Effect of Attacks Felt Acutely Around LAX

With air travel slumping, the economic engine believed to power a tenth of the Southern California economy is starting to sputter.

Los Angeles International Airport--the world’s third-largest--moves 70 million passengers and 2.1 million tons of air cargo a year. It is believed to generate more than 400,000 jobs and $60 billion in annual economic activity for Southern California.

On airport grounds, that means everyone from airline mechanics and caterers to concessionaires and skycaps. And in the vicinity, the round-the-clock operation feeds the hotels and rental car companies that line the nearby thoroughfares. Hundreds of customs brokers, freight forwarders and packagers rely on the airport for business.

Experts say that although it’s too soon to quantify the damage in dollar terms or predict how long the slump will last, the region’s economy will take a big hit.

“There’s a real chain reaction,” said Steve Erie, a UC San Diego professor who studies the economic impacts of airports. “The question is, is it going to last more than 18 months?”

Airport-related jobs put food on the tables of tens of thousands of families in low-income minority neighborhoods such as South-Central, Inglewood and Lennox. Government too has benefited: About $6.5 million a year filters into the city of Los Angeles’ general fund from airport parking taxes alone.

But last week’s terrorist attacks threaten to disrupt the whole equation. Nationwide, the airlines have announced a 20% reduction in flight schedules and 80,000 layoffs--a number that is expected to grow. And Los Angeles airport officials estimate that those cuts in airline and supporting workers are nearing 15,000 locally.

Already, Los Angeles World Airports, the city agency that operates LAX, is losing $1.8 million a day because of increased security costs and reduced revenues from parking, landing and other fees, almost all from LAX. The city’s general fund is losing $18,000 a day, airport officials say.

Luis Ramos has worked for Gate Gourmet--which provides in-flight meals for LAX--for more than a decade, working his way up to an $11-an-hour job. But the thread that keeps his Inglewood family of four fed is now fraying: One-fifth of his union bargaining unit has been laid off as airline cuts filter down.

Forty percent of airport service workers live in Inglewood, Lennox and Hawthorne, and many more come from South-Central Los Angeles, said union officials who have conducted organizing campaigns.

Last year, the airport awarded $110 million in contracts for construction, consulting, airfield equipment and the like--more than a third of that to minority- and women-owned firms, said airport officials.

To economic development proponents, the airport promised a path to revitalization: “To change the economy, LAX offered a little hope,” said Dean Jones, executive director of the South Los Angeles Economic Partnership, which met with airport officials in June to express support for an expansion that would create yet more jobs.

The expected job losses come at a time when unemployment rates already are climbing in the region’s minority neighborhoods. A student of Los Angeles Southwest Community College teacher Kermin Maddox was scrambling last week to sign up for more classes after receiving his layoff notice as a Continental Airlines mechanic.

“When the economy takes a hit like that, people in low-income communities are the first to go,” said Maddox, who also owns Dakota Communications, a company that has a contract with the airport to help link businesses and job seekers in minority communities with airport opportunities. “The potential negative effects here could be catastrophic.”

Among the hardest hit are the 125 concession outlets that line the airport terminals. Even if passenger travel returns to pre-attack levels, the altered security landscape could have a lasting--and devastating--effect on concessionaires that rely largely on “meet-and-greet” customers bringing or picking up friends and family.

For now, only ticketed passengers are allowed past security checkpoints, depleting terminal concourses of customers.

Clarence Daniels operates a variety of LAX stores as president of Concessions Management Services Inc. Sales at his Cinnabun stand are down 30%.

“We’ve cut employee hours, and we’re about to lay some people off,” said Daniels, who employs 71 and has put a $400,000 renovation of the La Cantina bar on hold.

Of the $424-million operating budget this year, about half comes from concessionaires, said Los Angeles World Airports Chief Financial Officer Karen L. Sisson.

Hotels and car rental operations that rely on LAX for the bulk of their business fared well for a few days, when travelers were stranded and waiting to leave, but business has since plummeted, many say.

“Just like everybody else on this strip, we’re trying to survive,” said Oscar Gonzalez, manager of Super 8 Motel in Inglewood.

Like hotels, which were entering their slow season when the crisis slammed them, the cargo industry already was reeling from a dip in trade.

The attacks made matters worse. Heightened security means the goods only of known shippers will be loaded into passenger planes, a blow to those companies without their own fleets.

“They’re laying off. Some of the smaller ones are taking second jobs to support themselves,” said Shannon Howe, executive director of the Inglewood/Airport Area Chamber of Commerce, which counts 150 freight forwarders in its membership alone.

“This is peak season. It should be a lot busier,” said David Gibson, whose Los Angeles branch of Hong Kong-based freight forwarder Jardine Logistics is down about 30%, even with resumed flights.

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A Major Player

A decline in air traffic could put a dent in LAX’s contribution to the regional economy

Economy: Generates $60 billion in annual economic activity, or 9% of the economic output of Southern California.

Jobs: 408,000 jobs in the region are attributable to LAX, including 328,000 in Los Angeles County.

Direct employment: About 60,000 people work at or near LAX, including airline-related fields.

Taxes: Parking revenues alone generate $6.5 mllion annually for the city of Los Angeles.

Source: Los Angeles World Airports