--- In BATN@xxxxxxxxxxxxxxx, "4/24 Oakland Tribune" <batn@xxxx> wrote: Published Sunday, April 24, 2005, in the Oakland Tribune Airports seek new ways to make a buck With airlines in trouble, rental car companies, shuttles and parking lots get squeezed By Paul T. Rosynsky Staff Writer OAKLAND -- Air travel today may be cheaper than it was 10 years ago, but getting to and from the airport isn't. As the airline industry continues its transformation into low-fare, low-cost operations, airport managers around the country are seeking different ways to make money. One way is by turning to the companies that depend on airports to survive. The Port of Oakland's decision last week to raise the fees it charges shuttle buses and other ground transportation companies for the right to serve travelers at Oakland International Airport reflects a growing trend in airport economics. For the first time in almost a decade, several airports around the country have either raised such fees or are contemplating it. Oakland's two competitors, Mineta San Jose International Airport and San Francisco International Airport, are looking into charging more. "With the changing world, airports are adjusting their models," said Oakland International Airport Director Steve Grossman. "We've got to find ways in which the normal airport revenues can be augmented by the people who are using and benefiting from the airport." Historically, airports relied on the airlines to pay for operations. Airports raised landing fees and gate rental charges every time expenses rose or an expansion was needed. And airlines, flush with cash, were willing to pay. But with the introduction of low-cost, low-fare carriers such as Southwest and JetBlue, and the economic recession that reduced air travel, the financial model needs adjustment. Competition between airports and airliners forced airports to reduce the rates charged to airlines. The lower the rate, the more business an airport expects to receive from a company such as Southwest. To make up for the drop in airliner fees, airport managers cast their nets on the rental car companies, off-airport parking lots and hotels that court passengers with free shuttle service and convenient locations. They have increased fees for permits allowing buses to shuttle air passengers, and charge per-trip fees every time a bus enters the airport. Eventually, those fees are passed on to the customer. "Airports, for the first time, are facing economic downturns and are struggling to pay their bonds," said Ray Mundy, a professor of transportation at the University of Missouri, in St. Louis. "It's been far more pressing, and rate increases have been greater in the last five years." In Oakland's case, permit fees will increase to $500 a year, up from $300. And per-trip fees, which for some companies were $2 a trip, will rise to $2.50 per trip. Meanwhile, off-airport parking lots will have to pay Oakland 1 percent of their gross annual revenue for the right to drive shuttles to the front of the airport's two terminals. In 2006, they'll have to pay 2 percent of the gross. "The airline is the most mobile of business entities, it can place its assets anywhere it wants," Grossman said. "So, it's important that we run this place as efficiently as possible, looking to maximize our revenue, so that we can offer facilities to the airlines at the lowest cost." An example of the airline's mobility was Southwest Airlines' decision several years ago to pull out of SFO in favor of Oakland and San Jose. It cost airlines $17.27 last year for every passenger it took to or from San Francisco International Airport, compared to $4.50 in Oakland and $4.33 in and San Jose. "Definitely, we are cutting costs and trying to keep expenses down in every area we can control," said Jack Evans, spokesman for the Air Transport Association. "Most people who follow the industry can see that the airlines are struggling to cut costs." But airport mangers must be careful not to scare away the companies that offer the amenities air travelers expect. "They have some elasticity in terms of charging companies that have not been paying in the past," Mundy said. "But you don't want to squeeze the goose to the point that it stops laying eggs." --- End forwarded message ---