Frontier leaving Mineta San Jose Airport

February 22, 2010 6:35:03 PM PST
Mineta San Jose International Airport is losing Frontier Airlines in May. That is when twice daily flights to and from Denver will be cut in a cost-saving move. Southwest and United already fly the San Jose-Denver route, so passengers will not lose service between those two airports.

The loss of one airline isn't catastrophic. The airport last year generated over $146 million in total revenues. However, it has to be self-sustaining, and it also has to cover the debt for a major improvement project planned before the recession.

Airports are transient by nature. Passengers come and go, planes land and take off and now Frontier Airlines is departing -- for good. While they represent only one percent of the airport's flights, this loss is an unwelcome hit.

"We generate revenue from parking and rental cars and from food concessions. All of that goes into our mix, so every time you lose a passenger, every time you lose a flight, that's something that makes us pull our belt in a little more tightly," San Jose Mineta Airport spokesperson David Vossbrink said.

The recession and the related drop in passengers has cost the airport between $35 million and $40 million.

In 2007, passenger volume was 10.7 million, last year, it dropped to 8.3 million. That's a loss of almost two and a half million people.

The airport already cut 95 jobs to save money and it's actively courting a new airline. Two existing carriers, Alaska and JetBlue, are adding flights in a few weeks.

"The airport and the whole air industry is important to a city, and getting the people in and out in a fashion where you have good accessibility and good throughput is important," passenger Alan Ugolini said.

Ugolini is talking about Mineta San Jose's new terminal B. It's part of a $1.3 billion expansion and upgrade project.

Payments on bond debt that financed the project will begin in a couple of years. So the airport is already adding more concessions and expanding onsite advertising to beef up its income.

That's because it can't go to the city for help.

"We are a separate financial entity in a sense from the rest of the city. The bonds are supported by airport revenue, not the general fund, not by general taxes, and airports across the country are pretty much structured that way. They are self-supporting, independent businesses," Vossbrink said.

In 2009, the airport has to pay out $23 million a year to cover long-term debt for past projects. That figure will jump to $40 million a year in the near future as payment begins on the bonds covering the new terminal project.


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