August 7, 2008
Airport Looks to Recoup Its Losses
By Art Marroquin
Airport officials will consider charging for free services, cutting administrative costs and other measures to balance the books at Los Angeles International, which is projected to see a 17percent reduction in flights this fall.Several airport jobs remain unfilled as officials seek out cost- saving ideas to keep LAX operating and pay for an overhaul of aging facilities expected to cost up to $10 billion over the next decade, according to Gina Marie Lindsey, the airport's executive director.
"It means belt-tightening for LAX and Ontario airport, but we're not backing away from the capital improvements that are necessary at the airport," Lindsey told the Los Angeles City Council's Trade, Commerce and Tourism Committee on Wednesday.
Rising fuel costs have prompted the airlines to use smaller jets, cut routes and increase ticket prices, leading to a reduction of nearly 2,000 weekly takeoffs and landings at LAX by November, compared with a year earlier, according to the latest figures posted by Atlanta-based Innovata, an airline industry database.
As a result, nearly 175,000 fewer weekly seats will be available to airline passengers by late fall, an 11.5 percent drop from the same period last year.
While the airlines are expected to make deeper service cuts by winter, there is a slight chance of a recovery with the recent drop in fuel costs, according to Mark Thorpe, director of air service marketing at LAX.
"No one knows if this is going to be a permanent shift in demand but keeping costs down is key," Thorpe said.
The dramatic drop in flights means LAX stands to lose millions of dollars' worth of parking fees and projected traveler spending on concessions, which help pay for day-to-day operations at the airport.
To recoup the anticipated losses, airport officials are searching for new sources of revenue, such as imposing a fee on vans driving into the terminal, charging for wireless Internet service and freezing unfilled airport jobs.
The proposal comes after the airport commission agreed last week to increase landing fees by 15 percent to generate an additional $185 million.
"We need to stop providing services that don't pay for themselves," Lindsey said. "What we need to do is develop new ways to get ourselves in a position to adopt a financial strategy that embraces the realities of these troubled times."
Any savings are expected to maintain airport operations and to help pay for a new airline terminal and several new gates on the back of the Tom Bradley International Terminal to accommodate the Airbus A380 by 2012.
"It's really of concern to me whether this will impact our modernization plans and keep the airlines feeling good about wanting to participate in some of the initiatives we want at LAX," said Los Angeles City Councilwoman Janice Hahn.
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