San Jose to waive $3.2 million in fees for airlines
In an attempt to encourage airlines hobbled by the coronavirus pandemic to continue flying out of San Jose after struggling for years to land them in the first place, the city is waiving almost $3.2 million in fees.
The city’s decision to grant fee waivers comes as some U.S. lawmakers are pushing for a new round of federal bailouts for the aviation industry — on top of the $25 billion in federal payroll assistance handed out in mid-April.
“Given the unprecedented and enormous nature of the pandemic, we recognize a need to put some skin in the game,” said Scott Wintner, director of marketing & communications at Norman Y. Mineta San Jose International Airport. “We want to demonstrate to our air carrier partners that we’re vested in their successful return to the San Jose airport.”
Seven airlines that provided intercontinental routes from the San Jose airport before the pandemic — Air Canada, Alaska Airlines, ANA Airways, British Airways, Southwest Airlines, Volaris Airlines and Hainan Airlines — will get both their landing fees and international arrival fees waived for a three- to six-month period upon their return to the airport.
The financial support ranges from about $24,000 for Southwest Airlines up to $688,000 for British Airways, for a total estimated at $3.2 million.
San Jose established a fee waiver program several years ago for certain airlines launching new routes from the airport, but this is the first time it’ll provide this
kind of financial assistance for an airline and route already there.
City officials say they’re focusing on intercontinental routes because of the complexity and costs associated with government approvals, competitive pressure from San Francisco International Airport and the fact that some of the airlines already have begun actively soliciting other airports for cost reductions. And as San Jose Mayor Sam Liccardo noted, the city historically has had a difficult time securing international flights.
“It’s only a result of these programs that we’ve been able to land direct flights to Europe and Asia after going six to seven years without any such flights,” Liccardo said.
The number of people who passed through San Jose airport’s TSA checkpoints in July was down 82% compared with July 2019, according to San Jose airport officials.
But the number of passengers traveling to and from the Silicon Valley aviation hub has grown tenfold over the past four months, from a low of 18,500 in April to an estimated 124,000 in July, according to airport TSA checkpoint measures that can be an early indication of travel trends.
No international flights have returned to the airport since they were canceled at the start of the pandemic five months ago. And as airlines are downsizing their aircraft fleets and reevaluating the flights they’ll offer, San Jose wants to ensure it’s not forgotten.
Just this week, a struggling American Airlines announced it will cease operations at Oakland International Airport. The news came after the airline, along with Alaska Airlines, laid off hundreds of Bay Area employees.
“To the degree that COVID(-19) ends or is not having as much of a dramatic effect on the aviation industry, we realize that things will be different than what they were in February and airlines will have a lot of tough decisions to make,” Wintner said. “We believe that the Silicon Valley market is relatively strong, but we felt the need to offer this as a demonstration of our partnership with these carriers when its safe to come back,” he added.
The city will use the airport’s $190 million operating budget — which is separate from its general fund used for services and programs — to cover lost revenue from the fee waivers.
When the flights resume, the city anticipates that the revenues the airport will generate, including from passenger parking, concessions and other airport activities, will far outweigh the costs of the waivers. If that is not the case and the city needs to offset the waiver costs in the future, it may tap into the $66 million from the Coronavirus Aid, Relief, and Economic Security Act — or CARES Act — awarded to the airport.
In recent months, the airport has also used its CARES Act money to provide financial support for airport concession businesses, restaurants and rental car companies.