--- In BATN@xxxxxxxxxxxxxxx, "12/17 SJ Business Journal" <batn@xxxx> wrote: Published Friday, December 17, 2004, in the San Jose Business Journal Airlines may lose exclusive gate deals By Andrew F. Hamm Mineta San Jose International's four oldest airlines could lose exclusive rights to the airport's gates under a new plan designed to maximize use of its 32 portals to the skies. Today, the exclusive contracts have occasionally led to aircraft idling on the tarmac because of delays getting another aircraft out of a gate even as other gates sat empty. Airport officials are afraid this scenario could intensify, despite the planned addition of eight more gates by 2007, because of an expected increase in flights later this decade. "We're just trying to get maximum use out of the gates we have in anticipation of (greater) future use," says Airport Operations Manager John Aitkens. "It provides better customer service and it makes for a more efficient airport." The airport's ability to expand is limited by some hard realities -- fixed runway access, a midnight to 6 a.m. curfew and noise restrictions that define aircraft size. The airport now handles about 11 million passengers annually, down about 15 percent from pre-Sept. 11, 2001 terrorist attack levels. Southwest Airlines, which has control of five gates in Terminal A on a month-to-month basis and uses another four airport-controlled gates there, is worried about losing gate access. Southwest is seeking long-term contracts on the gates it uses, spokeswoman Kim Delevett says. Two of the airport-controlled gates Southwest uses regularly are officially international gates and could be lost should San Jose gain the additional international flights it has been seeking. Southwest is Mineta San Jose's busiest carrier. Other airlines have expressed concern about passenger confusion should they be shuttled to another terminal to catch a flight or when arriving. American Airlines has exclusive control of nine Terminal A gates through Nov. 30, 2007, while United has eight in Terminal C. Delta and Alaska each has three in Terminal C. United, Delta and Alaska share some of their gates with other airlines in an agreement with the airport. However, airports have begun taking greater control of their gates nationwide as officials begin to recognize gate access as a valuable commodity, says Zane Gresham, who co-chairs the airport and aviation group for the San Francisco offices of the law firm Morrison & Foerster. Back in 1977, American Airlines, United Airlines and Delta signed 30-year contracts for exclusive rights to a total of 28 gates at the then San Jose Municipal Airport. At the time, the contracts were considered a coup of sorts for the airport, which was struggling to get and keep carriers. The issue of gate usage came to a head nationwide when large portions of a Los Angeles International Airport terminal went unused when TWA's declared for bankruptcy protection in the late 1990s. TWA refused to let LAX officials transfer the gates for Southwest Airlines use and instead held on to them as an asset to be used in bankruptcy-protection proceedings, Mr. Gresham says. "It's all part of the evolution of the airline industry," Mr. Gresham says. "In the old days, there were a limited amount of flights and a limited number of airlines. Pan-Am was always going to be there, so it made sense to sign long-term contracts." Today, with airlines coming and going, exclusive contracts have become a liability, Mr. Gresham says. The biggest problem for the airport -- and the airlines' biggest fear -- is how the airport will make up the fees lost when the contracts are allowed to expire, Mr. Aitkens says. Gate fees are set annually in negotiations with the airlines after a budget is agreed to. The $16.29 million raised annually from gate fees is the airport's second-largest revenue source behind parking and ahead of rental car fees. Some suggestions include a square-foot per use fee, a fee based on time actually using a gate or a simple per-use fee. The plan is expected to be revenue neutral, although gaining more flights out of the same space could raise airport revenues, Mr. Aitkens says. Airport officials are talking with its airlines on a fee structure and how to minimize problems, Mr. Aitkens says. A final plan for the four gates the airport now controls could be in front of the San Jose City Council in early 2005. That plan would be extended to include the eight gates expected to be added in 2007 and the remaining gates now under exclusive contracts once they expire in 2007. Currently, the airport charges $216 a square foot for Terminal A gates and $93 for Terminal C gates. Andrew F. Hamm covers transportation for the Business Journal. He can be reached at (408) 299-1841. --- End forwarded message ---