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SFO says airport self‑supporting, defends low percentage rent model as panel weighs PR positions
Summary
Airport Director John Martin told supervisors SFO will pay a $26.2 million dividend to the general fund and is largely in agreement with budget analyst cuts; the director defended a pricing model that capped concession prices and uses lower percentage rents while the committee deferred five public‑relations positions as policy items.
Airport Director John Martin told the Budget & Finance Committee on May 20 that San Francisco International Airport remains financially self‑supporting and will pay a planned $26.2 million dividend to the general fund next year, calculated as 15 percent of concession revenue under the lease formula.
Martin reported passenger traffic down 0.6 percent year‑to‑date and described Terminal 2 as a $383 million construction project with expected San Francisco firm participation at 47 percent and 19 percent LBE participation. Using the budget analyst’s recommended cuts, the airport expects an overall reduction of eight full‑time equivalents.
Martin defended the airport’s concession approach — limiting price increases and using a lower percentage rent — as a strategy that increased sales and rents after changing from an exclusive lease model. “The result…has been that sales on a per passenger basis have increased 65%,” Martin said. He noted that the airport could legally adopt higher percentage rents but warned higher retail prices could reduce sales.
The budget analyst (Harvey Rose) recommended roughly $3,036,469 in adjustments; Martin said the airport concurs with those recommendations but expressed concern that five ground‑level public relations positions listed on the analyst’s policy page are necessary for operations. Committee members accepted the analyst recommendation but declined to act on the five PR positions as policy items to be revisited later, and asked that any labor negotiation impacts be reported back and fees adjusted if necessary.
A Local 2 representative, Ian Lewis, told the committee that while concession sales have risen, industry metrics show SFO still lags comparables on per‑passenger and percentage metrics and warned that lease renewals could shift costs to airlines and passengers if rents or fees change.
The committee directed staff to forward the airport budget with the recommended cuts and to withhold action on the policy items pending further consideration during the remainder of the budget process.
