John Wayne:  Handicapped

The following article appeared in the Orange County Business Journal of May 4, 2009

http://www.ocbj.com/archive_article.asp?aID=21629028.79327702.1777412.9487683.6459859.152

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John Wayne: Handicapped

VIEWPOINT

By Leonard Kranser

John Wayne Airport’s “plan year” did not go according to plan.

In a worsening economic slowdown, why would any business plan to turn away customers? John Wayne Airport did just that this past year, in the process of applying elaborate regulations intended to limit utilization of the airport.

Orange County officials created the John Wayne Airline Access Plan and Regulation to implement airport restrictions negotiated with Newport Beach. The plan limits passenger service from April 1 to March 30 and then is re-evaluated.

Here’s how the plan operates. Annually, the airport manager decides how many seats—no matter whether filled or empty—each airline will be allowed to fly. This is to keep the airport operating below its passenger cap. The cap, negotiated in 2003, is currently 10.3 million annual passengers.

These seat allocations are tough to estimate. The procedure requires a prediction of air travel demand and load factors for up to 14 months into the future.

Here’s what happened in the most recent plan year. On Jan. 15, 2008, the Orange County Board of Supervisors, on the airport manager’s recommendation, allocated 600,000 fewer seats to air carriers in plan year 2008-09 than the carriers requested.

None of the airlines on the airport’s waiting list were approved to begin service, with Air Canada and Virgin America forced to wait for yet another year, 2009-10. The reason given was to avoid hitting the 10.3 million yearly passenger cap.

Things did not go according to plan. The slide in passengers worsened. The economy and airline woes took a toll. Contrary to last January’s optimistic projections for plan year 2008-09, the year ended this March with traffic slumping to 8.6 million passengers.

Such results were not a one-time occurrence. To maintain a safety cushion under the agreed upon passenger cap, county officials have repeatedly turned down airline requests to add capacity and denied access to new airlines on the waiting list.

Since plan year 2003-04, the airport has served nearly 6 million fewer passengers than allowed by the agreement between the county and Newport Beach.

Consequently, Orange County’s airport lost millions of dollars of potential revenue from passenger ticket charges, parking and other fees that it might have earned had carriers been allowed to offer more seats. OC travelers saw higher ticket prices than they might have paid if more airlines were allowed to compete.

Something is wrong with a planning process that turns down offers to serve the flying public—from both current and new carriers—and thereby exacerbates a downturn in business.

The existing process asks airport management to do the impossible—accurately predict both air travel demand and airline load factors more than a year in advance—in order to maintain a cushion below the passenger cap negotiated in 2003.

It does not have to be this way. The county owns and operates the airport, which sits in an unincorporated county island adjoining three cities—Newport Beach, Costa Mesa and Irvine. The county entered into an agreement with Newport Beach in 1985 to settle litigation brought by that city and its residents. The agreement was to expire in 2005, but as the El Toro airport project was collapsing, the parties voluntarily reacted early, amended and extended the Newport agreement until 2015.

There is no requirement that this agreement continue forever. In compliance with the California Environmental Quality Act, the county has prepared environmental impact reports considering the effect of eliminating passenger caps. Balancing the interests of travelers and airport neighbors, county supervisors chose not to take that option. They have another chance in preparation for 2015. Newport Beach has the right to sue over flaws in any environmental report, but otherwise has no legal authority over the county’s utilization of its airport.

As OC builds a costly new third terminal at John Wayne—and faces a new round of discussions with Newport Beach—it seems prudent to reconsider whether imposing a passenger cap is good business.

Airport neighbors should be protected by restrictions on aircraft noise, by zoning of the adjacent land and by preserving the airport’s nighttime curfew, but not by turning away customers.

Kranser is editor of www.eltoroairport.org, which opposed development of an airport at the former El Toro Marine base.