Ontario Moves To Create Joint Powers Authority To Manage Airport

(August 24)   ONTARIO – The Ontario City Council on August 21 voted to join with San Bernardino County in the formation of the Ontario International Airport Authority, an entity intended to facilitate the city’s efforts to regain ownership and control of Ontario Airport.
It is anticipated that San Bernardino County will officially vote to join Ontario, the county’s fourth largest city in terms of population, as a member of the joint powers authority later this month.
In 1967 the city of Ontario transferred management of the airport to the city of Los Angeles and its department of airports, a ploy which allowed the entity that owned and controlled Los Angeles International Airport to use its prestige and greater negotiating leverage to convince airlines to fly into and out of Ontario. In 1985, Ontario deeded the airport to the megalopolis for no consideration. Under Los Angeles’s direction, over $550 million in improvements were made to the airport, and passenger traffic there increased dramatically from just under 200,000 in 1966 to 7.2 million in 2007. But over the last five years, passengers flying in and out of Ontario have dwindled considerably, with 4.2 million passengers in 2011, and further declines are registering this year.
Ontario officials blame Los Angeles and Los Angeles World Airports, the non-profit entity Los Angeles created to own, maintain, administer and operate its division of airports, for the downturn in passenger traffic through Ontario in recent years. The once-cordial relationship between Ontario and Los Angeles has suffered as Ontario officials maintain that Los Angeles has purposefully increased enplaned passenger costs at Ontario and diminished marketing of the airport as a ploy to increase passenger traffic at Los Angeles International Airport, even as the airline industry in general has been contracting. Led by councilman Alan Wapner, Ontario officials have been pushing ever more aggressively to have Los Angeles relinquish the airport, maintaining that the entirety of the Inland Empire has seen its economy negatively impacted as a result of the loss of passengers transiting through Ontario Airport. That effort, which included videos, and a push to have legislation passed in Sacramento and Washington, D.C. to mandate what is referred to as local control of the airport, has angered Los Angeles World Airport officials, who earlier this year offered to let Ontario take over the Ontario Airport marketing assignment.
Ontario officials maintained that they did not want to undertake the promotion of the airport if they did not have control over costs at the aerodrome. Los Angeles World Airports, known by its acronym LAWA, oversees Los Angeles International Airport, Van Nuys Airport, Palmdale Airport and Ontario International. Ontario officials assert that for the last five years LAWA has allowed Ontario International Airport to languish, as major improvements have been made to Los Angeles International Airport.  LAWA charges the airlines at Ontario International $14.50 per enplaned passenger, which is substantially more than the $11, $9.93, $5.34, $4.07 and $2.10 charged at Los Angeles International, John Wayne, Long Beach, Palm Springs and Burbank airports, respectively. Ontario officials have noted that Los Angeles World Airports has overstaffed Ontario Airport with Los Angeles Department of Airports personnel, artificially inflating the operating costs at Ontario Airport.  Indeed, Ontario officials maintain, LAWA is purposefully mismanaging Ontario International as part of an effort to bolster the Los Angeles economy.
In recent years, some airlines have elected to discontinue operating out of Ontario. JetBlue no longer offers a nightly red-eye flight from Ontario to John F. Kennedy International Airport in New York, having discontinued that option in 2008. Allegiant Air ceased flying into and out of Ontario in 2009. Both JetBlue and Allegiant cited the higher costs at Ontario in their decisions to abandon the airport.
In recent days, LAWA has unveiled an incentive plan including the lowering of rental rates at Ontario Airport to encourage airlines to increase flight operations there.
LAWA’s Jess Romo, who serves as the Ontario Airport manager, is promoting Ontario Airport by offering airlines currently operating there or ones contemplating coming in a reduction on the rent for space in the airport’s terminals.
Currently at Ontario, airlines are paying $144.11 per square foot for terminal space. That is up from the $134.39 they were charged in 2011, but less than the $154.63 charged in 2010. Romo did not specify how much of a break LAWA would be offering the airlines, but said the discounts would be significant, making Ontario competitive with all of the airports in the region. And he indicated the rents would be reduced even further for airlines that significantly increased their operations at the airport.
Ontario officials were not placated by that proposal, however, and pushed forward with the creation of the joint powers authority, designating Wapner and councilman Jim Bowman as the city’s representatives to it.
“Ontario Airport and the economic destiny of the Inland Empire should not be in the hands of the officials of a city more than 40 miles away, who are not answerable to the local electorate,” Wapner said. “Ontario Airport should be operated by an agency that is responsible and accountable to our residents for its service and performance.”
The county will have at least one representative on the authority board. Another elected official from another local city, quite possibly Rancho Cucamonga, will in time be appointed as a voting member as well. Ontario officials did not rule out the possibility of having a representative from Los Angeles or LAWA in some fashion associated with the authority.
Gina Marie Lindsey, the executive director of Los Angeles World Airports, told the Sentinel, “Our immediate focus is ensuring the long-term success of ONT.  An independent, multi-jurisdictional authority can be a good governance model for enterprises like airports.  If there were to be a change in the governance structure for ONT, an airport authority is one of many models.”
Linsey has previously  maintained the decrease in passenger traffic at Ontario International is a reflection of the struggling national, state and local economy. She indicated she did not believe Ontario’s effort to seize back ownership and operational control of the airport would reverse Ontario Airport’s decline.
“Local control, in and of itself, is not going to be a panacea,” she said. “We ought to be working together to stem the exodus now.”
Lindsey further indicated that Los Angeles was not poised to simply return the airport to Ontario, emphasizing that a considerable amount of money under the discretionary spending control of Los Angeles World Airports had been invested in Ontario Airport. “The city of Los Angeles has made an extraordinary investment in Ontario Airport,” she said. “$128 million of passenger facility charges paid by passengers at LAX [Los Angeles International Airport] came over to Ontario to help build the two terminals.”
Charges that Los Angeles is exploiting Ontario Airport are unfounded, Lindsey said. “Every dollar that was earned at the Ontario airport went back into re-investment at the Ontario airport,” she said. Criticism that LAWA is using Ontario as a dumping ground for Los Angeles Department of Airport employees is similarly inaccurate, she said, pointing out that her agency had reduced operating costs at Ontario Airport by $19 million per year. “150 of the employees that used to be at Ontario were absorbed into LAX,” she said.
The formation of the joint powers authority was widely seen as an intensification of Ontario’s recent moves to reacquire the airport. Previously, Wapner and other city officials asserted that Los Angeles should simply deed the airport back to Ontario as a public benefit transfer, maintaining that the airport had no value as marketable real estate. It was subsequently learned, however, that the city of Ontario had made a confidential offer to purchase the airport for $50 million and an assumption of all debt related to financing for improvements that had been made to the airport.
Los Angeles officials have privately said they believe the airport and its assets to be worth in excess of $450 million.

Leave a Reply