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In his last column for the magazine before his untimely death, Mark Lacter checks in on Ontario, which was supposed to be LAX’s sister. That plan, and its failure, says a lot about the cost of flying high in L.A.
An airport-bound express train is pulling out of the Veterans Administration transit terminal off Wilshire Boulevard in West Los Angeles. It’s not going to LAX but to the less congested Ontario International Airport, 50 miles to the east, in San Bernardino County. Including stops at Union Station and in the San Gabriel Valley, the trip will take only 30 minutes, thanks to a magnetic levitation system that allows speeds of up to 250 miles per hour. No worries about bags, which already have been checked at the VA station. Upon arriving at what has become the state’s third-busiest airport (after Los Angeles International and San Francisco), passengers head to the boarding area for flights to dozens of cities, among them New York, Chicago, and Atlanta.
Maybe in our dreams. The high-speed rail system that was proposed by regional planners in 2002 (and later presented in a 59-page report) wound up being a nonstarter, and traffic at Ontario has been plummeting as airlines sharply cut back on flights or eliminate service entirely. With few passengers from L.A. and Orange counties, along with the effects of a crushing recession, Ontario is at best a middling market—not the major embarkation point that boosters had once expected. This year’s passenger count will barely reach 4 million, down from a peak of 7.2 million in 2007 and below the laughable 30 million people who, with the help of the dedicated maglev train, were supposed to use Ontario by 2030, according to a projection by the Southern California Association of Governments. Business has fallen so much that aside from an early-morning rush, the airport shops and terminal areas are virtually empty. Smaller regional jets have replaced many of the larger-body aircraft. The farthest east you can go is Chicago—once a day.
People in Ontario feel rooked, and not only because the train idea went poof. They claim that their facility, which is owned and operated by Los Angeles World Airports, the umbrella agency that also owns LAX, hasn’t been run well. Bloated staff (trimmed by half in 2008), minimal efforts to attract airlines, little development of the 1,000-plus acres of LAWA-owned property adjacent to the airfield—the list of complaints is long. A group called Set Ontario Free, which seeks to take ownership of the airport, produced a video in which aerial shots of empty gates and barren land parcels are set to mournful music. The City of Los Angeles says it’s doing what it can, maintaining that planes don’t fly into Ontario because, well, it’s Ontario, one of the three midsize cities east of Los Angeles that anchor Southern California’s Inland Empire. That’s not a poke—simply the reality that airlines would prefer to concentrate at LAX. “If there’s a market there, then the airlines will serve that market,” says LAWA’s executive director, Gina Marie Lindsey. “But unless they want to do it, it’s not going to happen.”
The airlines will tell you they’re happy to fly to Ontario or LAX or Timbuktu—provided the numbers make sense. That means being able to generate enough revenue to more than offset the cost of jet fuel, wages, and aircraft. It works the other way, too: Fewer passengers lead to fewer flights, which lead to still fewer passengers, which lead to still fewer flights. Compounding matters, the carriers have drastically altered their business models following a decade of heavy losses due to soaring fuel prices and the crippling recession. Some of the changes involve those bothersome fees for baggage check-in, additional legroom, and other “extras” as a way of generating new revenue without having to jack up the price of a basic ticket. In addition, airlines are reducing the number of planes in the air and focusing on dominant airports like Los Angeles International. Operating from a single, full-service facility is more efficient for everything from arranging international connections to handling bags.
It also helps with selling tickets; airlines want to maximize the price of each seat, and that works better at a larger airport. Using a computer-aided process called “yield management,” carriers can adjust fares according to demand on any particular flight at any particular time. If you’re traveling from Los Angeles to New York, a round-trip coach ticket might run as low as $350 if you can book weeks in advance. The closer to flight time, however, the fewer seats are going to be available and the higher the price is likely to be. A day or two before departure, a coach ticket can cost more than $1,000. Every flight might have a hundred or more fares—and margins are so thin that revenue from just one seat can mean the difference between profit and loss. “Unlike the grocer who sells his ripe bananas at a very low price, this is the reverse process where you have to determine how many ripe bananas you can sell at a higher price,” says Peter Belobaba, a researcher at MIT’s International Center for Air Transportation. “Whatever you fail to sell becomes of zero value.”
This new strategy, which is being employed in markets around the country, has come at the expense of second-tier airports that can’t draw the same volume of customers. Among local facilities, the most noticeable decline has been at Ontario, where traffic through August fell 9.5 percent compared with 2012. Burbank’s Bob Hope Airport, where service also has been cut, is down almost 5 percent (through July). While Long Beach’s traffic keeps increasing, its primary tenant, JetBlue, is carrying fewer passengers than it did in 2012 because additional flights are being offered at LAX. Orange County’s John Wayne Airport is starting to recover, but only after losing more than 11,000 flights between 2007 and 2012. LAX lost flights during the recession as well, though the number of available seats is practically unchanged because the airport can accommodate much larger planes. Through the first eight months of the year LAX traffic was up 4.2 percent. “We fly a schedule that we feel the market can support,” says Southwest Airlines spokesperson Brad Hawkins, explaining how the carrier decides which airports to serve. “As the cost of fuel has gone up, we’ve had to be more selective about cutting flights that weren’t productive.”
