IE Business Daily

Saturday, August 15, 2015

Let’s get some facts out from the very beginning. The Airline industry has been running on shoe-string budgets for decades. Airlines go out of business every year. Competition and demand determine where and how many flights any airline makes. The cost of flying a plane is fixed based on aircraft costs, maintenance, fuel and staffing requirements.

Therefore, for an airline to function, it must get the maximum number of passengers on EVERY flight to keep prices competitive and make a profit (though most still do not.)

It is in this light that the transfer of Ontario International Airport to “local” control will make no difference. The idea that the City of Ontario will be able to manage costs any better than Los Angeles World Airports (LAWA) and attract more flights or increase air traveler demand is, unfortunately, wishful thinking.

Here is why. Air travel requires three basic things: An aircraft, an area to take off, and an area to land. The particular matters of takeoff and landing are conditional on an extensive area set aside to do so, Airports. Unlike taxis, you just can’t park a plane anywhere.

For commercial airlines to function profitably, they must also have passengers and cargo that will pay to fly, which means that airlines must have commercial passenger rates that are affordable, competitive, and have a suitable base of customers willing to pay for the service. It also requires centralization of those airport services as, unlike trains, aircraft cannot make multiple stops to pick up passengers.

And there is the rub. Even under the local control of the City of Ontario, the Inland Empire does not produce the necessary passenger traffic to keep costs lower than the centralized airport of LAX. Ontario doesn’t even have the passenger traffic to sustain international air traffic to Mexico. It really is simple mathematics.

Unlike so many other commodities, availability in the airline passenger market does NOT drive demand. We aren’t discussing the choice between red and green apples here. It really isn’t a choice between WHICH commodity to purchase. No one, outside of a few business interests actually HAS to travel by plane.

To read expanded column, click here.