San Jose building height limits come with price tag

Dan Connolly warned San Jose officials in 2019 that pushing up the height limits on downtown buildings could cost airlines money. They didn’t listen to him.

Two years later, his predictions have held true—and he’s not happy about it.

“We chose a scenario where the airport and airlines lost and the developers won,” he told San José Spotlight. Connolly, who chairs the Airport Commission, said he was speaking on behalf of himself.

Airlines flying out of Mineta San Jose International Airport have lost an estimated $2.8 million in combined revenue due to a 2019 policy that raised the height limit for towers being built in San Jose by up to 35 feet downtown and 150 feet in the Diridon Station area. According to a city memo, some of the carriers facing losses include Alaska Airlines, Jet Blue and Hawaiian Airlines.

The loss occurs because Federal Aviation Administration safety guidelines force airlines to fly with a reduced number of passengers depending on the height of buildings. San Jose’s airport, which is located close to the downtown area, is heavily impacted by this issue.

‘They just don’t care’

A new policy passed last week in San Jose will force developers to pay fees if their cranes exceed the downtown height limit, impacting the operations of nearby airlines. Money from the fund will be used to compensate passengers bumped from flights, with airlines having the discretion to refund fares, pay for a hotel or both.

The proposed height limit change was the subject of fierce debate between developers and the airport commission. The city examined several scenarios for expanding height limits, including one backed by the airport commission that would have raised height limits near Diridon Station but not downtown. The city went with a proposal backed by groups including SPUR and the San Jose Downtown Association.

Connolly and the commission argued that the height limits could be a major financial setback for SJC, which is debt-heavy from its $1.5 billion expansion and the millions spent trying to lure new airlines here and brand itself as an international hub to compete with San Francisco and Oakland international airports.

Connolly claims the commission also raised concerns about what would happen to passengers who were forced off flights, but this attracted little interest as a discussion point.

“There’s not one mention anywhere of the impact to passengers—they just don’t care,” Connolly said. “I think it’s wrong that families plan their vacation, then the next thing you know they may get bumped off a flight from Hawaii.”

Keeping an eye on things

Scott Knies, executive director of the San Jose Downtown Association and a longtime backer of increasing the height limit downtown, expressed no regrets with how the increased height policy has played out.

“I remember we looked at the data in 2019 and there were very few flights that were impacted,” Knies told San José Spotlight. “I remember when we were interviewing some of the airlines directly about it, the operations folks, particularly for some of the carriers that are the biggest customers here—they shrugged at it. It wasn’t an issue.”

The airport media relations office did not respond to multiple requests for comment.

Fred Buzo, San Jose director for SPUR, said it’s too early to tell whether the 2019 policy is going to have a long-term detrimental impact on the airport, citing the COVID-19 pandemic as one potential confounding factor.

“I think the policy is fine as is,” Buzo told San José Spotlight, adding that he supports the city creating a separate policy to help the airlines recover losses. “It was always part of the equation… I don’t think this is a bad thing at this point, but we’ll see. It’s still a long-term project and we’ll keep our eye on it for sure.”

Financial burden

When it comes to the crane fee, funds won’t be collected for the first six months of use. If cranes are still up after this period, developers must pay tens of thousands of dollars, although fees may be reduced if they’re working on multiple projects. Knies said this will help the airlines, but he’s concerned with how it could potentially hamper development in the future.

Connolly is worried that fees won’t be collected for the first six months of crane use, which means airlines won’t be compensated for the entire period they’re being impacted.

He’s also concerned about how the policy will affect SJC’s status as an international airport. Airport officials in 2019 said the effects of the height limit policy would be minimal for East Coast, European and Hawaiian flights, although certain flights to Asia would potentially have to operate with fewer passengers.

Connolly said this proved incorrect because flights to Hawaii have been affected. He also noted that China Air and Lufthansa no longer service San Jose, which he said may be partially due to the cost of losing passengers to meet FAA requirements.

“If it’s not economically viable, a carrier is just going to go to Oakland or San Francisco with their route,” Connolly said. “We should not, in my opinion, be putting the financial burden on the backs of the airlines. They didn’t make this decision, the city did.”

Contact Eli Wolfe at [email protected] or @EliWolfe4 on Twitter.