When Los Angeles International first opened its doors in 1961, replacing a smaller facility to the east of Sepulveda Boulevard, it was meant to be most things to most travelers. But unlike newer airports in other cities, L.A. had little room to expand because of business and residential development to the north, east, and south—along with the ocean to the west. The space crunch led to decades of court-mandated growth and noise restrictions. During the 1960s, when Concorde-type supersonic aircraft were on the drawing board, city officials considered putting an international airport in Palmdale, 60 miles from downtown, but the idea stalled because of intense environmental opposition and weak public support.
Like Palmdale, Ontario Airport, which is slightly closer to L.A., had nothing but space. Located near the Union Pacific railroad tracks (pilots used to gauge the direction of the wind by watching the smoke from locomotives), the facility was modernized during World War II, and regular passenger service began by the 1950s. Travelers came to know Ontario as the place where L.A.-bound planes landed when LAX got fogged in (passengers who had to finish the trip to Los Angeles by bus sometimes thought they were landing in Canada). Its tiny terminal was so quaint that Steven Spielberg later used it to depict a 1960s-era Miami International Airport for the film Catch Me If You Can. While Ontario had potential, it lacked the financial resources to handle repairs and renovations. Eyeing the possibilities of a business relationship, L.A. and Ontario city officials started talking, and in 1967 they entered a joint powers agreement that gave Los Angeles operational control. Eighteen years later the Ontario City Council voted 4-0 to transfer the airport title to L.A.
Through the 1980s and 1990s, it seemed like a good deal on both ends. Ontario was relieved of having to run the place, and L.A. had a stake in the fast-growing Inland Empire, with its warehouses, distribution centers, and housing developments. Passenger growth was so strong that in 1998 the airport opened two glass-and-steel terminals, complete with modern Jetways and separate floors—one for ticketing, another for arriving and departing passengers. They even left room for future construction of a third terminal, based on the assumption that LAX would have to set a cap on the number of passengers it could handle per year (the limit was 79.8 million) and that a rail network, the one with a maglev line, would eventually transport people from Los Angeles and San Bernardino counties. This was the basis of the politically pleasing concept called “regionalization.”
As it happens, LAX hasn’t come close to reaching its max (2012 traffic totaled 63.7 million), and without a high-speed train the trip to Ontario requires a difficult 60- to 90-minute drive on the 10 or 60 freeway. The place simply never caught on. JetBlue, which considered making the city one of its primary bases, exited in 2006 after the addition of a second flight to New York couldn’t generate enough business. The regional airline ExpressJet, which launched a sizable expansion at the airport, shut down because of high fuel prices. Then came cuts from the legacy carriers: Delta stopped flying to Atlanta, United dropped service to Chicago, and American eliminated all its staff positions at the airport. Now there’s talk of consolidating operations into a single terminal. “I wish there was this magic solution, but I don’t see one,” says Jess Romo, Ontario Airport’s general manager. “The airlines will go where they think they will make the most money.”
Romo has presented LAWA’s case at city council and chamber of commerce meetings in the Inland Empire, but the people pushing for change argue that L.A.’s airport authority is essentially an absentee operator. They want to work with Los Angeles mayor Eric Garcetti on an ownership transfer, or if that fails, to convince a Superior Court judge that L.A. breached its fiduciary duty to run the airport responsibly. “In essence we have an economic generator that’s not being allowed to generate,” says Alan Wapner, an Ontario city councilman who is touting a business plan that focuses on turning the vacant LAWA property into industrial parks and keeping down landing fees, rents, and other costs charged to the airlines—even though the day-to-day expense of using airports is less of a concern for carriers than you might think.
Whoever winds up with Ontario, the place is far from a lost cause. The thing about the airline business is that changes are inevitable. Should the economy pick up, more people will fly—and that would result in additional flights. Another discount carrier might give Ontario a shot, and at that point the established airlines might be enticed to add or resume service. But forget the delusions of something greater—at Ontario, Burbank, or other smaller fields. Going back more than 50 years, the main event in Southern California has been LAX, and with an ongoing $4.1 billion modernization effort, including the overhauled Tom Bradley International Terminal, its prominence has never been bigger. The operation is closer to more population centers, provides service to virtually anywhere in the world, and despite its well-worn, no-frills look, does everything an airport is supposed to do. That’s why the airlines never left and never will.