SFO

ANNUAL REPORT 2017 FISCAL YEAR 2016-2017 TRIBUTE TO SAN FRANCISCO MAYOR EDWIN M. LEE

San Francisco Mayor Edwin M. Lee (1952 - 2017) dedicated much of his life serving the people of the San Francisco Bay Area, including nearly 30 years of public service. Starting with his first job as an attorney advocating for affordable housing and immigrants, rights, he was always working on behalf of others, particularly those who did not have a voice of their own or means to advocate for their needs.

Mayor Lee was a man of great courage, always pushing for momentous change and encouraging boldness and innovation. He took on challenges with great commitment and passion especially those issues close to his heart such as homelessness, the environment, and the safety and security of our City. His enthusiasm, dedication and commitment to improving the lives of all San Franciscans was an inspiration. He truly loved our City, and wanted all residents to take pride in its wonder and beauty, and share in its success.

Mayor Lee was proud of our Airport. He liked to tell people that coming to SFO was like coming to a 5-star luxury hotel. He viewed SFO as the global gateway to our entire region, one which should reflect all the values that make us great: equality, diversity, inclusion and innovation. We will honor his legacy by continuing to champion those ideals.

Larry Mazzola President, Airport Commission Linda S. Crayton Vice President, Airport Commission Richard Guggenhime Member, Airport Commission Eleanor Johns Member, Airport Commission Peter Stern Member, Airport Commission Ivar C. Satero Airport Director

1 1994.09.02 poster: United Air Lines, San Francisco 1951 Collection of SFO Museum LETTER FROM THE AIRPORT DIRECTOR

On the 90th anniversary of SFO, we took time to celebrate our past, but we also took important steps to ensure the future of our airport. SFO’s iconic landmark, the new air traffic control tower, became operational and we began construction of the new Terminal 1 facility and an on-airport hotel. These projects are at the forefront of our $6.2 billion Capital Plan, which reflects my commitment to revolutionize the passenger experience at SFO.

As we build for our future, we also reinforce our status as an industry leader in environmental sustainability. We established aggressive goals to achieve carbon neutrality, zero waste in landfill, zero net energy, and helped Airport tenants to achieve their Green Business Certification from the State of California. This history of climate action and sustainability reporting was recognized in March 2017, when Acterra announced the selection of SFO for their top honor, the 2017 Business Environmental Award. SFO continued to break new ground during this period, partnering with Singapore Airlines to launch the longest flight in the world using sustainable biofuel.

We remain firmly committed to be an Airport in service to our communities. We hosted another “Ready Set Fly” event to provide a real-world experience of air travel to individuals and families with autism and developmental disabilities. We celebrated 20 years of airport internship programs with the largest level of participation ever, offering opportunities to more than 150 individuals ranging from high school to post-graduate levels. We partnered with the FAA and two airlines to demonstrate a new GPS landing technology which offers potential to reduce aircraft noise over communities around SFO.

As they were 90 years ago, safety and security remain our highest priorities, and we continue to be innovators in these pursuits. We achieved perfect scores in our annual FAA inspection, and launched a new ID badge program to allow vendors and visitors occasional access at the airport while tightening security. The Quality Standards Program (QSP), our industry-leading wage and benefit policy, continues to reduce turnover and increase workforce stability among service providers whose employees perform services impacting safety and security at SFO.

I appreciate the guidance of the Airport Commission and the support of former San Francisco Mayor Edwin M. Lee. I am also grateful to my staff for their hard work and dedication. The same hard work and perseverance which created our Airport 90 years ago is today focused on building a vital future.

Ivar C. Satero Airport Director 3 1994.09.01 TWA (Trans World Airlines), Los Angeles c. 1955 Collection of SFO Museum LETTER FROM THE COMMISSION PRESIDENT

I am pleased to report that SFO set a new all-time record for traffic with nearly 54 million passengers served. SFO continues to be one of the fastest-growing airports in North America for international traffic, with double-digit growth for three straight years. What began nine decades ago as a muddy field constructed to transport air mail has since evolved into a global gateway to the world’s foremost center of technology, innovation, culture and tourism.

Growth at SFO has benefited more than the travelers who use our Airport. This growth powers local economies, driving job creation and business revenue. During this period, SFO directly accounted for more than 42,800 jobs at the Airport, and more than $8.4 billion in business activity. Off-site business activities that depend directly on local air service for staff movements, cargo deliveries, or visitor spending collectively raised the direct airport economic contribution to the Bay Area to $35.7 billion in business sales with approximately 165,000 jobs. The indirect and direct spin-off activities associated with suppliers of goods and services to directly affected businesses, and the re-spending of additional worker income on consumer goods and services, raises the total regional economic impact to more than $62.5 billion in business sales, including $20.9 billion in total payroll and more than 300,300 jobs.

