=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SF Gate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2003/06= /03/BU287925.DTL ---------------------------------------------------------------------- Tuesday, June 3, 2003 (SF Chronicle) On the wings of thrift/By catering to low-cost airlines, Oakland is stealin= g business from SFO David Armstrong, Chronicle Staff Writer It is late Sunday night, and Oakland International Airport is teeming. In Terminal 1, where a new ticket counter area was recently created in what used to be office space, a long line of travelers snakes and doubles back in front of the SunTrips counter. Many of the travelers, clad in flip-flops and tank tops, are young, giving the terminal the casual, expectant air of a rock concert. Crowd scenes are common these days at Oakland International, the only one of the Bay Area's three major airports that increased its number of passengers last year in the midst of the deepest-ever downturn in commercial aviation. Oakland has expanded the already-prominent presence of low-fare carriers and low-fare charter airlines, the only carriers that have made money in the aftermath of the Sept. 11 terrorist attacks, sudden acute respiratory syndrome, the war in Iraq and the continuing slump in the economy. "We operate in an environment that is very sensitive to costs," said Ste= ve Grossman, director of aviation at Oakland International. Given that, he said, Oakland focuses on luring low-cost carriers to its bayside facility. "We very specifically went after certain airlines. We very specifically went after JetBlue," he said of the stylish, low-cost New York airline that flies coast- to-coast from Oakland. Oakland embraced low-cost carriers in 1989, when Southwest Airlines -- then and now the low-fare industry leader -- began flying there. Throughout the 1990s, Oakland campaigned to attract more LCCs, as they are called in the aviation industry. In early 2002, Southwest pulled out of San Francisco International Airpo= rt and moved most of its Northern California operations across the bay -- a coup for Oakland, which was then the Bay Area's third-busiest passenger airport, behind San Jose and SFO. Also in 2002, JetBlue began flying from Oakland, and SunTrips, a low-fare charter airline that focuses chiefly on leisure travel to Hawaii and Mexico, pulled out of SFO and concentrated all its Bay Area flights in Oakland. All this made 2002 a very good year for Oakland International, even as airports and airlines generally were reeling. Oakland was the second-fastest- growing airport in the nation last year (after Cincinnati-Northern Kentucky International Airport), increasing its passenger traffic to 12.7 million from 11.4 million in 2001, a jump of 11.5 percent. That vaulted Oakland to second place among Bay Area airports, past Mineta San Jose International Airport, whose traffic fell 15 percent last year. SFO's traffic dropped 9.2 percent last year, while the nation's 40 largest airports saw passenger traffic fall by an average of 3 percent. Oakland has ridden Southwest's rising star, building Terminal 2 just for Southwest, which has filled up the space. According to Grossman, it was a logical decision. "We build stuff to serve demand, and we don't go out of our way to build monuments." Southwest, which boards 60 percent of Oakland airport's passengers, coun= ts Oakland as its fourth-largest center. Southwest likes Oakland's good ground transit links, its access to San Francisco and the East Bay, abundant parking and low operational costs, said Southwest spokeswoman Carrie Breinholt. Indeed, Oakland appeals to a wide range of airlines because it is an inexpensive place to operate, said Jessica Stolz Rudd, an airline analyst at Fitch Ratings, a credit rating agency. "Costs are very low at Oakland, and they use their space well, although they could use additional space," Rudd said. Oakland was the third-cheapest airport in terms of airline expenses such as rent and landing fees in a survey of 28 major U.S. airports conducted last year by Citigroup Global Markets. As figured by projected enplanements -- cost per departing passenger -- Oakland is expected to cost the airlines $3.39 per enplanement in 2003, Citigroup calculated. SFO, by contrast, is expected to cost $17.53 per enplanement, making SFO the second-most expensive airport surveyed, after Newark International Airport in New Jersey. Oakland's advantages have attracted small but growing carriers such as SunTrips, a charter airline based in San Jose. Founded in 1977, SunTrips began flying out of Oakland in 1982 and concentrated all of its Bay Area flights there in 2002. "We have clients all over Northern California and Nevada, and Oakland is really convenient," SunTrips spokeswoman Helen Zimmermann said. "Also, Oakland consistently has the best on-time record of the three Bay Area airports, and it has good parking and good weather." Created to serve Portuguese Americans traveling from Oakland to the Azor= es Islands, SunTrips now flies 10 weekly trips to Hawaii and eight weekly trips to Mexico in the peak summer season. It still flies once a week to the Azores, Zimmermann said, and plans to begin a weekly flight from Oakland to Costa Rica on June 15. SunTrips, which carried 250,000 passengers last year, counts Oakland as its busiest airport, followed by Denver. Brisk bookings in Oakland have spurred growth at SunTrips, which is owned by the British firm MyTravel Group PLC. Surging Oakland revenue also has enabled the carrier to upgrade its service, providing hot meals on most flights and installing leather seats on all flights to Hawaii, Zimmerman said. San Francisco airport -- hit by a drop in usually lucrative transpacific traffic and high-paying business travelers -- is trying to make up for the loss of Southwest. Low-fare carrier ATA increased its weekly number of SFO flights to 62 from 35 this month, for example. The San Jose airport derives 44 percent of its flights from low-fare carriers, according to airport spokesman Steve Luckenbach. But that figure pales next to Oakland, with 74 percent of its flights coming from discount airlines. Discount carriers are driving airport expansion in Oakland, according to Grossman, who added that the airport will continue to go after any LCC that expresses interest in serving the West Coast. But one byproduct of Oakland's growth has been congestion, so the airport is building a new parking garage and finishing a new main roadway entrance to make room for all the extra travelers. In addition, the Port of Oakland's real estate division is seeking to acquire land to build a retail and office mall near the main airport entrance and hopes to begin designing that project some time next year, according to Oakland airport spokeswoman Rosemary Barnes. Expansion presents challenges, said Rudd, the Fitch Ratings analyst, because it will require Oakland to carry a bigger debt load. But she praised Oakland's expansion plans, saying they are demand-driven and prudent. E-mail David Armstrong at davidarmstrong@xxxxxxxxxxxxxxxx=20 ---------------------------------------------------------------------- Copyright 2003 SF Chronicle