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Ontario Files Legal Complaint to Regain Control of Airport

The City of Ontario filed a legal complaint in the Superior Court of California for Riverside County to regain control of Ontario International Airport (ONT) in order to prevent its operational demise. The filing of the complaint follows the May 22 rejection by Los Angeles of Ontario’s administrative claim for return of the airport. OCBC President and CEO Lucy Dunn serves on the board of Ontario International Airport Authority as Orange County’s representative.

“We were disappointed that Los Angeles rejected our administrative claim without addressing the specific and detailed grounds for relief in the claim,” said Ontario City Council Member Alan Wapner, who also serves as president of the Ontario International Airport Authority. “The rejection leaves us with no choice but to exercise our fiduciary duties by filing a lawsuit as we press our campaign for control of the Inland Empire’s No.1 economic engine.” Wapner said the loss of passenger air service at ONT, resulting from Los Angeles’ failure to fulfill its contractual obligation to use its best efforts to retain and promote air service at the airport, caused a negative economic impact to Ontario and surrounding communities of at least $540 million in 2012 alone, and an estimated loss of over 10,000 jobs.

“Anyone following Southern California airport conditions over the past five years can only conclude that as long as Ontario International Airport’s fate lies within Los Angeles’ control, the airport’s condition will continue to deteriorate to the detriment of the entire region,” Wapner said.

Roy Goldberg, a partner at the law firm of Sheppard Mullin Richter & Hampton LLP, which is filing the complaint, said Ontario selected the court in Riverside County to adjudicate its complaint because neither Ontario nor Los Angeles is situated within that jurisdiction. Riverside County court has handled previous disputes between Ontario and Los Angeles relating to ONT.

As set forth in the complaint, “ONT is at a crisis point because of the emergence of a clear conflict of interest that has existed since Los Angeles, acting through Los Angeles World Airports (LAWA) and its Chief Executive Officer, Gina Marie Lindsey, decided to abandon the regionalization objective that previously had united the interests of the two cities to their mutual benefit. Los Angeles is focused on growth and development at LAX, not ONT, and the result has been an accelerating decline in ONT’s fortunes.”

Under the “Joint Power Agreement” that Los Angeles signed in exchange for the right to control ONT, Los Angeles agreed to “exercise its best efforts to attract and obtain additional regular scheduled airline service for ONT. . .” For many years Los Angeles and Ontario cooperated to develop and grow ONT. However, after passenger traffic at ONT peaked at 7.2 million passengers in 2007, Los Angeles ceased using its best efforts to “attract and obtain additional regular scheduled airline service for ONT” as required by two agreements. Passenger levels at ONT have dropped by more than 40 percent since 2007, to levels not seen since the early 1980s. In 2013, ONT is forecast to serve just 3.9 million passengers – down 46 percent from its peak years.

“Instead of taking specific recommended actions to reverse this staggering decline, Los Angeles’ officials refused to pursue regionalization,” said Ontario Mayor pro Tem Jim W. Bowman, also a member of the OIAA. Bowman noted that in a public meeting in 2008, LAWA Executive Director Lindsey stated that “continuing to pursue a strategy that actively pushes traffic away from the city of Los Angeles and into other jurisdictions could be viewed as a little self-destructive.”

“ONT’s survival is now in jeopardy because Los Angeles has for too long caused ONT’s costs to skyrocket compared with other secondary airports in Southern California and nationwide, has focused on developing LAX’s capacity as an international airport, and
has refused to market ONT as a convenient alternative to LAX,” Bowman said.

“The current administration at LAWA decided to focus its financial and other resources on renovating and promoting LAX, especially to retain and attract more international service, while allowing passenger levels at ONT to dip dangerously low,” Bowman said. “The result is LAWA has breached its contractual and fiduciary duties by failing to promote and expand air service at ONT.”

Attorney Goldberg added: “There are several things that an airport operator can do to attract and expand air service, even in challenging economic times, but if the operator has another airport property that gets all of the operator’s attention and resources, and the operator is trying to protect the favored airport from competition from the other airport, it is the precise recipe for what has befallen ONT. The citizens of Ontario and surrounding communities should not have to bear the economic burden of a failed airport simply because Los Angeles was looking out for LAX and not ONT.

“Nothing that Los Angeles has said in summarily denying the Ontario claim refutes the fact that Los Angeles has breached its contractual and fiduciary obligation to use its best efforts to promote and expand air service at ONT. It has made an obvious choice to renovate and promote LAX at all costs, including immeasurable harm to Ontario and its citizens.”

Ontario officials said Los Angeles cannot justify its neglect of ONT by pointing to a report that says medium sized airports have experienced declines in passenger traffic, when the reality is that ONT has suffered much worse than all other airports except for Cincinnati, which lost a hub carrier following the Delta-Northwest merger. In the Los Angeles area, secondary airports other than ONT lost 12.6 percent of passengers since 2007 while ONT lost more than 40 percent during the same period – a stark differential
not explained by ONT being a “midsize” airport.

Ontario officials said the City of Ontario has no practical alternative but to pursue its judicial remedies to stop the hemorrhaging at ONT by restoring local control over its operations. This would thereby level the playing field so that ONT can better serve the Southern California region and once again be an engine for economic growth in the Inland Empire. For more information contact Matt Petteruto, Vice President of Economic Development.


Posted on June 4, 2013

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