PERSPECTIVES ON LAX : The Airport Is a Public Enterprise : American’s irrational reaction to the city’s review of past policy sheds light on the airlines’ sweetheart deal.
The Los Angeles International Airport is one of the most important economic engines in the Western United States. It creates $3.3 billion in aviation activity at or near the airport and another $9.7 billion from aviation and visitor services in the region. Indirect “multiplier” effects add another $24 billion to our regional economy. More than 50,000 jobs are directly attributed to LAX and an additional 355,000 related jobs exist in the region because of LAX.
On a typical day, 125,000 passengers and 7 million pounds of cargo pass through LAX on 1,800 flights. Visitors arriving at LAX spend $17.7 million each day in our region.
To make the airport even more commercially successful and responsive to our city’s needs, much needs to be done. For many years, the airlines have dominated airport operations and policies. Until recently, landing fees at LAX were the lowest of any major U.S. airport. Even tripled to $1.56 per 1,000 pounds, landing fees are significantly less than those in New York, Chicago, Dallas and Seattle. To put this in perspective, the combined landing fees and terminal rent for airlines at LAX constitute less than 1 cent for every fare-revenue dollar generated at LAX.
Though airline concerns are important, we must remember that the airport is a part of the city of Los Angeles and must do its share to contribute to the city’s well-being. In this respect, the following goals will be pursued in coming months:
* We will defeat the legal challenges of our landing fees recently filed by the airline industry. Until June, our landing fees--under an agreement negotiated in the early 1950s--failed to cover the cost of service provided to airlines. In effect, the Airport Department has subsidized the airline industry for years.
* We will completely rework the airport-airline relationship. While the city must be friendly to business, the airlines have had their way at LAX for too long. Airport commissioners will no longer rubber-stamp the whims of the airline industry. Recently, American Airlines announced the termination of its renovation project, blaming the “strong-arm” tactics of the Riordan Administration. Based on an inconclusive discussion with the prior administration, American expected more than $40 million in credits against its airport rent. In response to Mayor Richard Riordan’s directive that all airport policies be carefully reviewed, commissioners are seeking to determine industry standards for renovation and the basis for any credits. American’s irrational response to these questions shows the airlines’ addiction to sweetheart deals. Commissioners will continue to examine how to get greater control of airport operations, enhancing revenue and achieving maximum flexibility.
* We will ensure that contracts are based on the best interests of the city. Year after year, lucrative contracts were awarded to big-time concessionaires represented by a small handful of powerful lobbyists. While some of these may have been appropriate, the airport-contract award process reeked of influence-peddling.
* We will examine all aspects of LAX’s relationship with the surrounding communities. The recent amendment to the Coastal Transportation Specific Plan requiring LAX to pay trip fees for certain expansion is consistent with the mayor’s policy that LAX bear a fair share of the costs it imposes on its host community. The Airport Commission will work with Councilwoman Ruth Galanter to review policies on noise. The higher landing fees will help pay for increased noise-abatement measures.
* We will begin examining the future of LAX as the central hub of air commerce in Southern California. Domestically, LAX ranks third in annual passenger traffic. But as a destination and termination airport on the Pacific Rim, LAX can substantially increase both its passenger and cargo operations. LAX must serve as a stimulus for new jobs and economic growth.
* We will examine LAX’s image. We will revamp our retailing, food service and transportation management. We will strive to create new public spaces dedicated to local art and culture. In doing so, we must find the right balance between providing opportunities for small businesses, particularly minority businesses, and maximizing revenues.
By employing creative entrepreneurial ideas and strong fiscal management, LAX’s revenue base will substantially increase. Through strong, firm and direct leadership provided by Riordan and the City Council, the potential for LAX is limitless.
