2 to 3 percent by the end of the year to 36.5 million, due to an increase in the number of domestic airlines using the facility as well as continued robust international travel.
Oakland airport officials expect operating revenue to decline $4 million to $6 million, largely due to reduced parking revenue as fewer people fly. The airport’s overall revenue in the fiscal year ended June 2008 was $135.5 million.
Oakland put plans for a third terminal on hold. That project would help relieve the stress on the existing two terminals, which were built to accommodate about half the annual passenger traffic they handle now. The airport will still complete renovations to Terminal One — which houses all carriers except Southwest Airlines Co. — but that work will be spread out over five years instead of two to three years as originally planned.
The airport will close one of its four parking lots. That move will save about $1.6 million a year.
The difficult times for Oakland’s airport started last spring. At that time, three small airlines — ATA, Aloha and Skybus — went out of business. Then bigger airlines, dragged down by record-high fuel costs, weighed in with bad news for the airport. American Airlines Inc. and Continental Airlines Inc. said they would stop serving Oakland as part of a strategy to reduce capacity and focus on their most profitable routes.
For years, Oakland airport’s strategy of catering to budget-conscious flyers has been a winner. Even during the airline industry downturn immediately following the Sept. 11 attacks, Oakland continued to handle increasing numbers of flyers.
Much of the airport’s success stems from its status as a major base for Southwest, the nation’s biggest carrier.
“We’re very thrilled that Southwest has been a longtime partner here,” said Rosemary Barnes, airport spokeswoman.
About two-thirds of Oakland’s flights are handled by Southwest, which has held its own during the airline industry downturn, remaining profitable and maintaining conservative growth plans.
But the Dallas-based carrier now says it is trimming capacity growth plans to just 2 percent for the current quarter and 1 percent in the fourth quarter.
The company “may not grow in 2009,” said CFO Laura Wright.
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