Two passengers wear masks as they rest in the international terminal at San Francisco International Airport on Friday, April 10, 2020. (Kevin N. Hume/S.F. Examiner)

SFO says full recovery could take up to six years

Airport continues to struggle due to low passenger numbers, reduced flights

Deserted terminals and closed concessions have become commmonplace at San Francisco International Airport, a West Coast hub that shuttled more than 57 million annual passengers through its doors in 2019 before the COVID-19 pandemic hit.

Now, airport officials say it could take as many as six years for passenger traffic to return to those same levels.

Most of last year was marred by the stay-at-home orders and travel restrictions initiated in order to slow the spread of the coronavirus. The number of travelers through SFO in 2020 dropped to 16.4 million, a 71.4 percent drop compared to the year prior.

SFO was a gateway for international flights, particularly routes to Asia, before the pandemic, but half of the gates that serve overseas destinations closed in April due to low demand.

They remained closed until September 2020, but, even then, travel patterns had changed. The two most popular international destinations were cities within Mexico and Canada, according to SFO data.

Doug Yakel, spokesperson for SFO, said the airport currently anticipates a slow recovery from the pandemic, and it’s forecasting roughly 40 percent of its pre-pandemic passenger levels this upcoming year as demand fails to swell and airlines continue to hold off on reinstating flights through the airport.

Even United Airlines, the flagship of SFO, once again delayed plans to launch direct flights from San Francisco to New York City’s John F. Kennedy airport for the first time in five years. The airline was supposed to restore the route on Feb. 1, but it pushed back the date to the end of March due to low demand.

The airline also delayed plans for its inaugural direct flight from SFO to Bangalore, India.

Twelve months of relative inactivity have devastated the airport financially.

According to Yakel, revenues are down 22 percent, and officials have had to cut $136 million in expenses by deferring construction projects, restructuring contracts, limiting hiring to essential positions and other cost-savings initiatives.

Coupled with an estimated $255 million in CARES Act relief and an additional $46.5 million from a separate federal stimulus program dedicated to supporting airports across the country, the airport has been able to balance the $1.2 billion current fiscal year budget.

An empty airport doesn’t just hurt the gargantuan airlines for whom public sympathy is often waning.

Dozens of contractors provide vital services to airlines and the airport facilities such as cleaning, catering and baggage handling, and at least 125 commercial tenants rent space in the airport, everything from fast food restaurants to high-end retail chains.

Prior to the pandemic, SFO estimates it generated more than 46,000 direct jobs inclusive of these various employers. Of those, it’s believed as much as 50 percent have been laid off or furloughed due to the reduced passenger activity, according to Yakel.

Mayor London Breed signed an ordinance in January authorizing SFO to provide up to $21.3 million in rent and fee relief for the commercial tenants who have been especially hard hit by the halt in air travel.

“We know how hard this pandemic has hit our retailers and businesses, especially at the airport, where traffic has been down significantly for months,” Breed said in a statement. “As we work our way towards recovery and travel picks up again, we are going to need these businesses to serve our visitors and residents.”

Under the ordinance, the airport can more nimbly modify its lease agreements to waive some portion of rent payments and fees, a process that’s usually subject to review from city officials.

Eligibility and scale of support varies based on the type of tenant, but most establishments will have their minimum annual rent guarantees waived for at least three months last year as well as a slew of utilities, cleaning and infrastructure fees waived for the better part of 2020.

Those companies that plan to use the financial relief for payroll purposes and bringing back employees who have been either laid off or furloughed will be prioritized in the waiver program.

cgraf@sfexaminer.com

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