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Aftereffects of recession reverse a California airport's growth

By BILLY WITZ

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ONTARIO, Calif. - Rolling into Ontario International Airport is a traveler's delight. The parking lots, across from either terminal, are mostly vacant. The spacious, tidy terminals are filled with natural light and few lines at the ticket counters. Jostling around the baggage carousel is not like trying to box out LeBron James for a rebound - there is plenty of elbow room for everyone.

 

The greatest inconvenience awaits those who head to the taxi stand: sometimes there are no cabs. One has to be called.

"Truthfully, I love this," Annette Long said as she prepared to check her bags for a recent flight, thrilled to be missing the freeway traffic and crowds she encounters flying out of Los Angeles International Airport. "It's so easy."

But what makes traveling so pleasant for passengers like Long also underscores the problem facing this regional airport, which, like the Inland Empire region that it serves, is still reeling from the devastating impact of the recession.

As airports show slow but steady signs of recovery, with passenger traffic nearing pre-recession levels nationally, the passenger traffic at Ontario has plummeted 40 percent since its 2007 peak of 6.9 million, according to Federal Aviation Administration figures. The decline, fed by a confluence of economic misfortune, a change in airline business practices and local political turf wars, is projected to continue through the end of the year. It has left Ontario with traffic levels around 4 million, about what they were in the mid-1980s, a decade before construction of two modern terminals that were supposed to make this airport a linchpin of the region's economic growth.

But like the housing booms and busts that have driven the economic prospects of the area over the last 25 years, the airport's plight has left some to wonder if such ideas were too speculative.

Ontario's experience mirrors that of other smaller airports in large markets - like Islip and Newburgh in New York - which expanded to handle added traffic only to see airlines pull back.

The Inland Empire, which includes San Bernardino and Riverside counties, continues to be one of the fastest-growing regions in California, with more than 4 million residents, but the lure is affordable housing, not high-paying jobs. The region is projected to have a double-digit unemployment rate through 2015. And last week, a judge cleared the way for the city of San Bernardino to declare bankruptcy.

"With the benefit of hindsight, it might have been overreaching when they expanded," said Sampath Rajagopala, a professor of data sciences and operations at the University of Southern California's business school. "Airlines can never operate at a profit if they rely on consumer business. They need business passengers. Yes, there are a lot of people living there, but they are a lot more price-sensitive."

It is not just the economy that has crippled the Ontario airport. There has been a change in how airlines operate, analysts say, prizing profitability now more than market share, which has driven airlines away from smaller airports to larger ones nearby.

Southwest Airlines, the main tenant at Ontario, began there in 1985 with five daily flights to Phoenix. It once flew 64 flights a day from Ontario in the late '90s, but is now down to 35 flights a day. An additional reduction of 12 percent has been announced for January. At the same time, it has expanded service at Los Angeles International.

Brad Hawkins, a Southwest spokesman, said that cost "is by far the most important determinant in how we operate." The company's service to Ontario, he said, "is where it should be."

This has left Ontario with a conundrum: declining flights mean that airports must charge airlines higher fees per passenger to recoup expenses, and Ontario's fee of $11.12 per passenger was close to the $12.18 that Los Angeles International charged in the 2012-13 fiscal year, according to airport officials who set the fees.

And with high fees, airlines are more likely to move flights elsewhere to lower those costs - there are scant direct flights to the East Coast favored by business travelers - or raise fares to recoup them. While it was once regularly less expensive to fly out of Ontario than Los Angeles International, now it rarely is, Sean Nealon said as he returned from a trip to Montana.

"You can't get a red-eye to New York like you used to," said Nealon, who grew up near Buffalo.

Ontario's decline stands in contrast to the region's other smaller airports, like Burbank International, Long Beach and Orange County, which have mostly rebounded from the recession.

But as Ontario struggles, what has gained the most attention locally is the political tug of war over control of the airport.

Los Angeles World Airports, an agency of the city of Los Angeles, has operated Ontario and several other smaller airports along with Los Angeles International since the 1960s, when the largely rural area was happy not to have the task of running an airport. Now, though, a group of Inland Empire officials, headed by an Ontario city councilman, Alan Wapner, and a team of consultants and lawyers, have started a bid to take the airport back.

They have set up a shadow airport board and begun a public relations campaign that includes a website, setontariofree.com. In June, they fired their sharpest shot, filing a breach-of-contract lawsuit against Los Angeles in an effort to return control of Ontario to local officials. Wapner said that the airport agency had eliminated advertising, raised airline fees and neglected Ontario facilities, all with the purpose of driving business to Los Angeles International.

"Initially, we gave them the benefit of the doubt," Wapner said in an interview. "We just said it's mismanagement or miscalculation. But when you go from 7 million to 4 million passengers in such a short period of time, it wasn't accidental, it was intentional. There's no vested interest for a city located 40 miles away in another county doing anything here that doesn't service them. In fact, it's just the opposite. If a business is here, they're not using the services in L.A."

Gina Marie Lindsey, the executive director of Los Angeles World Airports, declined to comment through a spokeswoman, citing the impending litigation. But Ontario's city manager, Chris Hughes, who is leading negotiations, is hopeful that the newly elected mayor of Los Angeles, Eric Garcetti, who has not announced if he will retain Lindsey, will be more open to returning the Ontario Airport to local control than his predecessor, Antonio Villaraigosa.

The belief that a return of local control will ultimately lead to the boom in economic development around the airport is embraced in the area. But a few voices warn that it would not be a panacea.

"Local control isn't a magic wand," said Janice Rutherford, the chairwoman of the San Bernardino County Board of Supervisors.

This spiral is not unlike what many in the Inland Empire know about the housing market, how one foreclosure can unleash a chain of events that soon leaves an entire neighborhood half-vacant.

"I can't think of another situation like it," said Jan Brueckner, an economics professor at the University of California, Irvine's Institute of Transportation Studies. "It's a great airport with good facilities that's underutilized in the middle of millions of people. It's the strangest thing."






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iwanaknow wrote:
Locally we'll see what happens to Kona, Hilo and Lanai airports in the future?
on September 3,2013 | 12:28PM
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