These contributions all reflect increases over previous figures, thanks to the addition of new airlines and new routes, both in the U.S. and around the world. New airlines included Finnair, with nonstop service to Helsinki, and Thomas Cook Airlines, along with incumbent airline Virgin Atlantic, launched new nonstop service to Manchester, England. This period also witnessed the acquisition of Virgin America by Alaska Airlines, and the newly-combined company has demonstrated its commitment to SFO with the largest announcement of new markets in its history; 10 new routes from SFO, including service to Mexico City. This effort has promoted a healthy competitive environment with United, the largest airline at SFO, as it continued to invest in the Airport by introducing new routes and expanding frequency.

On behalf of the Airport Commission, I congratulate SFO on the achievements and awards they have garnered over the past year. These accolades are further evidence of the exceptional leadership provided by Airport Director Ivar C. Satero, and the dedication of the employees at SFO.

Larry Mazzola President Airport Commission

5 1994.09.03 poster: Pan American World Airways, Mexico 1950s Collection of SFO Museum NON-STOP DOMESTIC DESTINATIONS

ABQ Albuquerque, NM HNL Honolulu/Oahu, HI ACV Eureka, CA IAD Washington-Dulles, VA ANC Anchorage, AK IAH Houston, TX ASE Aspen, CO IND Indianapolis, IN ATL Atlanta, GA JAC Jackson Hole, WY AUS Austin, TX JFK New York, NY BDL Hartford, CT KOA Kona/Hawaii, HI BFL Bakersfield, CA LAS Las Vegas, NV BNA Nashville, TN LAX Los Angeles, CA BOI Boise, ID LGB Long Beach, CA BOS Boston, MA LIH Lihue/Kauai, HI BUR Burbank, CA MCI Kansas City, MO BWI Baltimore, MD MCO Orlando, FL BZN Bozeman, MT MDW Chicago-Midway, IL CLE Cleveland, OH MFR Medford, OR CLT Charlotte, NC MIA Miami, FL COS Colorado Springs, CO MKE Milwaukee, WI CVG Cincinnati, OH MMH Mammoth, CA DAL Dallas Love Field, TX MRY Monterey, CA DCA Washington-Reagan, VA MSO Missoula, MT DEN Denver, CO MSP Minneapolis/St. Paul, MN DFW Dallas/Fort Worth, TX MSY New Orleans, LA DTW Detroit, MI MTJ Montrose, CO EUG Eugene, OR OGG Kahului/Maui, HI EWR Newark, NJ OKC Oklahoma City, OK FAT Fresno, CA OMA Omaha, NE FCA Kalispell, MT ONT Ontario, CA FLL Fort Lauderdale, FL ORD Chicago-O’Hare, IL GEG Spokane, WA OTH North Bend, OR HDN Hayden, CO PDX Portland, OR

7 2005.119.006 poster: Air France, Paris 1947 (reproduced 1993) Collection of SFO Museum, gift of Air France NON-STOP DOMESTIC DESTINATIONS CONT.

PHL Philadelphia, PA PHX Phoenix, AZ PIT Pittsburgh, PA PSC Pasco/Tri-Cities, WA PSP Palm Springs, CA RDD Redding, CA RDM Redmond, OR RDU Raleigh-Durham, NC RNO Reno, NV SAN San Diego, CA SAT San Antonio, TX SBA Santa Barbara, CA SBP San Luis Obispo, CA SEA Seattle/Tacoma, WA SLC Salt Lake City, UT SMF Sacramento, CA SMX Santa Maria, CA SNA Orange County, CA STL St. Louis, MO STS Sonoma, CA SUN Sun Valley, ID TPA Tampa, FL TUS Tucson, AZ XNA Arkansas, AR

9 2014.166.086 poster: Scandinavian Airlines System (SAS), Copenhagen 1960s Collection of SFO Museum, gift of Captain Jon Simmonds NON-STOP INTERNATIONAL DESTINATIONS

AKL Auckland, NZ MNL Manila, PH AMS Amsterdam, NL MUC Munich, DE AUH Abu Dhabi, AE NAN Nadi, FJ CAN Guangzhou, CN NRT Tokyo-Narita, JP CDG Paris-De Gaulle, FR PEK Beijing, CN CPH Copenhagen, DK PTY Panama City, PA CTU Chengdu, CN PVG Shanghai, CN CUN Cancun, MX PVR Puerto Vallarta, MX DEL Delhi, IN SAL San Salvador, SV DUB Dublin, IE SIN Singapore, SG DUS Dusseldorf, DE SJD San Jose Cabo, MX DXB Dubai, AE SYD Sydney, AU FRA Frankfurt, DE TAO Qingdao, CN GDL Guadalajara, MX TLV Tel Aviv, IL HEL Helsinki, FI TPE Taipei, TW HGH Hangzhou, CN TXL Berlin, DE HKG Hong Kong, HK WUH Wuhan, CN HND Tokyo-Haneda, JP XIY Xi’an, CN ICN Seoul-Incheon, KR YUL Montreal-PET, CA IST Istanbul, TR YVR Vancouver, CA KEF Reykjavik, IS YYC Calgary, CA KIX Osaka-Kansai, JP Y YJ Victoria, CA LHR London-Heathrow, GB YYZ Toronto, CA MAN Manchester, GB ZRH Zurich, CH MEX Mexico City, MX

