City Hall, Airlines Need to Work on Revving LAX Economic Engine

The next time you fly into or out of Los Angeles International Airport, you might reflect on the way major airlines recently tried to deliver a hammer blow to the economy of Southern California.

The Air Transport Assn., the airline industry’s Washington lobby, persuaded Rep. Frank Wolf (R-Va.), head of the transportation subcommittee of the powerful House Appropriations Committee, to kill a $400-million loan guarantee for the Alameda Corridor. That’s the expanded rail and truck route from the ports of Long Beach and Los Angeles that’s considered essential for the future growth of the ports.

But the corridor has nothing to do with airlines or airports. Why did the airlines lobby against it? They wanted to chastise Los Angeles and Mayor Richard Riordan for raising landing fees at LAX since 1993 and for attempting to recover other money from the airport to pay for additional city police.

And chastise they did, with letters to Riordan from Wolf and Sen. John McCain (R-Ariz.), head of the Senate subcommittee on aviation, accusing Los Angeles of attempting to “subvert the law” by trying to take airport money into the city budget.

For a while it looked as though funding for the corridor and the Metropolitan Transportation Authority would be blocked in Washington, such was the airlines’ influence with the politicians.

But extraordinary efforts by the Southern California congressional delegation, along with city officials in Los Angeles and Long Beach, got House Speaker Newt Gingrich (R-Ga.) to restore the corridor loan guarantee.

The victory demonstrated the political clout of the region’s representatives when they act together.

“It was a spirit of comity among colleagues that made the point,” says Rep. David Dreier (R-San Dimas).

And their cause was just. The airlines, whatever their dispute with Riordan, should not have used their lobby to imperil funds for the Alameda Corridor, upon which so much business in Southern California and neighboring states depends.

“The airlines were way out of line,” says Los Angeles Councilman Marvin Braude. “They should pay their fair share.”

Behind the rhetoric, however, details of the dispute give a glimpse of a city and region grown beyond its romantic origins and of government trying to make ends meet by tapping its piggy bank.

The airlines have been smarting since the Department of Airports, an agency of the city of Los Angeles, raised landing fees at LAX to cover the cost of services provided by the police and fire departments.

The hike was justified. Landing fees at LAX are still lower than those in Chicago, New York and other large cities. And the bulk of the $100 million in annual fees stays at the airport to help pay for maintenance and improvements.

Only $26 million of “lawful reimbursement” for services was transferred to the city last year, says John Driscoll, head of the Department of Airports.

But airline managements got emotional because they sensed the end of a cozy relationship. Los Angeles always held a special place in the industry. Aviation’s pioneers--Glenn Curtiss, Allan Lockheed, Jack Northrop, Donald Douglas, Glenn Martin, T. Claude Ryan--invented the industry in Southern California’s dry and sunny meadows.

“Los Angeles was the capital of aviation,” wrote Kevin Starr in “Material Dreams,” his history of Southern California in the 1920s. “Aviation bespoke technology, modernity, Los Angeles as a crossroads of world civilization.”

With the fee hikes, the city put the airlines on notice that they were benefiting from the world’s fifth-busiest airport but not paying enough for the privilege.

“The airlines do $11.5 billion in business through this airport,” says Driscoll. “I think they’re doing well at $100 million in landing fees.”

But more was to come. Riordan, who took office in 1993, set city lawyers and accountants to researching the original 1920s contracts that set up LAX. And they found that Los Angeles had ceded land for which the airport had never directly reimbursed it.

So $30 million in belated payment was included in the city’s latest budget. Los Angeles also introduced a tax on airline fuel that it had forgone for years even as other cities have charged it.

To the airlines, the message was clear: City Hall needed money to pay for additional police, and the airport was a deep pocket. So the airlines filed lawsuits and mounted a case against the city in Washington. The seaport of Los Angeles, where the Riordan administration has raised shippers’ fees, has sued in Sacramento.

At present, Riordan has had to take $30 million back out of his budget because the City Council ruled that the disputed money could not be counted. Claims and counterclaims continue, and justice will be decided in court.

But on the face of it, financing municipal necessities--more police on the streets--by reaching into ancient history for one-time charges on assets like the airport is a questionable tactic.

No, higher fees won’t threaten the “competitiveness” of LAX, as the airlines claim. One advantage of Southern California’s main airport is the immense local market. Passenger flights from Asia can fly half-full of passengers and still be profitable because they also carry huge amounts of freight.

But City Hall and the airlines should be cooperating to develop the airport’s economic engine to the fullest extent. LAX generates $43.5 billion of economic activity annually in the five-county area of Southern California, the Department of Airports estimates.

In that respect, the airlines can call off their hired politicians and be less thuggish. Hardball is one thing, bean ball another.

And the mayor of a city now acknowledged as a “crossroads of civilization” can seek what Dreier calls “comity.” That is, after all, what rescued the Alameda Corridor loan guarantee.

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Landing Business

Although landing fees at Los Angeles International Airport, the world’s fifth-busiest, have increased steadily since 1990, the airport is 11th on a list of the most expensive airports at which to land. A look at LAX landing fees and how the airport compares with others:

1995 Landing Fees per 1,000 pounds gross weight

1. New York (La Guardia): $4.20

2. Denver International: 3.31

3. New York (JFK): 2.95

4. Detroit: 2.55

5. Newark: 2.50

11. Los Angeles: 1.97

* LAX landing fees--which were upped several times a year until 1993--are taken from July 1 increases.

** Officials changed the way they calculated airline fees in 1992, assessing airlines for services they actually used rather than using landing fees to make up for revenue shortfalls.

Source: Los Angeles Department of Airports

Researched by JENNIFER OLDHAM / Los Angeles Times