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Hot Air Over the Airport

April 18, 1993

A new analysis indicating that leasing Los Angeles International Airport would realize much less money than once predicted should come as no surprise. We hope the report finally puts an end to the pie-in-the-sky fantasy that a privatized LAX would provide a huge windfall to the city. No one knows exactly how much money the city might realize under any such arrangement. And, as we have said before, almost everyone has underestimated how long it would be before the city saw any money at all.

Exasperation with the airport's operating arrangements, more than economic sense, long has powered the bandwagon to sell or lease LAX. While city general fund revenues for such vital city services as police and fire have dwindled, LAX continues to make a profit. The federal and local rules that appropriately protected revenues of the 46-year-old airport during its tenuous early years make much less sense now. These rules bear revision.

One proposal to tap into airport profits is selling or leasing the facility to a private operator; another is writing new--and more profitable--landing fee agreements between LAX and the airlines. We prefer the latter course. Mayoral candidate Richard Riordan has made leasing the airport to finance a 40% boost in the police force a cornerstone of his campaign. Other candidates for mayor or the City Council also entertain notions of leasing. But their proposals are based on wistful assumptions that LAX would generate millions if not billions to the city through lease or sale. Maybe, maybe not.

The new analysis, done by an outside consultant and requested by airport officials, indicates that the city could expect less than $15 million annually from leasing--far less than earlier estimates, which ranged up to $130 million. The airport might earn more, depending on how much new business it generated, but how much more is unclear. And the city wouldn't see an additional dime until the existing federal arrangements were redrawn--no easy matter.

The far wiser course is to retain city ownership and operation of this uniquely valuable facility while restructuring contracts with airlines and concessionaires. Los Angeles must also continue its efforts to revise the rules that prevent it from using airport profits for essential city services. The current 40-year-old landing fee agreements were to expire last December but the airport and the City Council extended the deadline through June. In the short run, Los Angeles' best interests are served by concluding a new agreement quickly so the city can move on to dismantling the remaining legal fences around LAX profits.

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