Burbank Airport Seeks Bids for Its Management

Seeking to ensure the “best bang for the buck,” the Burbank-Glendale-Pasadena Airport Authority has thrown open to the lowest bidder management of the facility that serves 5 million passengers a year.

The action breaks with a 20-year practice by which the contract with longtime management company Airport Group International (AGI), formerly Lockheed Air Terminal, was renewed without bids.

AGI, which employs all but two of Burbank Airport’s staff members and administrators, will be asked to compete for the contract in a bidding process against other companies in early November.

Already, a competitor for the contract has emerged: the U.S. subsidiary of British-based BAA Plc., the company that runs Heathrow Airport in London, is a world leader in airport management and has annual revenues of $2.2 billion.

Airport commissioner Chris Holden said he hopes the process will ensure that “we are getting the best bang for our buck.”

But an AGI spokesman said the airport is already highly efficient. The company has declined to talk about how much it might bid to keep its contract.

The decision to seek competitive bids for airport management was approved by a 5-4 vote of the chronically strife-torn airport commission and represented an unusual consensus among members long divided over the facility’s growth.

The move also reflects trends in airports worldwide, which are increasingly becoming arenas for private-sector competition, AGI executives said.

Airport commissioner Phil Berlin, who represents a minority faction of commissioners appointed by Burbank, led the move to open the bidding process after balking at renewing AGI’s contract.

Berlin rarely wins majority support for his proposals, so he said he was surprised when Holden, Pasadena’s mayor, and another Pasadena commissioner, Bill Paparian, voted with the three Burbank representatives to open the bidding process.

“All we seem to hear about now is private companies managing airports,” said Berlin. “I don’t think . . . AGI is doing a bad job. But generally when you have someone do the same thing for 20 years, it’s healthy for someone to come in and see . . . if it can be done better.”

Holden said he voted with Berlin because he wants “to see what the marketplace is like.

“I can’t say I have any complaints with AGI, but 20 years is a long time,” he said. “I think it’s important . . . to make sure we have the benefit of looking at all the options and understanding all the opportunities that are out there.”

Airport Authority President Joyce Streator opposed the move.

“I think it’s bad timing,” she said, noting that the airport already has its hands full with numerous lawsuits over its planned expansion.

Added Streator: “The airport staff has just done a fantastic job in keeping the airport running as efficiently as it has.”

AGI, a spinoff of Lockheed Martin Corp., owns and manages airports all over the world. Lockheed Martin retains about a 35% stake in the company, said AGI spokesman Randy Workman. AGI oversees maintenance and ground operations at the airport, administering its $16.8-million yearly operating budget. The annual service fee paid to the company by the airport is $415,000, said Victor Gil, an Airport Authority spokesman and AGI employee.

The company’s five-year contract with the Airport Authority ends in July, said Gil.

AGI’s association with Burbank Airport goes back even further than its initial contract with the commission, signed in 1978.

Prior to that, the airport was owned and operated by Lockheed Corp. The company grew out of the Lockheed division that oversaw its operations, and when the airport was bought by Burbank, Glendale and Pasadena, the company continued to do the same job under contract, said Cody Plott, AGI’s senior vice president of business development.

Robert Garcin, a former airport commissioner who served during those early years, said that the Airport Authority renewed the company’s contract time after time because there is no legal requirement to seek competitive bids.

Besides, Garcin said, “There were no competitors. There was no one else out there, no need, and no one available.”

That’s changed only recently, said AGI’s Plott. The authority’s decision, he said, “is indicative of where we are in the industry today. . . . If I were in their shoes, I would do the same thing.”

Plott said airport management is a growing industry that has only recently felt the heat of market forces. Airports, traditionally publicly owned and managed, have begun to seek various forms of privatization to save taxpayers’ money, he said.

The resulting emergence of a new, competitive airport-management industry is a strong incentive for airports like Burbank to put contracts out to bid, said Plott.

BAA sent a letter to Berlin declaring its interest in competing for the Burbank contract.

BAA USA Vice President David C. Suomi said he has no idea what kind of deal the company would offer. “But we would be very interested in talking to them,” he said.

BAA manages the Indianapolis airport system, which is only slightly larger than Burbank’s, Suomi said. There, the company’s contract with the airport authority is based on profit sharing, not set fees, as has been the case in Burbank, he said.

AGI’s Plott declined to discuss its upcoming bid, saying he doesn’t want to tip off competitors.

BAA and AGI are well acquainted with each other as competitors. Both companies recently scored successes in the competition for contracts to run Australia’s newly privatized airports.

Berlin said a change in management may save Burbank Airport money, but probably won’t help resolve the long-simmering political battles that have stalled a planned expansion. Burbank and the neighboring cities of Glendale and Pasadena are at odds over whether the airport should be allowed to expand without additional noise restrictions.

Solving the dispute “still comes down to the authority’s direction to its contractor,” Berlin said.

In other news, U.S. Rep. Howard L. Berman (D-Mission Hills) and U.S. Sen. Barbara Boxer (D-California) announced they had jointly sent a letter to newly confirmed Federal Aviation Administration administrator Jane Garvey asking to discuss ways to minimize noise impacts from the planned Burbank Airport expansion.

Among the suggestions the two want to discuss are establishment of a curfew, a limit on the number of arriving and departing flights and the diversion of planes away from homes of those most affected by noise, according to the letter.

“This thing has dragged on and it’s only getting worse. The hostility is intensifying,” said Tom Waldman, Berman’s press secretary.

“We should all try to resolve this so that not only the Airport Authority and the people who use the airport get the facility they need, but the people of the region have their views taken into consideration as well,” said David Sandretti, communications director for Boxer.

Waldman said his office is still waiting for the FAA’s reply.

The move, which Waldman said was initiated by Berman, got a cool reception from commission President Streator, who recently turned down a similar proposal for a meeting with FAA officials proposed by Glendale Mayor Larry Zarian.

Streator said she believes such meetings are a waste of time because the FAA has already made its position on noise restrictions clear.

“It is ridiculous to go back again,” she said. “I would hope [Berman] would stay out of it. . . . It’s only going to fuel the fire.”