LOS ANGELES — In May 2006, mayor Antonio Villaraigosa announced that Gina Marie Lindsey was taking over the helm of the Los Angeles World Airports (LAWA), which oversees Los Angeles International Airport (LAX). The move was viewed by many in the industry as an indication that the city might finally be serious about altering the course of LAX, a course that was leading one of the world’s largest airports to infrastructure decay and feuds with its air carriers. Since then, much effort has been put into a new master plan, performing a needs assessment, attaining peace with the airlines, and getting a capital improvement program moving — one that could reach more than $12 billion.
Prior to joining LAWA, Lindsey had led a team that achieved what was often seen as an insurmountable goal: building a new runway at Seattle-Tacoma International Airport. She is also credited with being instrumental in making Anchorage International Airport a major transcontinental hub for cargo. Having served as the chair of Airports Council International - North America, Lindsey had gotten connected to Washington and moved there after retiring from Sea-Tac, where a new terminal carries her name. Then came a call from the LA mayor.
Explains Lindsey, “I truly loved D.C. Then the mayor called and said, ‘We’ve got a big challenge here at LAX.” Of course, anybody in the airport industry knows that and has known that for years.
“After talking with the mayor and a couple of the board members, it was pretty clear to me that the political impediments that have been plaguing improvement to LAX for years actually had a chance of being gone for awhile. This may be overused, but I thought the stars were aligned. I thought that there was a possibility that for at least a brief moment in time there would be a political commitment from the mayor, who is very strong about wanting to be the first mayor since Tom Bradley that had put any significant improvement into LAX. I was really impressed by a couple of the city council members I spoke with before I took the job, that they also wanted to see improvements.
“Then when I met with the board members it was very clear that we had a sophisticated, savvy board that wanted the same thing.
“Everybody told me I was absolutely crazy. But if what you’re driven by is making a difference somewhere, this was a really good opportunity, I thought, to make a difference. I thought maybe we could turn around some of the aspects of LA World Airports that could be improved a little bit faster than we could fix the aviation system as being administered through Washington.”
Defining the needs
Little investment of significance has been made at LAX since 1984, when the city hosted the Summer Olympics. Since then, its nine terminals have been managed on more or less an ad hoc basis, say officials. A master plan, still being finalized, has gone through at least four iterations, according to Lindsey. Leases with airlines are all over the board, which has led to various lawsuits and complaints with the U.S. Department of Transportation.
“We needed to have time to do a needs assessment, and to translate that needs assessment into a list of projects, to define those projects, get cost estimates, and then use that as the centerpiece around which to negotiate a unified rates and charges formula” explains Lindsey.
Relates LAX chief operating officer Steve Martin, “What one has at this airport is a very different circumstance depending on whether the airline developed the terminal and borrowed the money to develop the terminal, or whether the terminal is either reverted to or was built by LAWA. During the course of 2006-2007, there were a lot of changes made in how rates and charges are set at this airport, which tipped over lots of litigation. That litigation was at DOT in the form of an administrative complaint or in various courts where airlines claimed breach of lease, etc.
“For over a year now, we’ve been trying to work to reach better agreements with the airlines.”
According to Lindsey, much of the rates and charges dispute arose out of the airport’s need to revitalize its two airfields and its terminals. First, officials needed to clearly identify the needs of LAX, and then work to determine a fair rate-making methodology by which to pay for those improvements.
Says Lindsey, “Because we don’t yet have a totally definitive cost for all of these projects identified in the needs assessment, we’re still talking generalities with the carriers.”
Capital projects are beginning to move forward, however, and LAX is developing plans and contracting for some $2.5 billion in improvements, according to Lindsey. At the top of the list: refurbishing the Tom Bradley International Terminal, including an expanded concessions program and the addition of six gates to accommodate the A-380 airliner; replacing the existing central utility plant, built in 1959; connecting the nine individual terminals that sit in a horseshoe-shaped configuration and are primarily connected by buses; and, bringing LAX’s two airfields into Group 6 compliance.
Bringing the airlines into the fold
Regarding the ongoing disputes with the tenant airlines in recent years, Lindsey asks, “How can we build all of this stuff we’re talking about if we’re spending our time in court with our customer base?” Thus, she and her staff have been working to get interim agreements with the airlines while a long-term answer is sought. One challenge is that some airlines have lease agreements that extend out as far as 2024, while others have shorter terms or operate without a lease.
Explains COO Martin, “The long-term leases are vintage 1984, pretty basic non-sophisticated leases. They do not cover the world as we know it today in terms of costs or operational considerations; the security world we now live in was never contemplated in the leases as written or could it have been. We’re trying to work with those airlines to respect their lease rights, but to get them to understand that there are new obligations in the world.
“As an example, we’re working closely with TSA to get all nine terminals to have in-line EDS; the leases that the long-term airlines have don’t contemplate a federal directive to do that and spend $50 million per terminal to make the improvements. It’s not something we can just do by fiat.
“The original leases were designed to do something very simple — get a building built — but they don’t contemplate a 30- or 40-year old building maintenance requirement and who’s responsible for what. There are lots of gaps in the leases.”
Lindsey says that her goal is to seek an even playing field when it comes to rates and charges. The hurdles of defining the capital improvement program and getting the airlines to discuss it have been overcome, at least to the point of maintaining a dialog and staying out of court, say officials.
Comments Lindsey, “I give the airlines a lot of credit. A bunch of the airlines told me when I took the job that they thought that LAX was within six months of being absolutely irredeemable. After they all said that you are completely crazy for even trying this, they have to their great credit basically said, ‘Look, if you’re crazy enough to try and fix this, we will be cautiously participating to see if you really are going to take a different approach.’ And they have been helpful.”
“I have been really pleased with the amount of participation that they have brought to the table, the spirit with which they have reviewed the needs assessment and the projects that we’ve identified, and they are trying very hard to rise above the inevitable individualism and parochial concerns to try to find a collective solution.”
