Mayor announces 10-year airport lease agreement expected to generate $330 million for city over next decade

Mayor Gavin Newsom and San Francisco Airport Director John Martin announced at the Board of Supervisors meeting that the city has reached a negotiated 10-year lease-and-use agreement with airline carriers serving San Francisco International Airport.

John Martin introduced the announcement and Mayor Newsom described the agreement as a negotiated settlement that preserves the airport’s longstanding annual service payment to the city. Newsom said the negotiated agreement, combined with one remaining year under the old contract, “should generate another $330,000,000 of revenue to the city and county of San Francisco.” He said the annual service payment program — a share of concession revenue paid to the city’s general fund — has contributed hundreds of millions of dollars to the city over the past 30 years and that the new agreement was reached to avoid litigation and provide revenue certainty.

Laurie Peters of United Airlines, speaking for the carriers, said the negotiation took two years and was difficult at times, but the airlines and the city preferred a negotiated settlement to litigation. Airport Director John Martin explained that the agreement sets the method for calculating airline rates and charges and introduces a preferential gate allocation system to allow annual reallocation and gate-sharing to maximize efficient use of gates.

Martin told the board the agreement protects the annual service payment (ASP) and will help the airport manage gate allocation and rates so as to minimize airline and ultimately passenger costs. The mayor and airport officials described the revenue as supporting city services through the general fund, including parks and social services funded in part by the ASP.

Speakers - Mayor Gavin Newsom (announced projected revenue and framed the agreement) - John Martin, Airport Director (introduced the agreement and discussed lease terms) - Laurie Peters (United Airlines representative; acknowledged carriers’ role in negotiations)

Clarifying details - Projected revenue: the mayor said the agreement “should generate another $330,000,000 of revenue to the city and county of San Francisco” over the next 11 years (including the remaining year of the old agreement). - Annual service payment: city receives 15% of concession revenues under the existing framework; total ASP receipts over prior decades were discussed as substantial in the transcript. - Status: 25 of 39 airlines had signed the new lease and use agreement at the time of the announcement; the mayor and airport director indicated they expect remaining carriers to sign in coming months.

Authorities - Lease-and-use agreement between San Francisco International Airport and participating carriers (specific legal citation not provided in transcript)

The announcement was informational and celebratory on the dais; the board did not take an additional vote on the airport agreement at this meeting.