Business Update with Mark Lacter

Boeing's new 787 Dreamliner makes its debut at LAX

KPCC's business analyst Mark Lacter says the 787 is making flights out of LAX, but the new jet has suffered some operational problems.

Steve Julian: There’s more trouble for Boeing's new 787, which is supposed to have an important presence at LAX.  Mark, we touched on some of the mechanical issues – what’s the connection to Los Angeles?

Mark Lacter: Well, the 787, otherwise known as the Dreamliner, is a big deal in the world of commercial aviation.  Last week, United began service from L.A. to Tokyo – the airline’s first international flight using the new plane.  Also, the Chilean airline LAN began Dreamliner service last week from Los Angeles.  And many more flights are scheduled out of LAX with the new plane.  But as you mentioned, Steve, the 787 has been plagued with operating glitches.  Just yesterday, a fire broke out in the midsection of a Japan Airlines 787 that had just arrived in Boston from Tokyo.  They think it started in an area that houses batteries and electrical components.  Nobody was hurt, but this follows the failure of an electrical generator last month that forced an emergency landing in New Orleans.  Another flight in December also developed electrical issues.

Julian: Isn’t there always a shakeout period for new planes, especially when the technology is this new?

Lacter: There is – and, in fairness, there's a lot about this plane that’s different.  The 787 is a twin-engine wide-body that's made largely from composite materials, mostly carbon fiber instead of the usual aluminum sheets).  These materials make the aircraft lighter and about 20 percent more fuel efficient.  Airlines with a lot of long-distance runs like the idea because the cost of jet fuel can be so volatile – and at LAX, a quarter of all flights are either to or from international destinations.

Julian: But I guess the electrical components are more sophisticated?

Lacter: That’s right, which means a lot more can go wrong, especially in the first few months of commercial service.  And with a number of these high-profile incidents, the question is whether airline officials will be comfortable using the plane for extended runs over water – and far from airports that could be used in an emergency.  Already, United has delayed the start of 787 service on several long-distance routes, though so far there’s no change in the L.A. to Tokyo service.

Julian: It’s worth remembering that 2012 was a very safe year for flying.

Lacter: The safest year since 1945 - only 23 accidents around the world, and only two of them in the U.S., resulting in two deaths.  Considering there are 37,000 flights around the world each day, that's pretty reassuring.  Still, about the last thing Boeing or the airlines want to do is freak out passengers about a plane that in so many ways is an engineering marvel.

Julian: Whatever happened to Ontario Airport as an alternative to LAX?

Lacter: What happened was that for various reasons the airlines don't consider it an essential airport, which means that they've cut back on the number of flights.  And those cutbacks have led to fewer passengers, which has led to even fewer flights.  The number of daily departures in 2005 was 111; today it's 59.  Passenger traffic is expected to total 4.2 million in 2012, which is about the same level as in 1986.

Julian: Is it about the economy?

Lacter: Well, that’s part of the explanation, but officials in the Inland Empire claim that the city of L.A., which operates Ontario, has discouraged airlines from using the airport so that LAX could get a bigger piece of the pie.  The LAX people say that's not true, though last fall the L.A. City Council did vote to work out a plan to transfer ownership.  Whether Ontario can afford such a purchase is another story.

Julian: Could Ontario, on its own, turn things around?

Lacter: The truth is  that airlines go where the business is - and even though LAX is the airport everyone loves to hate, it also happens to be the place passengers generally like to use, largely because it's close to much of L.A.'s population.  Let’s also not forget that LAX is in the midst of a modernization program that includes expansion of the international terminal, overhauls of the domestic terminals, and perhaps moving the northernmost runway in order to accommodate larger jets.  That’s a controversial idea among residents in Westchester, but the other modernization efforts are moving forward, and they’ll only make it harder for Ontario to gain any ground.

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


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