PonTell: Ontario Airport Agreement Bodes Well for Inland Empire Economic Growth

Steve, newspapers have reported that on August 5, the City of Los Angeles reached a “historic decision to transfer Ontario Airport back to Ontario.” Could you give us an updated status report on this airport transfer agreement?

Steve PonTell: My understanding is that the two cities are currently working out the final legal documents to effect the transfer, which are to be completed by October. The documents will then go before the Board of Airport Commissioners and the city councils in order to finalize them.

The State Assembly has unanimously passed the bonding authority so that the City of Ontario can issue revenue bonds for its portion of the payment to the City of LA. That legislation is headed to the Senate, where it is also expected to pass unanimously and move to the governor.

As a founder of the Ontario Airport Alliance and a longtime advocate for sub-regional control of Ontario Airport, share the Ontario Airport Alliance’s central mission.

We formed the Alliance as a group of business leaders from the Inland region to support the growth and development of Ontario Airport, which we believe would be best accomplished through local control. We brought together about 30 businesses that help fund a variety of advocacy initiatives communicating the need for growth of Ontario Airport. We also got support from organizations like the Southern California Association of Governments (SCAG), the Southern California Leadership Council, the Los Angeles County Economic Development Corporation, and others to say that the growth of Ontario Airport was critical and that local control appeared to be the best way to accomplish that.

Assuming this deal gets finalized, the Ontario Airport Alliance will shift into a marketing and promoting mode—working with businesses in the region to use Ontario Airport and working with airlines to continue expanding services. 

Could you explain the premise behind the argument for local control by the Inland Empire? How will such ownership benefit the airport and economic development within the region?

The theoretical premise is that more focus from those directly affected would be beneficial, as with any organization that has a primary focus and then a secondary element at a distance.

For the cities and the counties in and around Ontario Airport, Ontario Airport is the priority. For the City of Los Angeles, by definition, LAX is the priority. The City of LA doesn’t think about Ontario very often. And so by making Ontario the priority for the local agencies, local jurisdictions, and local businesses, there will be a lot more energy, resources, and focus brought to bear. Growth of Ontario Airport is the fundamental opportunity that we have as a region. 

Before discussing the specifics of the transfer agreement, how will Ontario Airport now proceed to grow air traffic—both passenger and cargo? Why, more specifically, do you believe passenger counts dropped to 4.2 million from 7.2 million between 2007 and 2012?

First, the landing fees at Ontario Airport were disproportionately high because it was carrying the additional administrative burden of contributing toward the overhead of LAX. Fees at Ontario Airport were around $12-13 per passenger (which were brought down to about $11), while LAX was running at $6-$7 per passenger. Other airports in Southern California were running at $3-5 per passenger. Ontario experienced a significant pricing disadvantage that incented airlines to go to other airports.

LAX had a totally logical incentive to get every passenger landing fee they could generate, given that $8-9 billion of bonds were going into improvements to LAX. Having passengers land at Ontario was not benefiting LAX in any financial way. As passengers moved to LAX, the airport had additional revenue to help pay for those things.

Obviously there was an economic downturn. But interestingly, if you look at the growth of jobs in the Inland Empire, Ontario has had a disproportionate loss in air traffic that cannot be attributed to the economy or to the region in any way.

We believe there’s pent-up demand. People really want to use Ontario Airport. Now there’s an opportunity to unleash that demand and negotiate deals.

The one time JetBlue wanted to make Ontario its primary hub in Southern California, LAWA would not negotiate a deal that the company wanted. JetBlue ended up in Long Beach. We will now have an opportunity to engage in those kinds of conversations. 

When you helped organize the Four Corners Economic Summit four years ago focused on regional control of Ontario Airport, those assembled offered revenue and expense-reduction opportunities including development of land around the airport and elimination of the same labor arrangements that had governed all the other LA airports. Are those still opportunities for a regionally owned Ontario Airport to consider?

