If you like expensive public megaprojects with dubious returns, you will love the Master Plan for Los Angeles International Airport.
If history is any judge, City Hall’s $11 billion budget for the project is low. The budget for Denver International Airport shot up from $1.5 billion to $5.3 billion before the doors even opened. One study concluded that nearly all public megaprojects (projects of more than $1 billion) run over by a factor of two.
The point is not just that this is a mountain of money but that it could be much better spent.
Proponents consistently argue that the so-called Consensus Plan (a procedural document regarding implementation of the Master Plan, which is the substantive document) will not expand capacity and that it caps passenger traffic at 78.9 million annual passengers, substantially similar to the forecast capacity for the airport’s existing design. If we take the proponents at their word — that $11 billion to $22 billion will be spent without increasing capacity — we have a credible case for the most flagrant misuse of public money in American history.
Mayor James Hahn artfully calls his Consensus Plan the “Enhanced Safety and Security Plan,” the lynchpin of which is the check-in facility at Manchester Square. Its conceit is to remove private vehicles from the central terminals by building a new entry to the airport at Manchester Square. So, instead of a car bomb exploding and killing people in front of the terminals, it would explode and kill at Manchester Square.
The full Rand security study of the merits and demerits of the Master Plan has still not been commissioned. But it doesn’t take a security study to question whether spending billions of dollars for a remote check-in facility is the best way to improve security.
The LAX Master Plan is a demolition engineer’s dream. Mayor Hahn’s Alternative D demolishes terminals 1, 2, and 3 and razes all central parking structures. It destroys thousands of housing units in Manchester Square and tears up two runways to reconstruct them nearby.
Who pays for this demolition derby? If you fly or buy products shipped by air, take a good look in the mirror.
First, some background. The airport is a self-funding entity of the city of Los Angeles. The city has not spent anything on LAX since it purchased Mines Field. The airport derives income from passenger facility charges, airport improvement funds, rents, concessions, parking fees, landing fees, grants and interest on investments.
Although LAX has a good deal of cash on hand ($500 million), it is nowhere near the price tag for the proposed improvements. The airport will have to raise rents and all the charges it imposes on airlines, such as landing fees and passenger facility charges.
Over the last four years, airlines in this country have lost $32 billion. Since 2001, the airlines have floated aloft on currents of debt. Bankruptcy protection has become the business plan for Atlas/Polar Cargo, Great Plains, Hawaiian, Midway, National, Sun Country, TWA, Vanguard, United and US Airways. American Airlines and Delta were near-misses with the bankruptcy courts. The traditional carriers are suffering because of high operating expenses, enormous debts and surging fuel costs.
To keep planes in the air, the airlines have taken on huge debt loads. Today, the average carrier is more than 90 percent leveraged. Since 9/11, Congress has either provided or made available financial relief amounting to more than $20 billion.
Thus, it is difficult to see how an airline that recently voided $4.6 billion in pension obligations, for instance, can afford to subsidize the Master Plan. Yet these same airlines that are struggling to survive are expected to foot much of the Master Plan’s $11 billion price tag.
The truth is that the cost of flying through LAX will soar.
Back when the Master Plan budget was a slim $9 billion, the airlines calculated that the LAX Master Plan would force the carriers to add $35 to the price of every ticket.
When the cost of serving San Francisco International Airport rose between $17 and $20, Southwest left SFO. That’s why Southwest flies through Oakland. A $35 Master Plan surcharge for the privilege of operating out of LAX may likewise drive out Southwest and other carriers.
So, who is going to finance the Master Plan? Businesses and the traveling public will through higher rents, more expensive concessions and parking and heftier ticket prices.
The truth is that the cost of flying through LAX will soar.
Valeria Velasco
President
Alliance for a Regional Solution to Airport Congestion, with Edgar Saenz
About the author
Valeria Velasco is an attorney and the president of The Alliance for a Regional Solution to Airport Congestion. Edgar Saenz is an ARSAC member and community activist.
About ARSAC
The Alliance for a Regional Solution to Airport Congestion is the leading grassroots organization opposing the concentration of growth at LAX and advocating for a regional solution to Southern California’s air traffic needs. For more information, visit ARSAC online at www.regionalsolution.org.
