No Benefit Found in Plan to Modernize LAX

Mayor James K. Hahn’s proposal to modernize Los Angeles International Airport would cost about $9 billion but provide no discernible benefit for the local economy beyond the short-term jobs created during construction, according to an economic analysis to be released today.

If the city refurbishes the airport as Hahn has proposed, LAX would contribute about $64 billion a year to the region’s economy in 2015 -- the same amount it would generate if no project were completed, a review of city documents found.

A remodeled airport would account for about 350,000 jobs in the region -- the same number that would directly result from airport operations in 2015 if nothing were done to improve the 75-year-old facility, economic studies show.

In the short term, Hahn’s plan would create nearly 50,000 construction jobs. The wages paid to those workers would increase the spending power of local businesses and households, economists say, but only during the dozen years the airport is under construction.

The economic analysis is only one part of the long-awaited environmental studies for Hahn’s plan that are to be released today. The voluminous studies, expected to come in at 5,323 pages and 10 volumes, will provide plenty of information for policymakers to consider, including details on how the project would affect airport security, traffic, noise, schools and other matters.

Two Plans

Although the report will include economic findings for Hahn’s plan, it is not expected to provide a detailed comparison with alternatives proposed by the mayor’s predecessor, Richard J. Riordan. Environmental studies completed for Riordan’s expansion plans showed that limiting the airport to 78.9 million annual passengers, as Hahn proposes, would have the same economic impact as leaving the airport unchanged.

The mayor’s plan, the 33rd modernization proposal in eight years, would dramatically alter the airport by demolishing Terminals 1, 2 and 3, and by replacing parking structures with a new terminal complex. Private vehicles would be rerouted to a new check-in facility a mile east of the airport.

The mayor hopes to discourage growth at the airport beyond 78.9 million passengers a year by decreasing the number of gates where airlines can park jets -- to 153 from the current 163 -- and by spreading air traffic among other airports in the region.

Limiting the number of travelers who use the facility could slow the engine that powers about one-tenth of Southern California’s economy, experts say.

“It’s going to be a drag on our economic growth,” said Jack Kyser, chief economist of the Los Angeles County Economic Development Corp. “You have so many industries that depend on good air service. If the airport isn’t generating more traffic to service these industries, that’s a concern.”

If the airport isn’t able to grow, other industries that prop up Southern California’s economy, such as tourism, apparel and furniture, would also suffer, he added.

Hahn declined to comment on the economic analysis of his modernization plan before today’s official release, but his office issued a prepared statement saying the mayor is “delivering on his pledge to make Los Angeles International Airport the safest and most secure airport in America.”

As the world’s fifth-busiest airport, LAX served 56.2 million passengers and 1.9 million tons of cargo last year. At its peak in 2000, when the airport handled 67.3 million passengers and 2.3 million tons of cargo, it generated $65 billion in direct economic output and 425,000 jobs, according to city documents.

The airport employs everyone from airline mechanics to caterers to concessionaires and skycaps. And within 20 miles of the facility, where 78% of the jobs generated by the airport are located, the facility supports hotels, rental car companies and hundreds of customs brokers, freight forwarders and packagers, according to economic studies for Riordan’s airport plan.

At Los Angeles City Hall, the economic findings are adding to growing doubts among City Council members about Hahn’s proposal.

“When you are finished spending $9 billion and 12 years of reconstruction and the end result is you are not enhancing the economic engine, then you really have to evaluate what does that mean for the city other than spending $9 billion in construction costs,” Councilman Bernard C. Parks said.

The council will ultimately be asked to choose among five alternatives to revamp the airport. They are: Hahn’s plan, which the mayor says emphasizes security and safety; three expansion alternatives devised by Riordan; and a no-project option, effectively leaving the airport as it is.

Riordan’s plans would allow the number of airport passengers to grow substantially, and would therefore generate a significant benefit to the economy, according to an analysis released in 2001. For example, Riordan’s Alternative C, which would allow the airport to accommodate 89 million passengers a year, would contribute $82 billion in direct economic activity annually to Southern California, city documents show.

With Hahn’s plan, “we’re getting a master plan piggybacked on the Riordan master plan,” said Steven Erie, a UC San Diego political science professor. “And we’re getting considerably less bang for our buck in terms of the region’s economy.”

More Study Urged

Local business leaders expressed concern Tuesday about the economic projections, calling for further studies on how Hahn’s plan might affect their operations.

“No one wants to spend a huge amount of money to not be able to have future growth,” said Nelson Zager, managing director of the Crowne Plaza Hotel on Century Boulevard near the airport.

The airport is a mixed blessing for surrounding cities, which benefit economically, but would suffer most of the negative impact generated by any modernization plan. The Westchester-Playa del Rey area, for instance, has at least 2,700 residents employed at the airport, but also must deal with noise and traffic.

“It is a difficult issue for us because in our case we get the good and the bad,” said David Voss, president of the Westchester/LAX-Marina del Rey Chamber of Commerce.

About 5,000 Inglewood residents are employed at the airport, according to Inglewood City Manager Mark Weinberg, but he said residents of Inglewood do not want economic benefits “at the expense of a great deal of negative environmental impacts.”

The airport’s airlines, which would be asked to shoulder half the plan’s cost through higher landing fees and terminal rents, have expressed concern about the cost of Hahn’s proposal and its effect on the economy.

The mayor’s plan to limit the number of passengers using the airport by decreasing the number of gates could cause low-fare carriers that operate smaller jets to leave the airport, experts say.

“The effect of constraining LAX will very likely be to shift it to larger aircraft, which will force out some of the service that is currently being provided by smaller aircraft to domestic markets,” said Dan Kasper, managing director at LECG, a consulting firm that works with the aviation industry.

In recent weeks, Southwest Airlines, the airport’s third-largest carrier, has sent about 1,000 handouts to elected officials and business and community leaders that detail the airline’s contribution to Southern California’s economy.

The airline’s 2.9 million Los Angeles-bound customers spent $2.5 billion locally in 2002, and the carrier employs 650 people in the area, the handout and an accompanying letter say.