Forty-six years after Ontario turned over its airport to the operators of Los Angeles International Airport (LAX), the city is suing to get it back.
Ontario charged that “chronic neglect and mismanagement” by Los Angeles World Airports (LAWA) is costing the local Inland Empire airport a ton of money and threatening its very existence. The “dire and increasingly urgent” situation cost the Ontario area at least $540 million and 10,000 jobs in 2012, according to a legal claim filed in April by the city. The claim was a precursor to the lawsuit filed Monday in Riverside County Superior Court.
The city has been chafing for years over a joint powers agreement entered into in 1967 that was expanded two decades later to include outright ownership by LAWA. Passenger numbers dropped at Ontario/LA International Airport from 7.2 million to 4.9 million during the first three years after the economic crash of 2007.
The L.A. operators blamed the downturn on the recession, but Ontario city officials said the airport has been decimated by L.A. business decisions that have chased airlines away and failed to attract customers. Ontario officials claimed the L.A. operators had a conflict of interest, which was exacerbated by the bad economy that had airports scrambling to retain business.
Ontario proposed in 2010 that the arrangement between the two airports be changed. L.A. would remain the owner and serve as an advisor to the Ontario airport’s board of directors, but would no longer set and manage policy there. Negotiations did not go well and shortly before Ontario filed its April complaint, L.A. offered to relinquish the airport if Ontario bought it for $474.5 million.
Ontario considered that price to be a bit steep in light of a study by consulting firm Oliver Wyman that put the value of the airport at between negative $78 million and negative $104 million. A city of Ontario press release (pdf) argued that none of the previous eight ownership transfers of airports in the last 20 years included a payout like L.A. was demanding. Ontario wanted to assume ownership in exchange for picking up the airport’s outstanding debt with zero payout beyond reimbursement for expenditures.
While LAWA is being sued for a lack of attentiveness to Ontario’s need for change and improvement, it is also being sued for wanting to do too much at LAX. A series of lawsuits were filed last week over a modernization plan that would move runways 260 feet, add terminal space, expand car rental facilities and prepare for transportation center connections to light rail.
Four local governments, a neighborhood coalition and a labor union charged that the plans violate environmental laws and would cause traffic problems. The Los Angeles City Council signed off on the projects last month that would cost an estimated $4.75 billion.