Airport officials plan renovation of SFO terminal

SFO -- Rising passenger traffic and an influx of low-fare carriers has San Francisco International Airport officials thinking expansion. The old international terminal, which has been closed since 2000, is on tap for a $250 million...


SFO -- Rising passenger traffic and an influx of low-fare carriers has San Francisco International Airport officials thinking expansion.

The old international terminal, which has been closed since 2000, is on tap for a $250 million renovation.

Aggressive low-fare carriers like Virgin America, Southwest Airlines and JetBlue Airways, which all launched SFO service in recent months, are pushing to expand and get more gate space.

SFO's dominant carrier, United Airlines, and others also want to grow, so the move to develop a plan to revamp and reopen the terminal is heating up.

International passenger traffic has climbed 8 percent year-to-date over last year, and domestic traffic is up 2 percent. SFO expects to handle 34 million travelers this year. That's up 15 percent from 2003, though off from the peak of 41 million in 2,000.

Airport traffic was hit hard after that peak, driven down by the dot-com bust, the Sept. 11 terrorist attacks, a prolonged economic downturn, and bankruptcy and cutbacks at United Airlines, which operates half of SFO's flights. Annual traffic hit bottom at about 30 million in 2003, but has inched up steadily since then.

Airport commissioners voted last week to solicit bids for contractors for the renovation of the old international terminal, the smallest of four wings at the airport.

SFO opened a new $900 million international terminal in December 2000.

"We'd like to see it done as soon as possible," said SFO spokesman Mike McCarron. "All the carriers want to expand."

McCarron added that it will take another year to fully develop a plan for the revamping, but expects the airport to have guidelines within 90 days that can be submitted to contractors.

After that, it will take three to six months to pick a contractor, McCarron noted. The project is expected to take 30 months to complete after construction begins.

Terminal 2 was built in the 1950s. The money for the renovation will come from selling revenue bonds and capturing facilities charges, McCarron said.

The terminal is 610,000 square feet and would be used exclusively for domestic traffic. It currently houses some office space.

With the resurgence of air travel, some 45 airlines now operate at SFO, and they smell a turnaround.

Discount king Southwest, now the nation's largest carrier, makes no bones about wanting to expand at SFO.

Its SFO launch of 18 daily flights in late August was the airline's biggest daily launch ever. Southwest returned to SFO after six years of absence, coming back after the airport reduced airline flight delays, and cut airline costs and curbs on growth.

"We look forward to growing here, and are putting no limits on it," said Gary Kelly, chief executive of Southwest. Kelly said the airline could reach 100 daily flights at SFO in five years or so. Southwest's SFO launch included flights to San Diego, Las Vegas and Chicago.

Terminal 2 can accommodate up to 14 gates. Southwest now uses two gates at SFO and hopes to open two more in the fall.

Strong growth of low-fare carriers in the next two or three years, coupled with continually increasing international traffic, means the airport could be "gate constrained" by 2010, according to a report by the airport's Bureau of Planning and Environmental Affairs. The group is nearing completion of the airport's Domestic Terminal Development Plan, which assesses the near- and long-range needs for terminal space and gate capacity.

The BPEA has indicated that SFO will require additional gate capacity by 2012.

Business writer Tim Simmers can be reached at 650-348-4361 or by e-mail at tsimmers@bayareanewsgroup.com .

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