Gina Marie Lindsey Updates LAX’s Capital Program: Bradley West

Gina Marie, in September the new Bradley West International Terminal at LAX opened. Address the significance of that terminal opening and whether it makes LAX more competitive in attracting and retaining both international and domestic carriers.

Gina Marie Lindsey: On September 6, 2012 Gate 134 in the New Tom Bradley International terminal opened.  The activation process was designed to activate the gate in phases or levels. Beginning with a Qantas arrival on September 6th, usage of the gate has steadily increased. The first departure occurred on September 24 with Cathay Pacific. LAWA is now mixing in a combination of arrivals and departures and will soon be adding additional airlines and aircraft. Completion of the phased approach is targeted for no later than mid-October. Of the 18 gates being built in the new terminal, nine will be able to accommodate the new generation of larger aircraft like the A380 and Dreamliner. That definitely makes us more competitive than we were before September 6th because we are now getting enough A380s on a daily basis that we are out of A380-capable contact gates. By mid-October we will have six A380 arrivals a day.  We had only two of those, and we now have five as of today—soon to be six mid-October. Three of them conflict with schedule overlaps. We were bussing at least one A380 load per day from the remote gates on the west side of the airport to the Tom Bradley Terminal. That’s an unhappy experience for any traveler, and it’s particularly bad when you’ve got the intensity of an A380 load. So it helps to be able to have the arrival capability on at least one additional gate.

Is the Bradley West Terminal opening a significant milestone in terms of capital investment in the modernization of LAX?

The Bradley West Project has a series of milestone openings because we are opening up as much of it as we can as early as possible. The significance of this first milestone opening, in a project that will not be completely finished until the end of 2014, lies in being able to activate one gate. The next milestone opening will activate all three of the gates on the North Concourse west side late this year. The subsequent milestone will be opening up the South Concourse and the Great Hall commercial area, which we think will happen in the second quarter of 2013. After that, we will reconstruct a new security screening checkpoint to connect the new terminal building to the old international terminal.

So that’s a lengthy way to say we set September 6th as the date,  and thanks to the amazing dedication of a committed team, we reached our first milestone. 

Please put into context plans for investment in LAX. What’s been accomplished? What remains to be built? 

We’ve got a $4.1-billion Capital Budget. Approximately $2.2 billion of that budget is expended, so we’re a little over half-way through. This $4.1-billion, Capital Budget #1 is more than the New Tom Bradley International Terminal.  It also comprises a number of completed, on-going, and future projects that will positively impact the passenger experience at ALL of LAX’s terminals, both domestic and international and result in an LAX that is safer, more convenient, and more energy efficient. Some of the other project include a central utility plant replacement, elevator and escalator replacements, upgraded passenger lounges, dining and retail options, new taxiway and taxilanes, and projects that airlines are doing—investment of $240 million in Terminal 6 by Alaska Airlines and improvements in Terminal 5 by Delta Airlines.

It’s important to note that Capital Budget #1 is not the end. We’ve got another $8 billion-plus to spend on this airport if we’re really going to make LAX the airport this city deserves. 

Capital Budget #2 is actually already partially underway. We are starting these projects as they are defined and designed. Examples include things like improvements in Terminal 2. Just yesterday the Board of Airport Commissioners recently approved the $6-million design contract to Gin Wong Architects to design basic, functional improvements for Terminal 2. 

Now a lot of Capital Budget #2, without going into the weeds too much, is not what I would call glitz and glamour. A lot of it is infrastructure redevelopment such as electrical systems, plumbing systems, upper roadway joint repair—that kind of thing. It’s invisible, nobody really likes to spend money on it, but when the infrastructure fails the airport doesn’t function well. 

Professionally, you know airport operations worldwide as well as or better than anyone in North America. What airports is LA competing with? What compels LAX’s capital investment plans? 

We’re competing with an increasingly sophisticated customer base worldwide. People are traveling more. They are going to airports that in many parts of the world are leap-frogging US airports in customer service, sophistication, technological capabilities, and the ambiance of their terminal areas. We are frankly in a catch-up mode. When you fly through Hong-Kong or Shanghai, you’re going to go through absolutely beautiful state-of-the-art airports. We are a major gateway to the United States, and we don’t stack up. 