Early in this process, I’d take pictures of Ontario Airport, sit down with LA airport commissioners, and show the lost opportunity and neglect of the assets on airport property.

The single biggest example is the Lockheed facilities along the northern side of Ontario Airport. While the rest of the logistics industry in the Ontario area is completely on fire and there is no space available anywhere west of the 15 Freeway, all of those facilities sit vacant. Fully developing there is absolutely one of the primary opportunities to create economic success for Ontario Airport.

The City of Ontario has a long track record as a very successful economic development organization. We have a lot of confidence that those opportunities will be fully realized. 

Referencing again that Four Corners Summit, quite a bit of bad feeling surfaced in interchanges between Los Angeles World Airports’ Gina Marie Lindsey and the leadership of the City of Ontario and region. What has now changed, allowing a transfer agreement by the City of Los Angeles?

I wasn’t in the rooms, but I know that Senator Dianne Feinstein weighed in. She called meetings that included Mayor Garcetti and representatives from Ontario and said, “You guys need to figure this out.” It never hurts when a US senator has a keen interest in having it happen.

A number of lawsuits were moving forward, as well. At some point, you need to make a business decision as to whether the legal costs are worth it given the possible outcomes. I think that probably weighed in.

Mayor Garcetti, now that he’s been mayor for two years, was finally able to devote the time and attention to think about the alternatives.

I’m not going to cast aspersions, but I think that Gina Marie moving on enabled LAWA to take a step back and look at other alternatives. 

At the Four Corners panel, Move LA’s Denny Zane noted the importance of improving ground-transportation access to Ontario Airport, including expanding Metrolink to reach it. Is that a realistic way of growing traffic at Ontario Airport? Is it under consideration by regional leaders?

Absolutely. The City of Ontario has been pushing hard on all fronts. It makes total sense that there would be a land-access strategy.

There have actually been conversations between San Diego and Ontario about a rapid connect, because of the limitations of San Diego Airport. Disneyland used to market Ontario as its airport—and so connections to Anaheim have been discussed for a very long time. The extension of the San Gabriel Valley light-rail system to Ontario Airport is also continuing to be a push. We fully anticipate that a significant ground-transportation system will link to Ontario Airport. 

The transfer-of-ownership agreement is reported to involve Ontario paying $190 million to the City of LA over 10 years as reimbursement for LAWA’S investments in the airport, and Ontario assuming about $60 million in debt. Is that your understanding?

Yes. In addition to that, they’ll split about $60 million in cash on hand. For LAWA and the City of LA, it’s about a $240 million deal. Both sides believe that it’s very fair.

Who will most likely make up the Ontario International Airport Authority?

Currently, the County of San Bernardino and the City of Ontario have put money into the authority. They’ve had conversations with the County of Riverside, as well.

The board consists of two Ontario reps, one County of San Bernardino rep, and then two appointed reps—currently Ron Loveridge, the former mayor of Riverside, and Lucy Dunn, the president/CEO of the Orange County Business Council. They may add some additional appointments, including possibly someone from eastern Los Angeles County, since the San Gabriel Valley uses Ontario Airport as its primary airport. 

To close, if we were to catch up with you in six months’ time, what accomplishments would you be sharing that had occurred in the interim? And what positive changes might happen in the next six years for Ontario Airport?

First, Ontario used to have 40 direct destinations, with direct flights to New York and Chicago. That’s now down to 14. Direct-flight infrastructure is absolutely critical to making Ontario a more attractive airport. That’s one major node to keep an eye on.

The second regards development, as we discussed. It’ll be very interesting to see what kind of catalytic role the airport will play in the further development of both on- and off-airport property in and around the Ontario area.

Finally, passenger counts are important, but we can’t underestimate the amount of freight that flies in and out of Ontario. The UPS western-US hub is at Ontario Airport. That has significant ripple effects for business. The closer you are to the freight hub, the quicker the response time you can have from a customer-serving standpoint. Continuing to leverage the freight moving to Ontario Airport is going to be another key indicator.