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Airport Diplomacy

Far away, deep in the county of San Bernardino

June 19, 2003

By CHIP JACOBS

Thirty-six years ago, during the money-loathing Summer of Love, Los Angeles got control of the air at a bead-like price.

For $1.2-million and future concessions, the city bought a postage-stamp airport in the dusty flatlands of the Inland Empire in the era before the subdivisions and chain-malls invaded. Though dry in detail, if not colonial in result, the 1967-transaction provided each side with something immediately useful. Los Angeles International Airport secured a backup landing strip for those nights coastal fog (or smog) socked in its runways. Ontario inherited a strapping big-city patriarch that could lure commercial jetliners to the scruffy, San Bernardino County outpost while chasing federal dollars to expand it.

Ontario’s airfield was barely more than parched earth and booster dreams when L.A. came along. It had taken World War II training needs to convert the dirt runways there to concrete, and defense contractors after that to bulk up the facilities. The first passenger terminal, one converted from a hybrid chapel-theater-canteen, didn’t rise until the 1960s. It was bush league at best.

Today you can relegate all that to the scrapbooks.

Ontario International of 2003 is mid-sized hub on par with Burbank-Glendale-Pasadena airport to the west and John Wayne to the south. Last year, 6.7 million passengers tromped through gleaming $224-million terminals with Southwest, United Airlines and other big carriers at the gates and freight operators like Federal Express and UPS ferrying 547,000 tons of cargo annually on the side. The parking lot is so vast there’s a shuttle for it.

For all that girth – and quantum advances in aeronautics for jetliners flying in bad weather – Ontario remains in the hands of taxpayers a county away. It is the oddity in the L.A. municipal portfolio, the equivalent of owning Puerto Rico from Malibu.

Someone driving from Los Angeles’s eastern boundary to the airport along the San Bernardino (10) Freeway crosses through the cities of Monterey Park, Alhambra, Rosemead, El Monte, Baldwin Park, West Covina, San Dimas, Pomona and Montclair to reach it.

“It’s an anachronism,” said Barna Szabo, a Westside-based consultant on airport and harbor issues. Comparing what the city paid against its current value, he said, “ranks it up there with the purchase of Alaska.”

Only the Los Angeles Department of Water and Power, which stakes partial ownership of power plants in Utah and Arizona and controls land for the Los Angeles Aqueduct running south from the High Sierras, has title to so much beyond city limits.

Ontario, the town, is no Podunk anymore, either – not with 162,000-plus citizens, a roaring retail and industrial base, a museum, a youthful population and a seriously strategic locale for commuters and the Vegas-bound.

Selling back the 1,000-acre complex to the natives would produce immediate gold. It could net the L.A. airport authority, some believe, in excess of $1 billion – money it could desperately use in the post 9-11 world. Ontarians, if they could ever amass enough bond money to finance it, would be able to plant their flag at what is their leading job wellspring. The airport is credited with breeding $6 billion a year in direct and indirect activity. The colossal Ontario Mills Mall, the city’s pride and joy, can’t come close to that.

But why make a bid for what you don’t need to even rent? Ontario officials have wised up to the idea that L.A. can’t go it without them.

Los Angeles needs a malleable Ontario Airport as a relief valve for LAX over the next twenty years. The region is expected to overlay a Chicago-size number of people (6 million) on top of the existing urban sprawl during that period, and government is backpedaling to keep up.

Los Angeles Mayor Hahn is doing most of that footwork. To pacify opponents of a proposed $9 billion-$10-billion modernization at LAX, he has recommended capping passengers at 78-million a year there. What load LAX can’t handle, Ontario and Palmdale, another city-owned airstrip that has flopped so far as a commercial field, must try to. LAX is already strained 40 percent over capacity.

“Los Angeles needs us to accommodate growth, and we can do that as long as there is the infrastructure to mitigate it,” acknowledged three-term Ontario Councilman Alan Wapner. “If they sold the airport, they would gain cash flow from the sale, but they would lose control over aviation in Southern California.” By allowing L.A. to own it, Ontario “realizes all the benefits without taking any of the risk.”

Orange County voters’ rejections of a proposal to convert 4,700-acres at the former El Tore Marine Corp base into a commercial airport has only padded Ontario’s hand. So has the political friction that decapitated a Southern California regional airport coalition. Its charge: figuring out how to distribute among 11 airports a passenger crush expected to double by 2025. The cargo load could quadruple by then.

The challenge is dispersing those droves. And from L.A.’s vantage, if you don’t own it, you can’t manage it.

Burbank, John Wayne and Long Beach airports face noise, anti-expansion and NIMBY pressures that relatively pro-growth, freewheeling Ontario International doesn’t. Once yearly passenger traffic there hits 10 million, it triggers pre-set talks for construction of a third terminal. Future iterations could mean 30 million yearly passengers, regional planners say.