How does LAX stack up against San Francisco, Seattle, or Dallas?

We have better weather! However, our airport experience is not as good as Seattle, San Francisco or Dallas today. We will be in the very near future, but that’s why we have to invest in our facilities and get ourselves up to snuff. 

Gina Marie, for those in the civic community who tracked (and recoiled from) the nasty political battles over the award of LAX concession contracts, how do you regain the confidence of both the airlines and the public that LA political representatives can oversee airport operations?

It’s difficult. The only way we can prove we can manage the challenge is to do it. We find that managing these political winds is not easy. In the end, we deliver the product, but the progress is so painful it’s easy to see why smarter people running the airport in the past, simply extended existing contracts.

Now I personally wish that it was less painful. But we are trying very much to learn from our experiences—we now play defense a lot in our procurements because of the experience we went through in the first concessions round. The frustrating part for me is not that we don’t have lessons to learn—we do. We’re trying our very best to learn them. It does mean, however, that it takes us quite a bit of time to get procurements out on the street. We allocate the very best talent in the organization to the larger business opportunity procurements, we think through every possible vulnerability, from every angle, to be sure that we have thought of absolutely anything anybody could object to and have guarded against it. That takes a lot of time, which is frustrating.

Let’s turn to the taxiways, the runway challenges that have burdened airport management for a decade. Is there a pathway to approval both from regulatory agencies and the public? 

We’ve issued a Draft Environmental Impact Statement that has nine alternatives for development that evaluate the different solutions for the yellow light projects that were not approved in the original master plan. So that’s on the street. We have not identified a preferred alternative, however, we will soon.  

The basic areas that are under consideration as a part of that  draft EIR are the north airfield and land-side improvements at the airport. What will be considered is a preferred alternative that includes a runway separation that moves the outboard runway to the north at a sufficient distance to gain FAA approval for standard operations for the large aircraft, hopefully in all weather conditions. On the land side, we evaluated traffic flow in the central terminal area, explored the pros and cons of a consolidated rental car facility, and asked, if it’s advisable to build such a facility, where should it be located? Where should we, from an airport standpoint, try to concentrate the future inter-modal transfer demands—not only Metro busses, but Santa Monica busses, Culver City busses, the various shuttles that come in and out of the airport—how do we manage that traffic in the best way? 

The public comment period closes on the 10th of October. The LAWA Project Team then reviews, evaluates, and responds to all of the comments. We will identify a preferred alternative later this year, and hopefully take the recommendation to the Board of Airport Commissioners in January of 2013. After that, there is a prescribed process that takes it to the Airport Land Use Commission, which is a subset of the County, as well as two LA City Council committees, and ultimately, the full Council. We are trying very hard to get this completed by June of next year. 

Gina Marie, all the approvals you seek will be considered as the election campaigns for Mayor and LA City Council heat up. Does that benefit or burden the process of getting essential approvals?

I would say that timing is everything, and ours is not optimal. But the option is to wait, and, frankly, I think this airport and the community that supports this airport have waited long enough.

Metropolitan LA is building-out ground transit across the region. Is LAX planning the connection points for intersection with Metro’s present and prospective rail lines? 

First of all, a robust connection between Metro and the airport is imperative. The airport is staunchly in support of that, and we will, between us and Metro, achieve that. We have a couple of challenges at the moment. One is that Metro was fortunate enough to get Measure R, which expedited their ability to do definitive planning. At the airport we have been lagging on that front because of our specific plan amendment process. The draft EIR has us basically in a programmatic level of development definition until we get CEQA approval. That hopefully will be by June of next year. 

In the meantime, MTA has been able to race past us, and we can’t keep up because we can’t plan at the same level of detail until we have programmatic CEQA approval. So our draft EIR has a general concept of the airport putting an inter-modal transportation facility (ITF) right around 96th and Lot C, and examines the option of a consolidated rental car facility on Manchester Square. But again, we’re talking bubbles here, so it should not be seen as very precise. 

