LAX is taken off flight plans
Los Angeles International Airport, battered by financially devastated domestic airlines, is now headed for trouble from overseas.
Foreign carriers, until now a bright spot for the airport in an increasingly dismal year, are slashing flights at LAX amid high fuel costs and slowing international demand, dealing yet another blow to Southern California’s economy.
For Southern California passengers, the cuts would add to travel woes including fewer nonstop flights to overseas destinations, higher fares and crowded planes, experts said.
“It’s kind of sad,” said Bob Covington, a Mid-Wilshire district resident who often flies out of LAX for trips overseas because of his job as an event manager for photo agency Getty Images. “I’m learning to live with less and pay more.”
International airlines that seemed more resilient are now either cutting service altogether or cutting flights this fall, much like the steps U.S. carriers have taken to cope with low demand and high fuel costs. Oil prices have fallen in recent weeks but fuel still remains costly for carriers.
Although improvements to the Tom Bradley International Terminal at LAX are not in jeopardy for now, airport officials are expected to be under pressure to rethink paying for certain amenities or look for ways -- including a hiring freeze -- to cut costs.
The anticipated cuts surprised analysts, economists and airport officials because overseas flights seemed robust and they were seen as a way for LAX to offset the sharp drop in domestic service.
Earlier this year, several foreign-based airlines announced plans to start new service at LAX, including Emirates Airlines’ first nonstop flights to Dubai in October, Vietnam Airlines Corp.'s service to Ho Chi Minh City in the same month and V Australia -- part of the Virgin Blue Group -- with flights to Sydney in December.
But high fuel expenses and weakening economies overseas are prompting other carriers to reduce service.
Air India plans to eliminate its six flights a week between LAX and Frankfurt, with connecting flights to New Delhi and Mumbai. In late October, Thai Airways will no longer offer nonstop flights to Bangkok and Cathay Pacific Airways Ltd. said it was suspending one of three daily flights between Hong Kong and LAX.
“We have to maximize our earnings during this difficult period,” Tony Tyler, Cathay Pacific’s chief executive, said in a statement. He added that the airline was “reshaping” its schedules “where necessary to ensure we fly aircraft to where we can cover our costs and also make some money.”
Other foreign carriers curtailing service include Ireland’s Aer Lingus, which is pulling six of its weekly flights from LAX, and Malaysia Airlines, whose weekly flights will drop from 14 to six.
The cuts by foreign carriers will add to sharp reductions for overseas flights being made by U.S. airlines. UAL Corp.'s United Airlines is slashing 31% of its overseas flights from LAX, while Delta Air Lines Inc. is cutting many of its flights to Mexico and Latin America.
Gina Marie Lindsey, executive director of Los Angeles World Airports, which operates LAX, said the expected drop in international flights was a little higher than she expected.
“There is always a dip in the fall, but this is more than usual,” Lindsey said. “I don’t yet know how this will settle out.”
In all, at least 11% of international flights at LAX -- both by U.S. and foreign carriers -- will disappear in November compared with the same time last year, wiping out nearly a decade’s worth of traffic gains.
The effect on the region could be significant as the cuts could erase more than $9 billion in local economic activity as fewer foreign visitors stay at local hotels and visit amusement parks. International passengers, on average, stay longer and spend more per trip than U.S. visitors to Southern California.
“International carriers, who some thought were insulated from these problems, are now facing the same situation as the domestic carriers,” said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp. “It’s definitely a threat to the local travel and tourism industry.”
A 2007 study by the organization estimated that one daily transpacific or transatlantic flight on a wide-body jet pumps about $620 million annually into the local economy and sustains 3,120 jobs. LAX is scheduled to lose at least 15 long-haul flights in the fall.
The cuts are a setback for efforts by airport officials to pump up international traffic.
LAX officials are planning to make as much as $2 billion in improvements to the Bradley terminal by January 2012. The work includes a new taxiway, rebuilding the airport’s central utility plant, and new gates on the west side of the terminal that can accommodate large commercial aircraft, such as the 500-passenger Airbus A380.
The anticipated drop in international flights underscores the need to hold down the cost of the Bradley terminal projects, said Frank Clark, executive director of LAXTEC Corp., a trade organization that represents international airlines at LAX.
Lindsey said the airport also would try to save money by limiting hiring and cutting administrative costs. Meanwhile, LAX will need to bolster revenue from other sources, such as parking, concessions, and other services, she said, adding, “No doubt about it, we have to be very cost-effective in planning the project.”