San Francisco Chronicle - (Sunday)
Ripple effects of virus at SFO
Passenger numbers drop, cutting spending at shops
With the coronavirus outbreak causing the cancellation of most flights from San Francisco International Airport to China, the airport is losing thousands of dollars a day in revenue, and some shops that serve international travelers are cutting back employee hours as sales fall. SFO, which is owned by the city and bolsters its finances, said it’s too soon to know the full impact of the close to sixweek suspension of flights to mainland China. China Eastern Airlines will stop flying from SFO to Shanghai and Qingdao on Sunday, and the last SFO flight to mainland China — China Southern Airlines’ route to Guangzhou — is scheduled to end next Sunday. Flights are not expected to resume until the end of March, which means the airport won’t get the big planes’ landing fees.
“We have never seen anything like this,” said Henry Harteveldt, a travel industry analyst and president of Atmosphere Research Group in San Francisco. “It’s a very tough situation.”
Dutyfree shops said sales are down with
“Yesterday you could have shot off a cannon in here and not hit anybody.” Carol Feiner, Airport Travel Agency
out Chinese customers. Bars stood nearly empty next to dark ticket counters. February is one of the slowest travel months of the year, but many business owners said it is worse than usual, even though plenty of travelers are moving through the International Terminal.
“It’s a combination of not just canceled flights, but people are freaked out in general,” said Carol Feiner, vice president of Airport Travel Agency. One customer she met had a ticket to Thailand but canceled it as soon as he got to the airport. Feiner, who has worked at SFO for 35 years, said the coronavirus impact has been more intense than the SARS and swine flu epidemics.
“Yesterday you could have shot off a cannon in here and not hit anybody,” Feiner said Wednesday. Her company stores baggage, ships passengers’ items and offers nap rooms and showers.
The airport pulled in nearly a billion dollars in the fiscal year that ended in June. SFO generates the revenue it needs to operate and sends the city a yearly service payment, which amounted to $49 million last year — a fraction of San Francisco’s $12.3 billion budget. Airport activities also generate several billion dollars in state and local tax revenue.
The rising coronavirus death toll and U.S. travel restrictions denying entry to most foreign citizens who were recently in China prompted the airlines to slash routes. United, which accounts for 40% of SFO’s traffic, has canceled its flights to China through March 28, and to Hong Kong until Feb. 20. Twentyone round trips per week will continue to fly between SFO and Hong Kong, but that is a far cry from the 90 round trips a week SFO normally sees to mainland China and Hong Kong in February.
Airlines pay landing fees based on the weight of each airplane that arrives. The fees — which can be well over $1,000 for each big plane — account for about a fifth of the airport’s revenue. Other sources include the airport hotel, rental car center, and parking lots, according to airport spokesman Doug Yakel.
The cancellations amount to 1.4% of all flights through the airport.
“Right now, it’s difficult to put a price tag on it,” Yakel said. “We’re still right in the middle of it. The big thing we don’t know (is) how long it will go on for.”
As of December, SFO had the secondlargest number of departures to China of any U.S. airport, after Los Angeles International, according to
Harteveldt.
In the last week of January, U.S. ticket sales for flights to China were down 59% from the same week last year, according to industry analysts Airlines Reporting Corp. and the International Air Transport Association. Sales to other destinations in East and Southeast Asia were down 18%.
“The good news is that the Bay Area remains one of the strongest markets for business travel, but this is definitely going to dampen SFO’s 2020 financial performance,” Harteveldt said.
Michelle Shih, product sales manager for Coach and the general manager for the dutyfree store in the International Terminal, said the Chinese market is “huge” and the store often delivers its goods to gates serving flights to Asia.
“Traffic is very bad,” she said. “We’re still open, but it definitely hurts the business.” Adam Light, who owns Tapas and Taps bar and Potrero Grill, around the corner from the United ticket counters that served the canceled Shanghai flight, said business has dropped 15% compared to this time last year. Bartender Andrew Decena said the bar is usually bustling with breakfast traffic, but on Friday morning, one man sat drinking a beer, with just two of a dozen tables occupied for food.
“Normally, that would be full of Chinese customers,” said Decena, motioning behind his shoulder at a row of chairs by the dark ticket counters.
The business has cut back employees’ hours — Decena normally works with a partner starting late morning, but for the past two weeks, he’s been solo, his workload the same. He and his fellow workers depend on hourly wages and tips, so “that’s affecting you,” he said.
The hours (which are set by the airport lease) and menus at the bar and restaurant are the same — for now.
“We’re all waiting to see if it gets worse, then we’ll go to the airport and start talking to them,” Light said.
Taxi services have also noticed the change, said Hansu Kim, owner of FlyWheel taxi company: “Whenever there are canceled flights, there are issues like this, drivers are directly impacted in terms of rides.”
But not everyone has felt it: Thomas Bedson, general manager of three Chocolate Market stores at SFO, said he hasn’t seen much of a drop in sales yet, because most international flights are still running. Workers at two Chinese buffets and a Brookstone store also said nothing was different. The general manager of the Grand Hyatt at SFO, which rents the property from the airport, said “everything is normal here.”
And despite more face masks and fewer passengers in the terminal, some workers said they were in good spirits and didn’t want to paint a negative picture.
“I don’t see people that scared,” said Nink Subsook, the manager of Potrero Grill. “There is no need to add to the hysteria.”