Business Update with Mark Lacter

Ontario Airoport; Qantas Airlines

KPCC's business analyst Mark Lacter talks about how Ontario International Airport is losing passengers; he also talks about how much LAX relies on international travel.

Steve Julian: On Tuesdays we talk about the latest business stories with Mark Lacter. Mark, yesterday we mentioned the steep decline in passenger levels at Ontario International Airport… whatever happened to regionalizing the airport system?

Mark Lacter: You mean flying out of some other airport besides LAX? Well, plenty of people still use Ontario or John Wayne Airport in Orange County, though there’s a good chance they’ll be paying higher fares. In terms of discount seats and long-distance flights, it’s still pretty much LAX. The latest passenger counts from the local airports show that L.A. International was up around 6 percent in September compared with a year earlier, while Ontario was down almost 7 percent from a year earlier. Actually, Ontario has been slipping badly since the recession – this year it’s likely to lose about 200,000 passengers, and that would bring traffic levels back to where they were in 1987.

Julian: I suppose one reason is the high unemployment there…

Lacter: That’s part of it, Steve. It is high in the Inland Empire (13-14 -percent), and also the airlines are cutting back on the number of flights, especially in second-tier markets (and that would include Ontario). But this isn’t just about the struggling economy – keep in mind that the idea of regionalization in Southern California really goes back to the early 60s, when local officials wanted to develop an international airport in the Antelope Valley. That’s when the 707 jet was just being put into service, and there were big concerns about noise and the fact that LAX had next to no space to expand (housing developers were practically backing onto the runways).

Julian: But Palmdale wasn’t much of a choice, as I recall…

Lacter: Yes, very far from he big population centers and you’d really need a high-speed rail system to get passengers to and from the airport. Besides, there just wasn’t much enthusiasm among the airlines to give up on LAX because travelers showed no interest in giving up on LAX. And not all that much has changed – LAX is actually an efficient operation: Its location is fairly accessible, it’s compact when compared with other big airports (that’s mostly a good thing), and you can get just about anywhere in the world, often nonstop.

Julian: So if you’re an airline executive looking to run a tighter operation, L.A. makes a compelling case.

Lacter: This is why regionalization has its limits. And by the way, Ontario Airport is actually operated by the agency that operates LAX and there are folks in Ontario who believe that the loss of business is some sort of deliberate effort by L.A. officials. That’s really not the case.

Julian: So let’s say you want to fly internationally out of Ontario, one place you can’t get to is Australia.

Lacter: You’re right, you can’t, and it’s been kind of an adventure for passengers on the Qantas flights out of LAX. The airline has been having lots of labor disputes with its workforce and over the weekend all flights were grounded for 48 hours. That was a big deal locally because L.A. is one of the airline’s biggest hubs. Things do seem to be settling down - a government tribunal in Australia ordered the airline to resume service. But they’re still trying to accommodate the folks whose flights were cancelled.

Julian: A reminder of how much LAX relies on international travel…

Lacter: Actually, it’s been too much of a good thing, and it’s created hassles like planes being parked away from the terminal and passengers having to be bused inside. A few years ago that Qantas officials were giving some thought to moving their West Coast operations from L.A. to San Francisco, which would have been a huge loss.

Julian: The Tom Bradley terminal is being expanded and remodeled – is that enough?

Lacter: It’ll certainly help. You can actually see the construction taking shape. The plan is to add boarding gates that can accommodate those massive A380s, along with more stores, restaurants, and ticket counters – and providing more space for security. They should have the first phase of the project completed about a year from now.

Julian:Mark Lacter is a contributing writer for Los Angeles Magazine and writes the business blog at LA Observed.com.


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