11 2002.073.018 poster: Pan American World Airways, India 1950s Collection of SFO Museum, gift of Constance Ogilvie FACTS & FIGURES

PASSENGERS Total Passengers 53,985,826 (7th in North America, 23rd in the world in 20161) Total Bay Area Market Share 69% Domestic Enplaned and 41,046,640 Deplaned Passengers Domestic Bay Area Market Share 64% International Enplaned and 12,922,418 Deplaned Passengers International Bay Area Market Share 91% Through (In-transit2) 16,768

CARGO Total Cargo3 (metric tons) 466,921 Domestic 166,445 International 300,476

TOP 5 AIRLINES AT SFO United Airlines 44% Alaska Airlines/Virgin America 9% American Airlines 8% Delta Air Lines 8% Southwest Airlines 7%

TOP 5 DOMESTIC TOP 5 INTERNATIONAL DESTINATIONS DESTINATIONS

Los Angeles London New York Hong Kong Chicago Taipei Seattle Vancouver Las Vegas Tokyo

Fiscal Year July 2016 to June 2017 1 Source: Airports Council International 2 Passengers who fly in and out on the same aircraft 3 Excludes mail

13 1994.09.05 poster: Pan American World Airways, Hong Kong 1960s Collection of SFO Museum PASSENGER & CARGO AIRLINES

PASSENGER Aer Lingus Finnair Aeromexico Frontier Airlines airberlin Hawaiian Airlines Air Canada Japan Airlines Air China JetBlue Airways Air France KLM Royal Dutch Airlines Air India Korean Air Lines Air New Zealand Lufthansa German Airlines Alaska Airlines Philippine Airlines All Nippon Airways (ANA) Qantas Airways American Airlines Scandinavian Airlines (SAS) Asiana Airlines Singapore Airlines Avianca Southwest Airlines British Airways Sun Country Airlines Cathay Pacific Airways Swiss International Air Lines China Airlines Thomas Cook Airlines China Eastern Airlines Turkish Airlines China Southern Airlines United Airlines Copa Airlines Virgin America Delta Air Lines Virgin Atlantic Emirates Volaris Etihad Airways WestJet Airlines EVA Air WOW Air Fiji Airways XL Airways France

CARGO Ameriflight FedEx Asiana Airlines Kalitta Air Atlas Air, Inc. Korean Air Lines China Airlines Nippon Cargo Airlines (NCA) EVA Air Redding Aero Enterprises

15 2015.109.067 poster: Qantas Airways, Australia 1950s Collection of SFO Museum, gift of Thomas G. Dragges AWARDS & RECOGNITION

AIRPORT WITH THE BEST MANAGEMENT TEAM Airport Revenue News

GOLD AWARDS ADVERTISING CAMPAIGNS Hermes Creative Awards

GOLD AWARDS DIGITAL MARKETING CAMPAIGNS Hermes Creative Awards

INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS (ITT) TEAM CIO 100

MOST INNOVATIVE INDIVIDUAL IN AIRPORTS American Association of Airport Executives

PLATINUM AWARDS PRINT AND SOCIAL MEDIA CAMPAIGNS Hermes Creative Awards

PRINT COMMUNICATIONS Airports Council International

SUSTAINABILITY Acterra

17 2000.102.002 poster: Northwest Orient Airlines, Philippines 1950s Collection of SFO Museum AIRPORT COMMISSION & MANAGEMENT

AIRPORT COMMISSION Larry Mazzola, President Linda S. Crayton, Vice President Eleanor Johns Richard J. Guggenhime Peter A. Stern

AIRPORT MANAGEMENT Ivar C. Satero, Airport Director

Chris Arrigale, Executive Assistant to the Airport Director Jon Ballesteros, Chief External Affairs Officer John Bergener, Planning & Environmental Director Sheryl Bregman, Airport General Counsel, Legal Jean Caramatti, Commission Secretary Leo Fermin, Chief Business & Finance Officer Ian Law, Chief Information Officer Jeff Littlefield, Chief Operating Officer Bill Loeffler,Acting Director of Facilities Geoff W. Neumayr, Chief Development Officer Julian Potter, Chief Administration & Policy Officer Blake Summers, Director & Chief Curator, SFO Museum Linda Yeung, People, Performance & Development Director

