ONT Poised to Lose More Annual Passengers

Aug. 6, 2013
The ongoing downward spiral of passenger loss at LA/Ontario International Airport could reach a point where it can become impossible for the medium-hub facility to regain the traffic, aviation expert Bob Hazel told the Ontario International Airport Authority on Monday.

Aug. 06--ONTARIO -- The ongoing downward spiral of passenger loss at LA/Ontario International Airport could reach a point where it can become impossible for the medium-hub facility to regain the traffic, aviation expert Bob Hazel told the Ontario International Airport Authority on Monday.

Decline in passenger activity this year has already lead to $60 million in annual economic impact as well as 1,100 jobs lost to the region.

Without intervention, ONT is likely to continue to struggle just to maintain its current uncompetitive airport charges, he said.

If the trends continue, annual traffic will fall below two million passengers by 2020. It would take at least $10 million to turn around the cost structure as well as devote substantial resources to market ONT and bring in low-cost carriers, said Hazel, a partner with Oliver Wyman, the nation's largest aviation consulting firm.

"The sooner we can get the costs down to a competitive level and start running this airport the way it is supposed to be run, then we can stop the downward cycle." Hazel said. "Stopping the downward cycle would be major progress."

Hazel and the five-member commission -- which is aiming to take back local control of ONT from Los Angeles World Airports -- had a more than an hour-long discussion Monday on the airport's activity between 2010 and the present. LAWA manages ONT, Los Angeles International Airport and Van Nuys.

The

basis of the discussion was the findings of the 16-page report, "Accelerating Passenger Declines Imperil Future Recovery," by the consulting firm. The report found it would make it harder to attract new service as well deter more passengers from using the airport.

Hazel even pointed out that LAWA's own consultant firm has admitted that a "game-changer" is necessary to turn around the decline.

It would also require the full support of the business community and a decision from the public to voluntarily fly out of ONT rather than choosing LAX, he said.

Dating back to the 90s, Hazel did not find any airports of ONT's size that have shuttered, but he did find similar facilities have experienced a dramatic drop in passenger traffic.

The situation at ONT is a fixable problem, Hazel stated, the high costs are attributed to the way it is being managed.

"For low-cost carriers and secondary airports, I don't believe it's possible to be successful with high and uncompetitive costs," Hazel said.

Ontario has one of the highest airport operating costs in the nation, because of many factors including a 15 percent administrative fee charged by LAWA, and a double-digit cost per-enplaned passenger. CPE is the cost airlines pay to each airport per traveler.

LAWA has responded to the decline by reducing its operating budget to help keep ticket costs down. Hazel said the airport passenger declines are far outpacing the airport operating reductions by LAWA and a result could lead to increase in . The agency has only reduced its budget by 8 percent, but passenger decline this year is expected to reach 19 percent.

The agency could offset ticket prices by renting/leasing out the vacant land around the airport, said Alan Wapner, OIAA president during its monthly meeting on Monday.

About a year ago, the authority discussed its business plan by doing just that, bringing in non-airline revenues. Since that discussion, he said LAWA has not even attempted to implement the idea.

The case for local control goes beyond the concerns of the continued downward cycle of passenger traffic, OIAA commissioners describe the situation by the operators of the medium-hub facility as "criminal negligence."

As the commissioners prepared to hear about the continued decline at ONT, a four-minute fly-over video of ONT was shown, depicting empty runways, abandoned buildings, overgrown weeds and fading signs.

"It isn't even accidental mismanagement, it has become so obvious through the years that this type of behavior can only come about as a result of intentional mismanagement. Intentionally calling the failure of ONT for the benefit of Los Angeles," Wapner said.

Commissioner Lucy Dunn, added that LAWA's management is allowing the airport to deteriorate, and its actions border "criminal negligence." Dunn said the South Coast Air Quality Management District was upset earlier this summer about smoke from fire pits at beaches, "and yet the reality is more greenhouses gases is being released by unnecessary traffic to LAX."

Copyright 2013 - Inland Valley Daily Bulletin, Calif.