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Late Night Noise or Reduce Expenses

The economic viability of San Jose’ airport (SJC) is in a precarious position. Bond payments are now due for the $1.7 billion dollar airport expansion, and, ultimately, the payment could fall to the general fund if airport revenue cannot cover what is owed. In order to avoid a bailout by tapping into the general fund, it is important to run the airport in the black. There are two ways to do this: either increase revenue or reduce expenses.

The airport has already reduced costs by laying off airport staff. However, more cost-saving measures are needed in order to make SJC more competitive with other regional airports.

Despite this predicament, the City Council has actually increased the cost of doing business at the airport by voting for “feel good” measures like the San Jose living wage policy, passed by the council in 2009. Airport staff and airline personnel both warned the council that this policy would make our airport less competitive. Surprisingly, I was the only councilmember that voted “no.”

This mandate required companies at the airport to pay private sector workers above-market wages. Placing such constraints on private business may win some votes for the politicos, but such actions also end up raising costs for the airlines and the airport itself, which must now oversee this policy. Higher costs for airlines at SJC can reduce flights in and out of the airport and, in turn, reduce airport revenue.

One way to cover the upcoming bond payments would be to increase airport revenue. This has already been done without undermining the curfew by expanding food courts, retail, rental cars and advertising within the airport. Further revenue growth could be achieved with the expansion and development of the airport’s west side. This possibility has been under discussion for years, and the majority of the council voted on April 3, 2012, to accept development bids for this land.

One proposal currently before the council would bring in $3 million a year for the airport: $2.6 million a year for rent, and another $400,000 from selling jet fuel. This development would house corporate jet aircraft, and would also be able to fuel and repair these planes.

However, most of these new airplanes would be exempt from the 11:30pm to 6:30am curfew and able to fly in and out of San Jose airport 24/7. Any potential airport expansion would assuredly increase the total inventory of curfew exempt planes, and thus increase the probability of more disruptive noise at night. In my view, this new revenue would bring with it the unfortunate by-product of greater noise pollution late at night and into the wee hours of the morning. This begs the question: How much is a good night’s sleep worth?

Another way to cover bond payments and ensure that SJC operates in the black would require reducing expenses. On Mar. 8, 2010, the council had a study session to discuss solutions that would both save money and also abide by FAA regulations. Airport staff proposed saving $9 million by outsourcing police and fire services like other airports across the country. However, the council, in my opinion, has not acted on this recommendation due to outside pressure from powerful union interests.

If the ultimate goal is to run a profitable airport, my recommendation would be to go with the concrete, “known” cost savings of $9 million over the $3 million revenue projections derived from expansion. The former requires that we work more efficiently with the fiscal resources that we already have. The latter requires that we blindly trust that the accompanying late night noise consequences will not get too out of hand, and that if they do, we will have an effective and foolproof way of addressing resident’s complaints.

Because of the lack of legal enforceability inherent in such arrangements, I, for one, am skeptical of such deals. No matter what anyone says, no municipal code or contract language can stop curfew exempt planes from flying from 11:30pm to 6:30am.

I voted against the expansion last year and again last week, due to the fact that there are other options to run the airport in the black without disturbing the traditional quiet time of our city’s residents. After all, why disrupt the sleep of thousands of residents when we can provide the same or greater cost savings from simply managing staffing differently?

Posted in Airport | Comments closed

Keep the Airport Curfew

This afternoon at 1:30 the Council will gather for a special meeting to discuss the City’s airport. The expansion was voted favorably by the council in 1997 with then-Councilmember David Pandori casting the only vote against. The airport, with the hands artwork that is visible driving on Highway 87, was approved in 2005. Through the selling of bonds (borrowing) the city of San Jose has spent $1.3 billion on the renovation.

Since 2007, the airport has experienced a 25 percent decline in the number of passengers and 33 percent reduction in number of flights. The airport competes with San Francisco and Oakland airports and is one of the few city assets that competes with other cities. Airports and airlines have been impacted negatively from terrorist threats, web meeting solutions. spiking fuel costs that pushed companies to adopt new web meeting technologies faster and of course the Great Recession.

Take all of these factors listed above into consideration and then add on government “feel good” measures like the new city of San Jose living wage policy that was passed by the council last year (I was the only no vote) that requires private companies at the airport to pay private sector workers above-market wages. It may “feel good” for politicos but it raises costs to the airlines and to the taxpayer as the city now has a city employee who makes $156,000 to oversee the living wage policy just at the airport.

In fact, we have a total of 11 full time people ($1,414,941) at City Hall who oversee that private sector workers are paid a certain wage. Personally, I would rather have 11 code inspectors or 11 planning dept staff. Another “feel good” measure is that the airport must spend $3 million extra every year on janitorial services because of another council policy that does not allow outsourcing, which again raises the costs to the airlines. (Well, technically we “allow” outsourcing but it takes nearly two years and multiple highly charged City Council votes that require at least six votes…so essentially NO). As Marvin Gaye said, “Mercy Mercy Me.”

If you put yourself in the airlines’ shoes and you know that the Bay Area has three airports and that residents will drive the short distance to fly, then you might be more likely to choose the airport where you can maintain a higher margin of profit that has the lowest cost. If you choose to not maximize your profit then consumers, mutual funds and even retirements funds may sell your airline stock and eventually you may get fired.

Some suggest that eliminating the curfew would solve the airport’s financial dilemmas. It is a big unknown that if eliminating the curfew would be the salvation of our airport. Will flights at 3am generate more revenue then the $12 million of savings that outsourcing would deliver at the airport as outlined by the airport director? I don’t think so.

What I do know is that approximately 100,000 people hear the airport flights today and they would prefer not to be awakened in the middle of the night. Now there are some areas of San Jose that do not hear the airplanes during the day, but I think that residents of Almaden Valley and Evergreen might start to hear the planes if they are arriving and departing at 1am, 2am, 3am, etc. The economic value of getting rid of the curfew is unknown however we do know the Council has the power to allow the airport to start saving money today without upsetting many residents.

My viewpoint is we need to have a successful airport and by that I mean a successful daytime airport that operates up to what the Environmental Impact Report (EIR) allows. The airport should be allowed to run itself like a private business, competing with San Francisco and Oakland without all of the city policies, while maintaining its successful curfew as other cities do so in the USA.

On another note: Tonight the General Plan 2040 Task Force will choose a scenario to recommend to the Council for San Jose’s growth by the year 2040.
Here is a link to a General Plan 2040 Task Force web survey prepared to solicit feedback.

Also posted in Politics | Comments closed
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