AIRPORT: LA’s pitches to improve Ontario don’t fly

May 16, 2012

Valet parking and VIP lounges are among the latest suggestions and strategies offered by the city of Los Angeles to best boost traffic at its Ontario International Airport.

But few, if any, of those ideas have taken off since Los Angeles World Airports began pitching them in 2008 when traffic began to plummet.

Shuttles to Disneyland, a discount for airlines and a proposal to farm out Ontario airport’s management to someone else have all been brought up by consultants hired by the LA public agency that owns and operates LAX and the Ontario and Van Nuys airports. None have been implemented.

In the meantime, traffic has dropped by 37 percent at the airport to levels unseen since the 1988, a decade before two twin terminals were built to serve 10 million passengers every year. Less than half that number of travelers used the airport in 2009, 2010 and 2011.

"Right now, if you go out to Ontario, the terminal is about half full. A lot of the concessions are shuttered throughout the day. That’s not a good story," said Edward Shelswell-White, a consultant hired by LAWA who presented his ideas to re-brand the Inland airport during a May 7 meeting of the board of airport commissioners.

But a half-empty terminal isn’t half bad, said airport commissioner Robert Beyer, since travelers could see it as an advantage to use Ontario instead of busier airports.

"What’s the reason to drive traffic there?" Beyer asked Shelswell-White during the meeting.

Spreading air traffic to LAWA’s other Southern California airports isn’t a charitable goal for the agency. Los Angeles has been bound by a 2005 legal settlement with the neighborhoods surrounding LAX that opposed expansion at that airport. In it, LAWA agreed to develop a regional strategy and grow traffic at "underutilized" airports it owns, namely Ontario airport, updating that strategy annually starting Dec. 31, 2006.

Costs have been cut by more than $19 million at the airport in part by shifting employees from Ontario to LAX when possible and closing portions of the terminals with an aim to make it less expensive for airlines to do business there.

FOCUS IS RENEWED, MANAGER SAYS

Now, LAWA is focused on building up the airport’s business, said Ontario International Airport manager Jess Romo.

Why has it taken this long? Romo said the agency has had a lot of competing priorities and that there was no expectation that the passenger declines would have gone on as long as they have.

"We will be doing a number of things," Romo said matter of factly, now that consultant Shelswell-White is on board.

In his presentation, Shelswell-White made conceptual suggestions that Ontario could re-brand itself, boost revenue and compete with John Wayne Airport in Orange County by offering features that would appeal to travelers with higher-end tastes such as valet parking, reserved parking or a club lounge.

Beyer wasn’t convinced. Doing that "in a place that’s devastated economically doesn’t exactly ring as an intelligent avenue," he said.

LAWA leaders have long blamed the economy for dragging Ontario and other midsize airports down with it.

But leaders in the city of Ontario have said LAWA’s neglect has played more of a role in the precipitous drop in traffic, and in 2008 they began talking openly about taking back the airport they signed over to Los Angeles in 1967 to manage and then in 1985 to own. That movement has since grown into the SetONTarioFree campaign.

At the May 7 meeting, the consultant said it would behoove LAWA to counter the campaign with its own competing vision.

"There is little confidence that the situation will get better," he said. The city of Ontario’s campaign has even questioned if the airport will remain open under LAWA’s ownership. "Of course it will," Shelswell-White said.

He also suggested temporarily doing away with the $4.50 passenger facility charge levied to airlines on every fare, an idea first suggested in 2010 by another hired consultant. Ultimately, the board of directors — who are all Los Angeles-area residents — delayed making any endorsement for a strategy until the consultant came back with more facts and data to back up a plan.

YEARS OF FEW RESULTS

The board has heard suggestions for years.

There was a plan in 2008 to shift Los Angeles World Airports’ marketing resources from Palmdale airport to Ontario instead. At the time Mike Molina, the agency’s senior director of external affairs, said, "Ontario shows the greatest potential for increasing our regionalization efforts."

But the budget shift didn’t happen.

Then there was the idea to divert Disneyland visitors to the Inland airport with airfare rebates, shuttle rides to the theme parks and even early admission to encourage fliers to go to Ontario instead of John Wayne Airport in Orange County.

Los Angeles World Airports hired Peggy Ducey, who developed the Disneyland plan, to be the agency’s "regionalization coordinator" in July 2009 to come up with a strategy. Two years later she submitted a report but no action was ever taken.

"The work that was submitted really lacked a lot of data," Romo said.

Early last year, the agency sought "expressions of interest" from airport management firms to gauge whether there was willingness by an outsider to run the airport and what the advantages might be. Ten firms applied but nothing happened.

"There were concerns in the report regarding public-private partnerships including, but not limited to, labor issues, FAA regulations and other uncertainties," Romo said in an e-mailed response.

At the same time, the budget to recruit both airlines and travelers to the airport was cut by 95 percent compared to pre-2008 levels, and the agency’s managers made public statements that indicated Ontario airport’s traffic wasn’t a priority. One such statement came from LAWA’s Executive Director Gina Marie Lindsay, who was hired in 2007.

KEEPING FLIERS IN LA?

"Continuing to pursue a strategy that actively pushes traffic away from the city of Los Angeles and into other jurisdictions could be viewed as a little self-destructive," she said during a 2010 meeting of the agency’s board.

Behind the scenes, the agency’s leaders and its air service marketing director, Mark Thorpe, had differing opinions on what to do. Thorpe proposed offering incentives directly to airlines to encourage more routes or cheaper fares, a common tool others airports use.

He said he was told by LAWA’s management that it would be too difficult to renegotiate the long-term lease agreement the agency had with its current airlines at Ontario airport. While the agency has cut significant costs, Thorpe said incentives and rebates would do more in the short term to attract airlines.

Thorpe left LAWA in January to be the assistant vice president of air service development at Dallas/Fort Worth International Airport.

At Dallas/Fort Worth, the airport offers airlines starting new international routes or expanding existing routes rebates on all their airport fees and rent for the first two years, plus $400,000 worth of advertising and marketing. It can add up to $5 million per qualifying route. There are deals for airlines offering new U.S. routes, too, including $125,000 worth of advertising and a full rebate on airport fees and rent for a year.

And if the airport makes more in nonaviation revenue than it expected to, it shares the profits with its airlines, he said.

The cost for airlines to do business at Ontario airport per passenger has been the highest in Southern California, and as fewer airlines and passengers have used the airport, those that remain cover the airport’s expenses.

"When I would talk to airlines, cost did matter," especially when two airports with a similar market were competing for one airline, Thorpe said of his work to recruit new service at Ontario airport.