Los Angeles owns Ontario facility and needs money, but would anyone pay the price?

10:11 PM PST on Saturday, January 30, 2010

The Press-Enterprise

Faced with a $200 million shortfall in its current fiscal year, the city of Los Angeles has considered putting a price tag on Ontario International Airport which it’s owned since 1967.

But will anyone buy?

Aviation experts say no. City officials say they’re simply researching options available to them which include an FAA program started in 1996 allowing five public airports at a time to be leased to interested management firms.

Since then, just one — Stewart International Airport in New York — was leased to a private company. That is, until the lease was transferred back to the Port Authority of New York and New Jersey in 2007 making it a public airport once again.

Ontario airport had 1.35 million fewer passengers use it last year compared to 2008 and by Federal Aviation Administration standards, it’s now a small hub airport rather than a medium hub airport based on traffic.

“I can’t see it being worth anything,” said Jack Keady, an aviation expert based in Playa Del Rey and former marketing development manager with American Airlines.

If a private company signed a long-term management contract to run Ontario airport, “how would they make money when (Los Angeles World Airports) hasn’t been able to make a nickel?” he asked.

Alan Bender, an airline economist with Embry-Riddle Aeronautical University, has his doubts too.

Two airports currently vying to privatize — Chicago Midway Airport, with 17.1 million passengers in 2009, and Louis Armstrong New Orleans International Airport which had 7.9 million passengers in 2008 — both have something Ontario doesn’t, Bender said.

Midway is one of just two airports in a major city with a clear role, a more affordable low-fare airport compared to the higher-fare Chicago O’Hare, he said. Louis Armstrong airport has a monopoly with no other airports serving the area nearby.

Ontario is surrounded by airports, including its behemoth sibling Los Angeles International Airport.

“I just don’t see that Ontario has a big enough niche,” he said.

Public airports with commercial air service are only allowed to be leased, not sold, to a private management firm after 65 percent of the airport’s airlines or landing weight sign off on the deal, according to the FAA. Unlike rules that bar any airport revenue from being used for non-airport purposes, an airport that is privatized through the FAA’s program can use the proceeds wherever they choose.

Airport ownership has been, and still can be, transferred from one public agency to another.

The city of Ontario sold the airport in 1967 for $26.4 million to the Los Angeles Department of Airports, later Los Angeles World Airports, and an assurance that $20 million would be spent on capital improvements. Two brand new terminals that cost $270 million in bond revenue to build opened in 1998 with enough room to accommodate 10 million passengers annually.

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