Tuesday, April 03, 2012

San Jose will consider more corporate jets on airport's west side

A divided San Jose City Council on Tuesday agreed to move ahead with a plan that could help cash-strapped Mineta San Jose International Airport increase its revenue by opening up the west side of the airport to more corporate jet business.

After almost two hours of discussion, the council voted 6-5 not only to approve minimum requirements for new general aviation business on 44 acres of available land, but also is seeking feedback on whether to allow a second full-service corporate jet center operator on 15.5 acres.

"This is not a planning decision... or a leasing decision,'' Mayor Chuck Reed told the council regarding the city's need to determine how much interest exists in developing more corporate jet traffic beyond the major fixed-based operator that exists.

"It's just a chance to test the market. All of that has to come back, and we can decide then what direction we need to go.''

Atlantic Aviation is the airport's sole full-service corporate jet center, but an executive with Signature Flight Support on Tuesday again told the council that his company has been aggressively seeking to establish a center at the airport, and is committed to doing so if given the opportunity.

Timing on a decision is crucial, according to Airport Director Bill Sherry, who told the council that the airport's finances continue to worsen because of three factors: the renovation of Terminal B, which made it tough for airlines to operate during construction;

the recession of 2008, which reduced the numbers of passengers; and the "Virgin Effect,'' or the number of major airlines "throwing enormous capacity'' into San Francisco International Airport to compete with Virgin Airlines' booming business there.

While airport officials had hoped that Mineta San Jose's passenger numbers would grow by 2 percent in fiscal year 2011-12 because the renovation was completed, the valley was beginning its economic recovery, and San Francisco's capacity to add flights should have subsided, that has not happened, he said.

"We have actually continued to see erosion, and we are updating our budget to reflect not a 2 percent growth, but a 1.5 percent decline in passenger activity,'' said Sherry, adding that the airport is now projecting no growth in 2012-13.

Developing the west side of the airport, he said, "is really the last item we have to generate new revenue at the airport.'' Without it, Sherry said, "the council will face difficult choices, particularly with outsourcing police and fire.''

A cost-savings plan last year to outsource police and firefighter at the airport was put on hold after other savings were identified. But the council could be forced to reconsider that, he warned.

However, Councilmembers Xavier Campos, Kansen Chu, Ash Kalra and Don Rocha opposed the idea of issuing a request for a proposal to develop the land before all studies and environmental review processes are approved. They said it is better to wait a little longer to ensure the project would be feasible, rather than hoping that a new jet center could be opened by summer of 2014.

"I'm concerned that moving forward on this may preclude other options,'' Rocha told the council. "If growth continues not to happen, then we have moved on a land-use decision that did not bear fruit as expected.''

Meanwhile, Councilman Pierluigi Oliverio voted against the proposal saying he would prefer to choose between a "known cost savings'' of outsourcing public safety at the airport to adding flights that would impact residents with noise.

General aviation planes are exempt from the curfew hours of 11:30 p.m. to 6:30 a.m. because the noise they generate does not exceed 89 decibels. The council also agreed with a memo by Councilman Sam Liccardo ensuring that any new aviation operator that leases the land would meet the noise requirements or follow the curfew.

But residents such as Terri Balandra who are concerned about the noise as well as what she believes is the airport's hurried planning efforts, urged the council not to adopt the item.

"This is about an assumption of short-term gains versus long-term growth,'' she said. "It's like saying it's better to buy a lottery ticket because sooner or later, I will win. Are we basing our future success on a future lottery ticket?''

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