Fact is Ontario’s 1,000 acres is choice, albeit distant real estate that L.A. can’t ignore. Nor has it. Hahn, for instance, recently persuaded a division of shipping giant Evergeen to go east when it was seeking to expand its air cargo operation at LAX.

“We said we don’t have space there, but boy do we have a deal for you out at Ontario,” said Nancy Castles, spokeswoman for the Los Angeles World Airport, the department that the runs the city’s four airports. “We know LAX isn’t going to be our only airport to handle all our future demand. It didn’t have anything to do with opposition to the LAX master plan.” If LAX and Ontario “were two separate entities, we wouldn’t be able to leverage.”

And leverage is not an unappreciated commodity in the L.A.-Ontario airport dynamic.

The Hahn Administration this summer asked the federal government for permission for the city to lease El Toro and revive the airport proposal there – a low odds bid not getting much Orange County political love. Ontario City Hall knows this, just as it realizes L.A.’s clout is vital for it to reel in federal money for a proposed magnetic-levitation train system it wants to connect the airport (and thus its city) to Anaheim and beyond.

Ontario’s relationship with Los Angeles officials hasn’t always been as outwardly harmonious as it is today. Before 1994, it was sometimes turbulent, and there was periodic talk about trying to buy the airport back.

“It was out of frustration,” Councilman Wapner said. “We were considering a breach of contract because the L.A. Department of Airports was dragging its feet about building the new terminals.” Officials there “said the right thing, (but) their actions didn’t follow their words.”

Today, the only rumblings about the city or county grabbing title to Ontario International are kicked up when the citizenry gets riled over airlines fares or flight schedules, said Debbie Graham, a travel agent and former president of the Friends of Ontario International Airport support Group. The travel slump incited by the terrorist attacks, she said, is a much bigger deal than L.A.’s long distance possession. (Post 9-11, Ontario’s passenger load has dipped slightly and budgets have been stretched by security demands.)

“There is intermittent talk about” control, Graham added. “It’s a hot issue and then it goes on the backburner.”

Five years ago, with then-L.A. Mayor Richard Riordan’s LAX-expansion plan stalled by slow-growth naysayers, Ontario airport finally came of age. Two new terminals were inaugurated, along with a new ground-transportation center, access roads and other improvements in a $384-million makeover. Passenger-facility taxes and federal subsidies are financing $102 million of the terminals’ cost. Another $122 million — $277 million with debt service — is coming from revenue bonds issued by Los Angeles World Airport, according to LAWA chief financial officer Karen Sisson.

Those bonds are backed by the airlines, which lobbied for the overhaul and are the 800-pound gorilla in the food chain anyway.

“The bottom line is that the airlines determine where they fly from,” said Ontario airport’s manager Jens Rivera. “You can have all the wonderful people in the world trying to get an airport going, but if the airlines don’t sell the advantages, they won’t go. If there was a new buyer and seller, the airlines would have a say in it.”

A Southwest Airlines spokesperson issued a generic statement, saying the company is “pleased” with its current deal there and would defer to the community about an ownership change.

Politically, it’s about L.A.’s efforts to juggle objects of varying mass. There are domestic and international passengers coming to Southern California in waves, but coming to a region with wildly varying appetites for air-traffic. There is thick competition for federal airport bucks from places like Phoenix and Las Vegas. There is the airlines’ hunger for market share. Least sexy, but just as important, is moving stuff – the machine parts, the E-bay goods and blueprints that don’t sit on trucks or train.

It’s this factor that by itself that may be why the city hasn’t tried jettisoning Ontario.

“It gives L.A. a major option to reshape how load factors are distributed,” said Szabo, the consultant. “So even though Riverside and San Bernardino have experienced enormous growth that could make the airport independent, by keeping it the city can move players around on the chessboard.”

Under the present arrangement, LAWA manages Ontario just like any other facility it owns outright. Mayor-appointed airport commissioners run the show.

What separates Ontario from LAX, Palmdale and Van Nuys, which only caters to general aviation, is money: since the mid-1990s, airport revenues cover Ontario’s operating expenses.

It’s the big-ticket construction projects that LAWA, a quasi-independent city department, subsidizes. It would also be on the hook, or partly anyway, if there were lawsuits following a major air disaster – a fact many are aware of.

Ontario officials stress the foreign ownership of the airport is working. City Manager Gregory Devereaux said property-related moves like ground access and master-planning are always discussed with them. The city pockets some of the sales tax, fuel tax and parking fees from the facility, too. The parking alone is worth about $5 million for city coffers.

“Their aren’t major decisions that affect the direction of the airport that occur without them being discussed with us first,” he said. “It would be one thing if LAWA was trying to take the airport in a direction we didn’t want, but it doesn’t. (Ownership) isn’t something that gets regularly discussed.”

This version is nearly identical to the one published in L.A. CityBeat. Copyright Chip Jacobs