19 1995.55.05 poster: Pan American World Airways, Hawaii 1948 Collection of SFO Museum FINANCIAL SUMMARY

HIGHLIGHTS OF AIRLINE OPERATIONS AT THE AIRPORT Fiscal year 2017 passenger traffic at SFO concluded with 26.9 million enplanements, an increase of 4.9% compared to the prior fiscal year, establishing a new peak for the Airport. Domestic growth was from increased service, mainly by a combination of Low Cost Carriers (LCCs) and legacy carrier United Airlines (United). The international sector also experienced service additions. These included new services commenced by Finnair, Thomas Cook, Virgin Atlantic, Volaris, United and WOW Air, and aircraft size or frequency increases by Air Canada, airberlin, KLM, SWISS, Korean Air, and United. Total cargo and U.S. mail tonnage increased by 18.6% due to increases in both domestic and international shipments.

The 4.9% fiscal year-over-year enplanement increase at SFO compares to increases of 8.3%1 at Oakland International Airport and 12.8%2 at Mineta San Jose International Airport, resulting in relatively stable Bay Area passenger market share of 69.1% for SFO, compared to 70.2% in fiscal year 2016.

To view the entire fiscal year 2016-2017 audited financial statements, visit www.flysfo.com/fy1617.

1 Source: Oakland International Airport Traffic Report 2 Source: Mineta San Jose International Airport Traffic Report 21 2012.147.248 poster: Pan American Airways, Golden Gate International Exposition 1937 Collection of SFO Museum, gift of the Captain John B. Russell Family FINANCIAL FINANCIAL SUMMARY SUMMARY

NET POSITION SUMMARY (IN THOUSANDS) HIGHLIGHTS OF CHANGES IN NET POSITION (IN THOUSANDS)

Percentage Increase FY 2017 (Decrease) Percentage FY 2017 FY 2016 FY 2017 Increase Assets: FY 2017 FY 2016 (Decrease) Unrestricted current assets $ 440,930 $ 467,577 (5.7)% Operating revenues $ 926,800 $ 866,991 6.9% Restricted current assets 437,934 282,371 55.1 Operating expenses (808,860) (640,473) 26.3 Restricted non-current assets 726,310 640,970 13.3 Operating income 117,940 226,518 (47.9) Capital assets, net 4,282,629 4,045,636 5.9 Nonoperating expenses, net (201,020) (144,463) 39.1 Total assets 5,887,803 5,436,554 8.3 Income loss before capital contributions Deferred outflows of resources: and transfers (83,080) 82,055 (201.2) Unamortized loss on refunding of debt 76,789 68,100 12.8 Capital contributions 11,212 10,424 7.6 Deferred outflows on derivative instruments 54,870 83,614 (34.4) Transfers to City and County of San Francisco (45,036) (42,542) 5.9 Deferred outflows related to pensions 145,743 43,982 231.4 Changes in net position (116,904) 49,937 (334.1) Total deferred outflows of resources 277,402 195,696 41.8 Total net position - beginning of year 167,073 117,136 42.6 Total net position at end of year $ 50,169 $ 167,073 (70.0)% Liabilities: Current liabilities 284,221 309,888 (8.3) Current liabilities payable from restricted assets 356,535 494,128 (27.8) Noncurrent liabilities 5,033,314 4,372,604 15.1 Net pension liability 359,599 144,271 149.3 Derivative instruments 65,965 96,132 (31.4) Total liabilities 6,099,634 5,417,023 12.6 Deferred inflows of resources: Deferred inflows related to pensions 15,402 48,154 (68.0) Total deferred inflows of resources 15,402 48,154 (68.0)

Net position: Net investment in capital assets (284,761) (117,377) 142.6 Restricted for debt service 109,554 35,462 208.9 Restricted for capital projects 296,188 212,931 39.1 Unrestricted (70,812) 36,057 (296.4) Total net position $ 50,169 $ 167,073 (70.0)%

22 23 FINANCIAL FINANCIAL SUMMARY SUMMARY

OPERATING REVENUES (IN MILLIONS) OPERATING EXPENSES (IN MILLIONS)

Personnel $364.8 45% Aviation $545.3 59% Depreciation 265.8 33 Concession 149.7 16 Contractual Services 73.9 9 Parking & Transportation 150.6 16 Light, Heat & Power 23.1 3 Net Sales & Services 81.2 9 Services Provided by 21.6 3 Total $926.8 100% Other City Departments Repairs and Maintenance 34.9 4 Materials & Supplies 16.2 2

General & Administrative 4.4 1

Environmental Remediation 4.2 0

Total $808.9 100%

24 25 SFO

SAN FRANCISCO INTERNATIONAL AIRPORT

P.O. BOX 8097 SAN FRANCISCO, CA 94128 (650) 821-5000