The airport would connect the ITF to the terminals by building a dedicated, grade-separated bus-way that could eventually become some sort of automated people mover when airport traffic demand grows. 

But that’s as detailed as our planning is on the airport side of things. MTA, I think, has narrowed their options down to about four. We’re working with them, and I know they would like us to be more granular in our planning. I hope that we can get the decisions on CEQA so we can oblige them sooner rather than later. 

What explains Los Angeles’ ability to expedite a football stadium through environmental review, but you can’t expedite LAX plans?

I wish I had an explanation for that. I really don’t know.

Let’s turn to your regional responsibilities and how your board and the City of LA manage those relationships, most especially with Ontario and Lancaster. 

Regionalization is a concept that both the Mayor and the board continue to support. I think the evidence shows that regionalization doesn’t necessarily happen by regulatory fiat. The predicate was that LAX was going to be at 78 million passengers by now, and clearly if that were the case dispersion would be more likely to occur because it would be more congested at LAX. But LAX is at about 62 million passengers, not even back to its peak of 67.5 million passengers in the year 2000. So the growth of traffic in other regional airports has not materialized as was anticipated. Then add, on top of that, the reality of the global economic slow-down and changes in the airline industry (their business model and their appetite for risk have changed drastically) and both of our outlying, intended commercial service airports, Ontario and Palmdale, are not what you would call thriving. 

That’s not unique. Medium-hub airports throughout the country are suffering; the same issue exists in Providence and Manchester with Boston’s Logan Airport growing and those airports not. We’ve had some bumps on the road with our community relations in Ontario, and we do not have a clear “fix” for the fact that Ontario has lost a lot of traffic. Airlines look at employment rates, new housing starts, and median household incomes as an integral part of their route planning process. In their new, risk-averse business model, the Inland Empire doesn’t stack up well.

The Ontario community’s desire to take more ownership over the airport, is this possible? 

We’ve been willing to talk about that. The issue has been, and continues to be, determining appropriate value. If LAWA is divesting, either through a long-term lease or a sale of a City of Los Angeles asset (which is what the Ontario airport is), we need to have an appropriate business transaction that passes muster with The Board of Airport Commissioners and the City Council. Are we transferring an asset with an appropriate value proposition attached to it? I think that’s where the major difference lies. We are discussing with Ontario what some options could be, and I’m hopeful that we can reach appropriate terms.

Lastly, if we again interviewed you again in a year, what benchmarks will you have hit? What will be your priorities? 

Yesterday’s board action is one I am very proud of. It’s not a physical change; it’s a business change. Five years ago when Mayor Villaraigosa gave us the challenge at LAX, not only did we have to build the facilities—the tangible assets—we also needed to build staff capabilities, structure a project delivery system, and adjust all of our business relationships and customers. The fundamental backbone of our ability to finance needed capital improvements in the long-term relied on us settling the plethora of active lawsuits between our airline customers and our airport, and establishing a rates and changes methodology that meets industry standards, provides predictability and transparency to the airlines, is applied fairly across the entire airport, and is self-adjusting to recover investment costs once airport improvements are brought into service. The Board of Airport Commissioners adopted just such a program yesterday. It is intangible, but strategically critical for the future of this airport. Without it we could not continue to deliver physical assets and facility improvements. So that is one of the things that a year from now will remain one of our proudest, and most fundamentally important accomplishments.

Secondly, we’ll have more physical things. Going through the “veil of tears” of all the concessions awards will fade into a distant memory by the time we see some of the new stores and restaurants actually built and in service. 

A year from now we will have the west side of both Bradley West concourses open. We’ll be demolishing the old concourses of TBIT and doing the necessary work to connect the old building to the new. DELTA will be finishing the improvements in Terminal 5, we expect to have a deal done with United Airlines to improve Terminals 7 and 8, perhaps another with Southwest for some improvements in Terminal 1, and hopefully have a decision on the Specific Plan Amendment and CEQA EIR that will approve modernizing the North Airfield, clear the path for improvements to the north terminals, and enable coordinated, compatible transportation and land-use developments to the north and east of LAX.