Thursday, October 8, 2009

Oakland airport's aviation director chats with Today in the Sky

08 October 2009

Editor’s note: The AirAsia X event was the marquee event during my visit to Oakland International Airport last month. But I also got to sit down with Deborah Ale Flint, the Acting Aviation Director at Oakland International. I pitched her questions that were submitted by Today in the Sky readers. Read on to see what she had to say. Read here for more on my day spent with the team at AirAsia X.

Ben Mutzabaugh: The San Francisco Bay Area is a dynamic aviation market, with three major airports serving the metropolitan area. Given what seems to be tight competition between the three Bay Area airports, many of our readers are curious how all those pieces fit together. Tell me a little bit about what Oakland is doing to cement its spot in such a competitive market.

Deborah Ale Flint: We’re doing quite a bit in terms of generating new business. I think (last month’s AirAsia X event) is an example of just such that type of business approach. With this relationship with AirAsia X … certainly we’re celebrating the partnership with the Oakland Raiders, but Oakland Airport also has been pursuing AirAsia X for service out of Oakland International Airport. So, the two have paralleled very nicely.

We have identified numerous markets that we feel are under-served here for the Oakland Airport and the East Bay of the San Francisco Bay Area. This one fits very nicely into that marketing plan.

Mutzabaugh: That would be Kuala Lumpur?

Ale Flint: Definitely Kuala Lumpur, and the intermediate stop for AirAsia X has yet to be determined. There are a couple of options that we’re looking at and working with them on – selling them, to a certain extent – on that intermediate stop. So we’re in heavy discussions with them in that regard.

Mutzabaugh: AirAsia X’s aircraft currently do not have the range for an Oakland-Kuala Lumpur nonstop flight, correct?

Ale Flint: As it did (in September with the AirAsia X Oakland Raiders flights), one of the concepts could be something that involves London and U.S. service as well as Southeast Asia service. I think there are some unique opportunities that they can have in there as well.

So, (AirAsia X) could not go to Kuala Lumpur nonstop. But (the flight) could stop in Tapei. It could stop in Seoul.

You know, you mention the competition amongst the Bay Area airports. I think what separates Oakland is the fact that not only are we a low-cost airport – and that’s intrinsic in everything that we do – but, the population for the market that AirAsia X would serve is right here.

Alameda County has one 1.5 million people in it. That’s larger than San Francisco County. When you couple that with (Alameda County neighbor) Contra Costa County – which is another million people – that is a large catchment area. For Alameda County, over 20% of the people are of Asian ancestry. So, even for people who would be doing friends-and family-type visits, the market is here.

Obviously the Bay Area is a great market for any type of air service. (The East Bay is particularly attractive when you look at things like) household income -- $80,000 plus – to the rich corporate (market) that is here. And the pharmaceutical companies that have headquarters here in the East Bay … there’s definitely a strong catchment area for good service to Asia.

Mutzabaugh: One of the things that caught my attention when I was talking to AirAsia X CEO Tony Fernandes is that he said one of the things that stood out about Oakland was the connectivity. I think most people’s reaction would be that San Francisco – with its United hub and the base for Virgin America – would be the Bay Area’s best bet for connectivity.

But, Tony said he thinks their customers would be more likely to take advantage of the low-cost carriers here in Oakland – like JetBlue and Southwest, for example – and book their own connecting options. Is that something you would expect as well?

Ale Flint: I would definitely expect that. I think that an analysis will show that there is a strong percentage of people per flight that would create their own “self-connect,” per se. We’re seeing that already with the Volaris and Southwest market. There is not a codeshare agreement, per se, but many Southwest passengers will automatically connect themselves onto Volaris flights. I think that’s indicative of what people’s decisions would be for AirAsia X service.

(Note: Southwest and Mexican low-cost carrier Volaris have announced plans for a codeshare pact that would allow passengers to buy a single ticket that would allow them to connect from a Southwest flight to a Volaris flight to Mexico – or vice versa. Despite the announcement, however, the carriers have not yet implemented the planned codeshare arrangement.)

Mutzabaugh: So, you’re seeing that already with Southwest and Volaris?

Ale Flint: We see that people are making those decisions. (For example, we’ve seen passengers) come from Seattle on Southwest into Oakland and then hopping on to a Volaris flight to Guadalajara.

Mutzabaugh: We’ve seen many low-cost airlines ramp up service across the Bay in San Francisco. In particular, Southwest, JetBlue and Virgin America.

Given that, what can Oakland do to try to hold on to local passengers – and airlines – and keep them on this side of the Bay? Or what can you do get passengers to come back to this side of the Bay if they’ve started going to San Francisco to take advantage of the proliferation of new low-cost carrier flights there?

Ale Flint: We are working with JetBlue to continue to show that they can continue to make money with service out of Oakland. There are so many things about Oakland airport that translate into profits. The people of the East Bay, they want to fly out of the Oakland airport. And they don’t want to fly out of San Francisco. So, they will go to Oakland airport if the flights are there.

We are the nation’s No. 1 on-time airport. And that translates into money. That reliability translates into fuel savings. For instance, there are at least five minutes of saved taxi time – from the terminals to the runway – at Oakland compared to San Francisco. When you translate that, say for an A330 or A340, you know that’s (somewhere in the range of) $700,000 per year based on a five-times-a-week flight schedule. That’s real money. So, our cost-per-enplanement are always relatively low. They’re lower than the other Bay Area airports, and that translates to the bottom line of these airlines. That’s a business model that we’re going to continue to stick with. And our customer service continues to improve as we’ve modernized our facilities. We have great facilities now without having passed on a significant amount of cost to the air carriers. They can run a successful, profitable business out of Oakland.

Mutzabaugh: We did see JetBlue start flying out of San Francisco in the past year. And it looks like they’ve pulled down some of their flight schedule at Oakland. So, presumably, some of those flights that were pulled down at Oakland are now operating out of San Francisco?

Ale Flint: One has to do a very detailed analysis to really follow the flights – particularly over the last year as the economy and the airlines have adjusted (to it). But, I think there has been some leakage to San Francisco, yes.

Mutzabaugh: Do you think it’s because JetBlue senses an opportunity there, or do you think they were motivated more by making a competitive response to the start-up of Virgin America and the return of Southwest to that airport.

Ale Flint: Yes, I think it is a competitive reaction to what’s been happening in San Francisco with Virgin America and Southwest.


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