Airport Money Crunch Ahead

In the aftermath of the Sept. 11 terrorist attacks, John Wayne Airport is projected to lose $9.2 million in revenue over the next 12 months and spend $12.6 million more for heightened security, according to county records obtained Thursday.

But officials said John Wayne will be able to survive the economic blow and eventually recover because they routinely keep tens of millions of dollars in cash reserve. Financial statements show the airport had at least $38 million in reserve a year ago.

“We are not worried about a loss this year,” said airport Deputy Director Christie McDaniel. “John Wayne Airport survived the Gulf War and the Orange County bankruptcy. We will weather this and meet our expenses.”

John Wayne, which handles 7.8 million passengers a year, suffered a 58% drop in travelers in the week following the attack, according to a memo by airport director Alan L. Murphy. But officials said Thursday the number of passengers has increased somewhat this week, though exact numbers were not available.

Officials project the $9.2-million loss will result from declines in fees paid to the county for aircraft landings, concessions and car parking and rentals. John Wayne normally has a security budget of $4 million a year, but officials said that the cost will quadruple in the coming year to $16.6 million.

“The implementation of new security regulations will have significant and long-term ramifications for the way airports operate,” Murphy stated in his memo, “and the costs associated with implementing these regulations will impose a substantial burden on airport finances.”

Airport officials declined to disclose what type of security measures they are taking to protect passengers, but sheriff’s deputies and private guards have been stationed around the clock at the entrances to underground and surface parking lots and are searching all cars before they are parked.

Deputies have been posted at some doors that lead to ramps and aprons to check workers’ badges against other forms of identification. They also conduct random patrols with dogs through the airport concourse.

At John Wayne Airport, some travelers said safety is now their top priority--even if it means paying more to fly.

Don Davey, a businessman from Denver, said he cares about the cost, “but I don’t think there’s any way around it. I feel like we’re doing a lot better [with security] now than we ever have. But I’ll feel a lot better when we get air marshals on all flights.”

McDaniel cautioned that the projected revenue losses and costs of security could change in the months ahead. Murphy could not be reached for comment.

Until now, John Wayne Airport was considered a cash cow for the county, funding not only airport operations but the planning process for a proposed second commercial airport at the closed El Toro Marine Corps Air Station.

But reacting to the projected losses and additional cost of security, Supervisor Todd Spitzer said Thursday he will consider a proposal to suspend the use of airport cash reserves to fund the El Toro effort.

Spitzer, an opponent of the El Toro airport plan, said it might be prudent to keep the reserves on hand in case John Wayne Airport needs them.

The airport’s 2001 business plan states that about $36 million of John Wayne’s reserves were spent on El Toro’s planning from 1998 to 2000.

The business plan states that continued use of reserves for El Toro could result in fee increases for passengers and other airport clients at John Wayne. In addition, the plan states that the airport’s ability to retire its bonds early--a traditional goal of the Board of Supervisors--will be diminished.

“Even without the crisis, we have significant financial issues we need to confront,” Spitzer said. “El Toro has been bleeding the airport’s reserves. The cash cow is not only running dry, it is facing a famine.”

Spitzer said he wants a full report about John Wayne’s finances at the Board of Supervisors’ Oct. 16 meeting. It is a critical date because the board also is scheduled to consider final approval of El Toro’s environmental review.

Depending on what the presentation shows, Spitzer said he might call for a moratorium on all reserve funds being transferred to the El Toro planning effort.

Supervisor Chuck Smith, an El Toro proponent, argued that it is far too early to predict the financial impact on John Wayne, noting that the projections are based on short-term conditions that may change. He said there is still a chance the federal government might take over airport security, reducing the county’s costs.

Smith also said he was not surprised that Spitzer would use the terrorist attacks on the World Trade Center and the Pentagon as a tactic in the fight against converting the base to a commercial airfield.

“The anti-airport contingent on our board would do anything in their arsenal to try to stop the planning effort of El Toro airport,” Smith said. “We’re not going to let this kind of a glitch stop our long-range planning for the future of Southern California. . . . That’s just caving in to terrorists.”

As for John Wayne passengers, who already pay higher prices for the convenience of a smaller airport, some said they would be more than willing to spend even more as long as security improvements are substantial and more evident.

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Lower Revenue, Higher Costs

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