Official Statement Airport Commission City and County of San ...

During Fiscal Year 2008-09, the Airport accounted for approximately 40.7% of total air cargo at the three
San Francisco Bay Area airports, compared with 42.7% in Fiscal Year 2007-08. Oakland accounted for
approximately 53.2% and San Jose accounted for approximately 6.0% of the total air cargo in the Bay Area during
Fiscal Year 2008-09. The Airport handled approximately 23.0% of domestic loaded and unloaded cargo and
approximately 93.7% of the Bay Area’s international loaded and unloaded air cargo. Oakland had the largest share
of the domestic air cargo market (approximately 68.9% compared to approximately 67.5% during Fiscal
Year 2007-08), which is attributable to its traffic in express package shipments, an activity that requires significant
land area that is not available at or in the vicinity of the Airport. Due to the large international component in the
overall cargo mix at the Airport and a deeper decline in international cargo, the total cargo tonnage decline at the
Airport was more severe compared to the other Bay Area airports which have cargo mixes that are primarily
domestic. During June of Fiscal Year 2008-09, this resulted in a 2.0 percentage point decline in cargo tonnage
market share for the Airport, and an increase in cargo tonnage market share of 2.1 percentage points at Oakland
while the market share for San Jose was virtually unchanged.
During December 2009, the Airport accounted for approximately 40.7% of total air cargo at the three San
Francisco Bay Area Airports, compared with 34.7% for December 2008. Oakland accounted for approximately
53.1% and San Jose accounted for approximately 6.2% of the total air cargo in the Bay Area during December 2009.
The Airport handled approximately 23.5% of domestic loaded and unloaded cargo and approximately 94.7% of the
Bay Area’s international loaded and unloaded air cargo during December 2009.
The Commission expects the Airport to continue to be the major air traffic center for the Bay Area based on
air traffic projections, the substantial investment by a number of major airlines at the Airport, terminal facility
improvements and passenger preferences stemming from the Airport’s location, service and frequent flights to
domestic and international destinations.
The primary competitor of the Airport on the West Coast for international passengers is Los Angeles
International Airport (LAX), rather than Oakland or San Jose. During Fiscal Year 2008-09, international passenger
traffic (enplanements and deplanements) at the Airport decreased 7.7% compared to a decrease of 12.2% at LAX for
the same period. During June 2009, international passenger traffic at the Airport decreased 8.0% compared to a
decrease of 15.9% at LAX for the same period.
Existing Airline Agreements
Three types of agreements (collectively referred to as the “Lease Agreements”) are currently in effect
between the City, acting through the Commission, and certain airlines (the “Signatory Airlines”) operating at the
Airport: the original Lease and Use Agreements (the “Original Agreements”), the amended Lease and Use
Agreements (the “Amended Agreements”), and the Lease and Operating Agreements (the “Operating Agreements”).
Certain non-signatory airlines at the Airport operate under short-term month-to-month operating permits while the
remaining non-signatory airlines use Airport facilities on an itinerant basis.
In 1981, as a result of litigation in 1979 between the City and certain airlines regarding the operation and
finances of the Airport, the City entered into a Settlement Agreement (the “Settlement Agreement”) and the Original
Agreements with 15 Signatory Airlines of which 14 are currently operating at the Airport. In connection with the
opening of the ITC in 2000, eight of the original Signatory Airlines entered into Amended Agreements that provide
for increased common use facilities and equipment in the ITC. In addition, 13 of the 16 non-signatory foreign flag
airlines currently operating in the ITC became Signatory Airlines in 2000 by entering into Operating Agreements
which are substantially similar to the Amended Agreements. Thus, there are at present a total of 27 Signatory
Airlines, of which seven do not lease space in the new ITC and thus have not signed the Amended Agreement, and
20 have signed either the Amended Agreement or the Operating Agreement in order to lease space in the new ITC.
Although the Amended Agreements and the Operating Agreements differ from the Original Agreements with
respect to the use of the ITC, all of the Lease Agreements incorporate the same provisions with regard to the
calculation and periodic adjustment of terminal rentals and landing fees, and airline review of proposed capital
projects.
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