SJ airport prepares to open new terminal

July 13, 2009 7:26:38 PM PDT
There is a ribbon-cutting ceremony Tuesday for the new terminal at San Jose International Airport, but behind the scenes the airport has been doing some serious belt-tightening to help keep the airlines in business.

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Planning for Terminal B started 12 years ago, but no one then predicted passenger traffic would shrink 14 percent from its high of 12 million passengers in 2000.

And no one knew jet fuel prices would soar, while a recession would leave airplane seats empty.

"So in the middle of the recession, our traffic went down, our revenue is way down, so as with any other business, we have cut costs, but also we have to recognize we have to invest for the future," airport spokesperson David Vossbrink said.

A major airport expansion and remodeling project was scaled back. The budget went from $4.5 billion to $1.3 billion and the airport went on a cost-cutting campaign to help the beleaguered airlines.

"We've reduced our staffing from about 400 people last year to 300 people today," Vossbrink said. "We've deferred other capital projects that we can put on a wait list. We've really washed every penny to keep all our costs under control."

Mineta San Jose Airport will save its airlines $20 million a year in operating expenses.

Its largest carrier, Southwest, had been paying $638,000 a month, but with the airport's reduction in expenses, Southwest will soon see a savings of almost $160,000 per month.

Despite this kind of cost-cutting, several airlines may still be facing bankruptcy this year.

Per-seat revenue last month was down 20 percent at Continental and US Airways, down 10 percent at United and down 8 percent at American.

And strapped airlines might not be able to borrow money.

"Other than Southwest, all of the carriers have taken a hit on their financial ratings, and when that's only one carrier with at least a decent financial rating, you're correct, the money isn't going to be there for the carriers," travel industry analyst Al Anolik said.

Mineta San Jose International, as well as airports across the country, is facing the same problem. As the airlines tighten their belts, so will the airports so that all of them will survive.

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