Van Nuys Airport Tenants Seek Private Management

Businesses, aircraft owners and pilots call on city not to increase rents and fees, but officials insist budget deficits must be reduced. Tenants at Van Nuys Airport on Thursday called on Los Angeles officials to freeze proposed rent increases and consider handing over the management to a private company that might run the popular airfield more efficiently.

The Van Nuys Airport Assn., which represents businesses, pilots and aircraft owners, made the requests in a letter to Gina Marie Lindsey, director of Los Angeles World Airports, the operator of LAX, Ontario, and Van Nuys — one of the busiest general aviation facilities in the world.

Association officials say the airport agency’s current efforts to raise rents and fees to eliminate budget deficits has contributed to the loss of almost 400 jobs at aviation businesses and threatens to drive more companies to other airports.

“Van Nuys is on the verge of an economic state of emergency,” said Curt Castagna, an airport association member and president of Aerolease Group. “We are committed to partnering with Los Angeles World Airports to find solutions that will help save jobs, retain businesses and preserve the economic vitality of the region.”

The association’s request that the city’s airport department consider privatizing the management of Van Nuys follows efforts by Palmdale officials to gain control of Palmdale Regional Airport, where it has been difficult to establish commercial air service. Faced with a dramatic decline in passengers, city officials in Ontario are also dissatisfied with Los Angeles World Airports and are weighing their options.

“Van Nuys may be a model facility for contracting out its management to a private venture,” Castagna said. “We’d get better service and an airport that is more responsive to the needs of the San Fernando Valley.”

Known internationally, Van Nuys is home to a range of aviation businesses and more than 700 aircraft. The airport has been hit hard by the national recession and a long-term decline in general aviation that has reduced the number of flights at Van Nuys by about a third since 1999.

Lindsey said Thursday that she and her staff have been working with airport tenants to reduce costs, but the agency remains committed to reducing Van Nuys’ budget deficits, which have persisted at the facility since 1992.

Airport records indicate that the gaps have ranged from $549,000 to $9.3 million a year — holes that have been filled with subsidies from Los Angeles International Airport. Lindsey expects this year’s deficit to be $3 million to $4 million.

To reduce the red ink, airport officials have been raising rents and various charges, including an almost fourfold increase in the tax on every gallon of aviation fuel delivered at Van Nuys — a charge that has not set well with pilots and aircraft owners. Officials also have proposed a “deficit recovery fee” to be levied on tenants.

“We need to meet the operating and capital costs of that airport,” Lindsey said. “We have reduced costs at Van Nuys. There is room to reduce them further.”

Earlier this month, Lindsey and Alan Rothenberg, chairman of the Los Angeles Board of Airport Commissioners, met with major tenants at Van Nuys to discuss rents, the recovery fee, budgets and whether an association of key leaseholders could manage the airport.

Robert F. Maguire, owner of Maguire Aviation Inc., attended the meeting. He said that tenants were asked to come up with a possible airport budget, which could serve as a basis for further talks.

“We had an enormously productive discussion and we started to come up with solutions to the vexing problems that have bothered tenants and Los Angeles World Airports,” Maguire said.

Instead of recovery fees and rent increases, tenants say the airport should concentrate on reducing expenses and creating economic incentives to attract businesses and keep existing tenants from closing or relocating to cheaper airfields.

Association members cite recent decisions at the Port of Los Angeles to create a $25.7-million economic relief package for terminal operators, including 6% rent reductions and discounts in various fees.

Lindsey said she would be willing to consider whether a private management company at Van Nuys would be a better operator than Los Angeles World Airports. An audit of the airport agency by KH Consulting in late 2008 recommended that the idea be considered.

“Everything is on the table,” she said. “We are certainly open to it.”

Five airports controlled by the Los Angeles County Aviation Commission are managed under a contract with American Airports Corp. in Santa Monica. The facilities include Brackett Field, Compton/Woodley, El Monte, Fox and Whiteman.

Oceanside Municipal Airport in north San Diego County also is operated by a private company. One of the few commercial airports in the nation under private management is Bob Hope Airport in Burbank.

“It works quite well,” said George Butts, vice chairman of the aviation commission. “The county has saved money by having someone else come in and run its airports.”

Editor’s Note: The Burbank Airport is operated by the Burbank Airport Commission, created by the three cities that bought it Burbank, Glendale and Pasadena. They each appoint three members from each city and have staff that run the airport similar to the city governments like Burbank does. Burbank has an elected city council, but a City Manager that actually runs the city and its various departments. The Burbank Airport Authority was created to be independent of the normal City governments.

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