Air Service Development UpdateNovember 16, 2015

British Airways announces SJC‐LHR service

• Daily service on Boeing 787‐9• Launch date of May 4, 2016

SJC Air Service Development:  Overview

Strategic Objective:

Address domestic and international opportunities to meet market demand through:

1) Viable airline options (right carrier)2) Profitable and sustainable aircraft fleets (right

aircraft)3) Value‐added service (right fit)4) Proper timing of implementation (right time)

SJC Air Service Development:  Challenges

Regulatory: Nation‐nation bilateralsAirport slot or mileage constraintsJV’s and anti‐trust immunityFreedoms of the Air

Competition: International and fortress hubsHigh‐focus corridorsAlliances influenceHighly motivated cities (subsidies)

Aircraft cost ($80 ‐ $300 mil)Operating cost ($60,000 ‐ $300,000)Effect of “cannibalization”Opportunity/competitive cost (???)

Economic Impact:  $100+ mil/year

Airline Financial Hurdles:

Air Service Development:  Activity Summary

Airline Headquarters Meetings:

18

Local HDQStaff SiteVisits:15

AirlineConferences/Meetings:

7

Total Points ofContact:470

Total AirlinesEngaged:

41

SJC Air Service:  Built on Strong Partnerships

Profitable Air 

Service

SJC International 

Airport

Silicon Valley Leadership Group

San Jose‐SV Chamber of Commerce

Global Tech Companies

Team San Jose

Mayor’s Office and City of SJ

Recent Announcements

International Service Profiles

• Hainan Airlines launches SJC‐PEK service• 5x/week on Boeing 787‐8• Launch date of June 15, 2015

• British Airways announces SJC‐LHR service• Daily service on Boeing 787‐9• Launch date of May 4, 2016

• Lufthansa announces SJC‐FRA service• 5x/week service on Airbus A340‐300• Launch date of April 29, 2016

Trans‐Pacific and Trans‐Atlantic Service Comparisons

City Psgrs* Beijing

Tokyo

London

Frankfu

rtAmste

rdam

Paris

Stockho

lmOslo KEF

Denver 52 M

Phoenix 40 M

Baltimore 22 M

Salt Lake 20 M

San Diego 18 M

Tampa 17 M

Portland 16 M (seas)

St. Louis 12 MOakland 10 M

Austin 10 M (seas)Kansas City 10 MOrange County 9 MSacramento 9 MPittsburgh 8 M

Cincinnati 6 M

* FAA 2014 U.S. Airports Data (Total Passengers)

City Psgrs* Beijing

Tokyo

London

Frankfu

rtAmste

rdam

Paris

Stockho

lmOslo KEF

Denver 52 M

Phoenix 40 M

Baltimore 22 M

Salt Lake 20 M

San Diego 18 M

Tampa 17 M

Portland 16 M (seas)

St. Louis 12 MOakland 10 M

Austin 10 M (seas)Kansas City 10 MSJC 9 M

Orange County 9 MSacramento 9 MPittsburgh 8 M

Cincinnati 6 M

Trans‐Pacific and Trans‐Atlantic Service Comparisons

12

Domestic Growth:  New Dallas, Eugene, Las Vegas

SJC Nonstop Route Map (June 2016)

IAH

LAS

ATL

AUS

DEN

DFW

BOS

GDLGuadalajara, Mexico

Hawaii(KOA, LIH, HNL & OGG)

JFK

MSP

Chicago(MDW & ORD)

PDX

SAN

SEA

SJDSan Jose Del Cabo, Mexico

BOI

SLCRNO

PHX

LA Basin(BUR, LAX, ONT & SNA)

34 Nonstop Destinations150+ Peak Daily Flights

NRT

SJC

DAL

PEK

LHR

EUG

FRA

New Nonstop Route

Additional Carrier

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec2012 2013 2014 2015

Calendar Year

Total Passengers

Year-Year

Cumulative Increase

2012 8,296,1742013 8,783,319 487,1452014 9,385,212 601,893 1,089,038

SJC:  33 consecutive months of growth

SJC Monthly Passenger Statistics

SJC Passenger Activity:– 33 consecutive months of growth – 1 million passengers added 2012‐2014

SJC Path to 12 Million Total Passengers

8,000,000

8,500,000

9,000,000

9,500,000

10,000,000

10,500,000

11,000,000

11,500,000

12,000,000

12,500,000

Base AsiaGro

wthDomes

ticDomes

ticGro

wthDomes

ticDomes

tic EUGro

wthNorth

Amer

AsiaGro

wthDomes

tic AsiaGro

wth(E

conomy)

Strategic Growth Plan

SJC Fast Facts

• 12 airlines serve SJC (with Hainan, British Airways and Lufthansa)

• 34 nonstop routes

• 22 airline hubs (global access)

• 731 specific O&D markets (YE 2Q 2015)

• 373 international O&D markets

• $1.7 billion in total round trip tickets

Thank You!