LAX facing head wind in international travel

Los Angeles International Airport is lagging well behind other big-city U.S. airports in the contest to attract highly prized foreign travelers at the levels seen before the global recession caused a steep dip in international trips.

Large airports in California and most other regions of the country have surpassed their pre-slump foreign traffic numbers from 2005, sometimes dramatically so, according to passenger data examined by The Times.

But LAX, which is spending billions to regain its footing as the premier international gateway on the West Coast, still has 4% fewer international arrival and departures compared with its peak of nearly 17.5 million six years ago.

Overall, LAX, the nation’s third busiest airport, has the second-lowest recovery rate among the 10 U.S. airports that handle the most international passengers. Only Chicago’s O’Hare ranked lower. In first place was Hartsfield-Jackson Atlanta, where the foreign travel volume soared 46%. LAX still ranks third in the number of international passengers served.

A number of factors have stalled a resurgence in foreign travel at LAX, airport officials and airline industry analysts say. Among them are the prolonged effects of the worst economic downturn since World War II, changing travel patterns and natural disasters overseas, most notably Japan’s devastating earthquake.

A particular drag on Los Angeles’ performance was the 2010 bankruptcy of Mexicana Airlines, LAX’s largest international carrier. Experts also note that the terminal complex lacks a convenient transit system and that international passengers often encounter a tedious and time-consuming arrival process — creating incentives for some travelers to use other gateways, such as San Francisco.

LAX officials acknowledge that they face significant challenges. But they point to two straight years of 5% annual increases in foreign travel — a trend they believe will continue as marketing efforts proceed and new international facilities are completed by 2013.

“I’m not that concerned about the figures. But I say that with reservations,” said Gina Marie Lindsey, executive director of Los Angeles World Airports, which operates LAX. “We should not become complacent. It’s very competitive out there. Everyone is scrambling for the international passenger.”

The reasons are simple math. A single international flight traveling round-trip daily for a year from LAX generates $623 million in business activity and supports 3,120 jobs in the region, according to a 2006 study by the Los Angeles County Economic Development Corp.

Boosting foreign travel at LAX — and the accompanying airline and passenger fees — is also a critical part of the financing plan for the $1.5-billion renovation and expansion now underway at the Tom Bradley International Terminal.

The overhaul will eliminate remote gates where international passengers must exit planes on the tarmac and board buses to reach the customs and immigration station.

The refurbished terminal, which is part of a $4.1-billion package of airport improvements, will feature upscale restaurants and retail stores. A new shuttle system also is planned to transport foreign travelers to connecting domestic flights.

“All the right things are being done,” said William C. Allen, president and chief executive of the Los Angeles County Economic Development Corp. “We will see more improvement in 2012 and 2013 as the economy gets better and the new Bradley terminal is opened. The trends are in our favor.”

With unemployment rates of 11.7% and about 13%, respectively, in Los Angeles County and the Inland Empire, Allen said the recession hit this region harder than other parts of the country served by major international airports. Joblessness in those areas now ranges from a low of 6.7% in Maryland to a high of 9.9% in Florida.

John Smith, owner of American Travel Bureau, a large agency based in Palmdale that arranges trips to more than 80 countries, said his business “really dropped off in the recession.” He says he sees some signs of hope, however. “International travel is starting to pick up again. The dollar is stronger than it was, which we are grateful for.”

Another particular problem for Los Angeles, industry analysts say, was the March 2011 earthquake that devastated northern Japan and brought air travel to and from that nation to a standstill.

“My business went to zero,” said Kiyoshi Tan, the branch manager at All Japan Tours, a travel agency in Ontario in the Inland Empire. He estimates that his business has recovered about 50%, but remains slow because of the disaster and a strong yen, which has increased the cost for Americans to visit Japan.

Last year, LAX got some help in foreign travel from flights added by Turkish Airlines, Iberia Airlines, Delta Air Lines and All Nippon Airways, as well as a surge in discounted flights from China. Singapore Airlines and Korean Air also introduced Airbus A380 service at the airport. The aircraft is the largest passenger plane in the world.

But A380 service has not been added as fast as expected at LAX, other international carriers have reduced flights or added service elsewhere in the country, and the years ahead could throw up other obstacles to steady growth.

Uncertainty surrounds the current bankruptcy and reorganization of American Airlines, a major LAX carrier that could reduce its domestic and international service.

Some industry analysts, such as the research arm of the International Air Transport Assn., estimate that foreign travel to North America could decline this year if the European debt crisis worsens.

“It could be a very challenging year,” said Perry Flint, an association spokesman. “If there is a full-blown crisis, international carriers could lose $8.3 billion.”

Industry experts also say that new terminals don’t necessarily generate more passengers and that LAX officials should be mindful of the fees being imposed on air carriers to help pay for ongoing airport improvements.

“Keeping costs down is critical,” said Bill Swelbar, an airline analyst at the Massachusetts Institute of Technology’s International Center for Air Transportation. “When we take into account the costs of international service, fuel surcharges and airport charges, it can become real money for an airline. For a traveler facing increased ticket prices, it can become the difference between taking a trip and not taking a trip.”

Indeed, airlines increasingly have the option not to use LAX because of advanced aircraft designs. Longer-range jetliners arriving from overseas now can bypass Los Angeles and fly directly into the nation’s interior. In addition to the A380, the new Boeing 787 Dreamliner has a range of nearly 10,000 miles.

“Long-range planes make it possible to go a lot more places non-stop than before, like Dallas,” said Lindsey, the Los Angeles airport director. “Whether we will be net losers or winners has yet to be seen. We hope we will come out winners.”

Lindsey acknowledged that LAX needs to ensure that the cost of improvements does not go too high and that airport fees remain competitive with other gateways.

But Michael Boyd, president of Boyd Group International, an aviation forecasting and consulting firm based in Colorado, said airport fees are not the primary concern of international carriers when deciding where to add or locate service.

“If high costs were an issue, John F. Kennedy would shut down,” Boyd said. “The issue at LAX is efficiency. They have to build new facilities. It’s been saddled for years with a 1950s airport concept.”

dan.weikel@latimes.com