July 14, 2008

Preparing for Departure: Airlines Cut Back Area Operations

By Andrea Bennett, San Bernardino County Sun, Calif.

Jul. 13--ONTARIO -- The nationwide struggle of an airline industry grappling with unprecedented fuel costs is having a ripple effect throughout the region.

Passengers are faced with fee hikes, less convenience and fewer perks. And many airline employees are finding themselves out of work.

But ExpressJet -- which will halt 22 daily nonstop flights at L.A./Ontario International Airport on Sept. 2, when it ceases commercial operations -- is the only carrier to bow out of the airport so far.

"We have heard from other airlines that there may be changes, but there's nothing official yet," said Maria Tesoro-Fermin, an airport spokeswoman. "We're hoping, because we are an

origin-destination airport, we won't have cutbacks in other airlines."

Los Angeles World Airports, which owns L.A./ONT, has been adjusting its traffic projections because of the loss.

"We were at 7.2 million passengers in 2007," Tesoro-Fermin said. "Our unofficial projections are going back to 6.2 (million) to 6.5 million by the end of 2008."

Air-cargo figures have been flat and are expected to stay that way until the economy picks up again, she said.

ExpressJet has accounted for about 15 percent of the airport's revenue this year, and Tesoro-Fermin said its departure will be a blow. The airport was projected to hit 30 million passengers annually by 2025 and absorb overflow traffic from Los Angeles International Airport.

ExpressJet brought $5.2 million in revenue to ONT from April 2007 to April 2008, Tesoro-Fermin said.

"It's definitely going to impact the airport," she said. "It could equate to a lot of things -- it could equate to higher landing fees. ..."

The loss is being felt by local fliers, too.

Tom and Rhonda DeLuca of Chino have been flying ExpressJet from Ontario to Spokane, Wash., every other month to visit their home in Bonners Ferry, Idaho.

"We're devastated actually," Tom DeLuca said. "We used to use Alaska (Airlines), but you have to make two stops and sometimes you have to run to catch connecting flights, and sometimes it's two hours between flights."

With ExpressJet suspending flights, DeLuca said it's back to stops in either Seattle or Portland, Ore.

ExpressJet's 400-plus employees at ONT are being offered an early-out program, airline spokeswoman Kristy Nicholas said.

"We are accepting interest from all ExpressJet employees that may want to voluntarily leave the company," Nicholas said.

The airline hopes to use the voluntary programs to limit layoffs, Nicholas said.

John Husing, a regional economist based in Redlands, said other industries and jobs that rely on the airport will suffer as well.

"This kind of cutback hurts surrounding businesses in that flight connections they need to be able to operate in the Inland Empire are reduced," Husing said. "That damages the ability to get companies to move here."

Dave Oldham, executive vice president of sales and marketing for Citizens Business Bank Arena, said he got Austin, Texas-based Stanhope Advertising Agency to expand into Ontario because of the convenience of nonstop flights.

Oldham takes a direct flight to Austin every weekend to be with his wife and children and has to return tickets now for flights he booked through November.

"Now, I have the hassle of going through Phoenix or Las Vegas, and Southwest is always packed," he said. "That just takes the wind out of my sails."

Steve Eckerson, general manager of the arena, said he did not know if ExpressJet's exodus would have an impact on its sponsorship of the arena.

The airline is one of its five founding partners, but Eckerson said even if ExpressJet tried to get out of the contract, it wouldn't impact the facility.

"We'll just find another founding partner, so financially it's not a concern," he said.

Mary Jane Olhasso, Ontario's economic development director, said the airline industry's troubles won't jeopardize the airport's future.

"We'll have a couple rough years, but the longevity of the airport is not at risk," Olhasso said. "It's backed by the credit of the city of Los Angeles, and the debt service on the terminals is not at risk."

The Ontario airport is primarily driven by an industrial base, rather than a tourist base, so its numbers will not wobble as much as others might, she said.

"We have a temporary setback in the airline industry," Olhasso said. "Is this going to hurt us in the near term? There will be less travel by corporations domestically, so we'll feel that. Everyone will."

The industry might adjust by restructuring, she said.

David Castelveter, a spokesman for the Air Transport Association, of which most U.S. air carriers are members, said fuel costs are killing the industry.

Services have been eliminated at 100 of the nation's 600 airports since 2000, nine airlines have closed their doors since Christmas, and two airlines are in bankruptcy court now, Castelveter said.

His association is one of many lobbying Congress to pass legislation to restrict speculative oil trading, which he says has artificially driven up oil prices.

"If we could curb this speculation process, a number of experts say we could drive down the price anywhere from $30 to $60 a barrel of crude oil," Castelveter said. "That's in the interest of the aviation community and everyone in the U.S."


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