LA/Ontario International Airport trims operating budget

May 25, 2010


May 25--ONTARIO -- L.A./Ontario International Airport will soon suffer another hit.

For the second year in a row, ONT officials are in cost-cutting mode and aim to slash 14.6 percent from the airport's day-to-day operating budget.

Los Angeles World Airport, ONT's owner and operator, is expected to approve the $67 million budget on June 7.

"We're cutting back where we can still cut back," ONT General Manager Jess Romo said.

The cuts at ONT will include about 40 staffers being shuffled to Los Angeles International Airport, which is also owned by LAWA. Romo said about 18 of those employees will likely opt for early retirement. The personnel shift will save $4 million.

ONT officials could afford to let go of staff without impacting services because of the reduction in traffic.

"We've been tightening our belt," Romo said. "We're still getting the job done and basically adjusting the budget to reflect changes in the market."

Cost-saving measures also included waiting longer for landscape maintenance; reducing service contracts, such as having restaurants in terminals close by 6 p.m.; and cutting back on the the availability of parking lots and shuttle buses.

"In the adjustments made to our budget, we know these are acceptable. It is acceptable, it is safe and efficient," Romo said. "We are doing more with less."

Councilman Alan Wapner said the cuts are responsible and consistent with the downward trend at the

medium-sized hub facility.

"They are doing the right thing in cutting the budget, but I still think they are overstaffed," Wapner said.

More than 300 employees are presently employed at the airport. Two years ago, Romo said, he managed 432 employees.

Wapner said he believes LAWA staff could help ONT by dropping a $8.7 million administrative fee. The fee is what LAWA charges for services it provides to ONT.

"It's a trend we have got to reverse, we're running out of time," he said. "They are doing what they have to do, but they are not doing anything to build revenues."

Wapner said ONT could help itself by lowering rental and landing fees, which are among the highest in California.

Last year, ONT increased terminal fees by 15 percent. Airport officials have said in the past the increases were meant to cover a $7 million shortfall and the costs of the terminals.

Revenues in 2010 at ONT are estimated to be down by $10 million. But Romo said he believes ONT's finances will be in better shape because reductions to expenses should be greater than the loss of revenues.

Estimated revenue figures at the airport are $75 million.

Wapner said he has been assured by Los Angeles City Councilman Bill Rosendahl that once modernization at LAX is completed, it will drive traffic to Ontario. But, Wapner said, that is at least three years away.

ONT is vital to thousands of jobs in the area, and to lose it would be catastrophic to the area, Wapner said.

For example, ONT is a key factor in the success of the Ontario Convention Center and Visitors Bureau, said Bob Brown, the facility's general manager.

"We rely on the airport for a significant percentage of of hotel occupancy for both business and leisure travelers," Brown said.

The reduction of traffic at ONT has impacted hotel stays in direct proportion to the level of passenger traffic, Brown said.

"We can't wait," Wapner said. "If we continue this trend then I can guarantee you the airport will not be here three years from now."

For the past two years, passenger traffic at ONT has dropped more than 47.5 percent. The airport in 2009 served 4.88 million travelers, which was down from a peak of 7.2 million passengers in 2007, according to LAWA's figures.

Passenger volume plummeted so significantly -- the 2009 figures were last seen in the early 1980s -- that portions of ONT's twin terminals in the past year have been shut down. The closures were approved despite a $270 million expansion project that was completed in 1998 and allows the airport to annually handle up to 10 million travelers.

2010 Budget

Estimated revenue: $84 million

Personnel: $35 million

Non-personnel: $31 million

Administrative fee: $10 million

2011 Budget

Estimated revenue: $75 million

Personnel: $31 million

Non-personnel: $27 million

Administrative fee: $8.7 million

Source: Los Angeles World Airports