Business Update with Mark Lacter

The future of expansion at Los Angeles International Airport

KPCC's business analyst Mark Lacter says expanding Los Angeles International Airport was an issue during the LA mayor's race... and it's not going away anytime soon.

Susanne Whatley: New lawsuits have been filed, Mark.  What's the story behind this headline?

Mark Lacter: Actually, that could have been the headline 10 or 20 years ago, Susanne - it just shows you how hard it's been to make changes at the airport, even though everyone agrees that changes are badly needed.  This latest lawsuit has the cities of Ontario, Inglewood, and Culver City challenging a new project recently approved by the L.A. City Council.  It would move the northernmost runway 260 feet closer to Westchester (but still within the confines of the LAX property).  They'd use the extra space for a center taxiway that would make it easier and safer for those larger planes to maneuver (the current configuration was designed for much smaller planes, like the old 707).  The project also adds terminal space and a car rental facility, but it's the runway that's been the source of the controversy.

Whatley: Neighborhood groups worry about the noise, of course; and now that Eric Garcetti won the election, what's his stance?

Lacter: Garcetti is opposed to moving the runway, and that position won him the support of voters in the area.  So now, he has to stick to that opposition, but still push for the other projects.  As for the lawsuit, it ensures further delays in the modernization effort.  Under the best of scenarios, you're looking at several years before they even begin construction.

Whatley: If everyone agrees that the airport needs work, why all the delays?

Lacter: You have to pull back, Susanne - back to the 1940s when real estate developers were allowed to build homes on land that was close to what is now the runway.  Remember that in those years, the area around the airport was a major center for airplane manufacturing, and the folks working in those factories liked the idea of living nearby.  The problem is that when air travel exploded, there was no room for expansion.  (Back in the 60s, there was a big push for having a major airport in the Antelope Valley and you can see how far that went.) The good news is that LAX has undergone any number of improvements in recent years, most notably the expansion of the Bradley international terminal that will be fully completed next year. That alone is a big deal.

Whatley: If LAX is bursting, wouldn't it make sense to add more flights out of Ontario?

Lacter: Well, city officials in Ontario would like to know the answer to that one.  Ontario Airport is operated by the city of L.A. (has been going back to the 1960s), and in recent years passenger levels have been plunging.  Now, the assumption has been that it was tough economic times in the Inland Empire that caused a drop in demand, and that might have been true during the recession, but it's not true now.  Part of why Ontario is such a ghost town is that the airlines have focused more on LAX, which brings up another big reason for bypassing Ontario: it's too expensive for them to fly there.  That's because landing fees and other operating costs are among the highest in the country.

Whatley: Does that mean fares are higher than at LAX?

Lacter: It does - that's the only way they can make money on Ontario routes.  Actually, that works on flights that are heavy on business travelers.  But, leisure travelers don't want to pay that much - even if it means driving 40 or 50 miles to LAX.

Whatley: The city of Ontario sued yesterday...

Lacter: Right, it alleges that the city of L.A. has mismanaged the airport and wants to take over operations.  L.A. officials say they are interested in cutting a deal, but the two sides have been miles apart in negotiations.  The next step is likely to be Garcetti's - he's spoken about the importance of regional air service (which sounds nice), but is more easily said than done because LAX - for all the complaints - remains the airport of choice for many travelers.  So, whoever ends up with Ontario will have to figure out how to convince the airlines that it's worth their while to add more flights at lower fares.

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


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