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Thursday, February 22, 2007

Economists? What Economists?

By Walter Moore, Chief Economist and Legal Analyst, L.A. Policy Institute.

An article in the L.A. Times attributes a decline in international traffic at LAX to a supposed failure to "modernize" the facility. The source of this information? Un-named economists, plus our old friend, the ubiquitous faux economist Jack Keyser, who has no degree in economics, but a great job with an outfit that really puts the "profit" in "non-profit."

Eager to learn the names of any economists who believe that international air travel is a function of airport "modernization," I therefore sent the following letter to the reporter who wrote the article, and I will share those economists' names with you if and when she shares them with me. Unless and until that happens, however, I, for one, will assume that these "economists" are, like Keyser, not economists at all, but are instead merely advocates for another public works boondoggle who hope to gain unwarranted credibility by labelling themselves as economists.

* * *

Dear Ms. Oldham:

In your story, you say, "Economists blame the shift on LAX's cramped and outdated terminals and lawmakers' inability to agree on a plan to modernize the airport while other cities have built gleaming new concourses."

Could I trouble you for the names of those economists?

I notice your article referred to one, and only one, person as an economist, namely, Jack Keyser. As his biography shows, however, he has no degree in economics.

Thanks in advance.

Cordially,
Walter Moore

25 Comments:

Anonymous westchesterkids.org said:

>>cities have built gleaming new concourses."

Can any of those 'economists" name any cities south of San Jose that have built "gleaming new concourses" that are filling the void?

Ventura? no, Palmdale? no, Ontario? maybe but they aren't seeing any increases in traffic, Burbank? no, Long Beach? no, Orange County? a big NO, San Diego? no... ummm where do we go from there, Acapulco?

February 22, 2007 11:30 PM  

Blogger Westsider said:

The L.A. Times article on LAX losing flights to San Francisco failed to mention a key fact: Qantas pulled out of San Francisco in 1996 after more than 40 years of service there (if you want to go back to British Commonwealth Pacific Airlines days). In departing SFO, Qantas lost their landing slot. This was such a critical mistake that Qantas fired the employee who made the pullout decision. It took until last year for Qantas to regain the landing slot. The reduced landing fee incentives from SFO to re-open the Sydney route did not hurt either.

The article correctly pointed out that airlines are offering more direct flights between inland hubs such as Las Vegas and Chicago to international destinations. There are four factors driving this phenomenon.

The first factor is longer-range aircraft that allow for non-stop city pairs such as New York-Singapore and Houston-Dubai. Before the rollout of aircraft such as the Airbus A340-500 and the Boeing 777-300 Extended Range, the aforementioned city pairs would have required one or two stopovers or connections.

The second factor is the liberalization of bi-lateral aviation agreements. Since 1992, the U.S. Government has been actively negotiating with many countries for “open skies” agreements. In the past, bi-lateral agreements limited the routes (city pairs), number of flights, airlines and even airfares. Often times, the bi-lateral agreements designated coastal gateways such as LAX and New York-Kennedy Airport (JFK). Under “open skies” agreements, airlines from both countries can essentially fly between any city in the U.S. and any in a foreign country with an “open skies” agreement. For example, open skies agreements have made it possible for Northwest to fly non-stop from Detroit to Amsterdam and from Las Vegas to Tokyo.

The third factor is airline operational efficiency. U.S. overseas carriers American, Delta, United, Northwest, US Airways and Continental all have hubs that draw in more passengers than they can shove through LAX. American’s hub in Dallas offers non-stop flights to Europe and to Tokyo. United has a large hub at Washington Dulles Airport with many domestic and European flights. United is moving its New York-Tokyo route to Washington and United was just awarded the Washington-Beijing, China route by the U.S. Transportation Department.

The fourth factor is consumer choice. Ask anyone who flies for business or pleasure and he or she will tell you they will prefer a non-stop flight over a one-stop or a connection. The new aircraft and liberalized bi-lateral agreements provide more point-to-point flying. This makes routes such as Continental’s Newark-Glasgow, Scotland flight on a Boeing 757 narrowbody twin-engine jet possible. Why be forced to change planes at London-Gatwick Airport- one of five airports in greater London.

LAX can afford to lose travelers whose final destination is not Los Angeles. Transfer passengers do not provide a significant financial impact than those businessmen and tourists who will be spending their time and money in Southern California. By not having transfer passengers, LAX can have additional room for new international passengers without having to expand the existing facilities. As it is, no airline, with the exception of United, really considers LAX to be a hub. While LAX is the fourth busiest passenger airport in the world, it is also the number one origin-and-destination airport in the world. This means more people begin or end their journey at LAX than any other airport. It is doubtful that LAX will lose the top O&D status. As long as the Hollywood sign stands and the beaches and amusement parks remain open, Los Angeles is never going to stop being a popular business and tourist destination.

LAX can stand to update its international terminal to provide more room for check-in and waiting areas and higher quality restaurants and gift shops. However, that should not be the end. LA officials need to significantly expand international capacity at LA/Ontario International Airport. LAX is too congested and Ontario offers acres and acres to grow with community support. Ontario needs full-time U.S. Customs and Immigration officers- not ones borrowed from LAX for two international flights a day. A truly international LA/Ontario International Airport can not only relieve the winglock* at LAX, but also the freeway gridlock in Southern California. Imagine how pleasant it could be for Inland Empire residents to catch their flights to London or Tokyo from Ontario Airport as opposed to sitting in four hours of traffic to get to LAX?


* “Winglock” term coined by Angie Papadakis

February 23, 2007 12:49 AM  

Blogger Westsider said:

One other point. LAX losing 12% of international flights since 2000- no mention is made of September 11, 2001. Airlines cut back 20% of the capacity immediately after 9/11. Not all of that capacity has been restored to pre-9/11 levels in all markets. Since 9/11, airlines have been "right sizing" aircraft to routes- in some cases this means an aircraft such as a Boeing 767 has replaced a larger Boeing 747 on a route to reduce the number of empty seats. If you have flown lately, you will notice that almost all of the seats are taken because there are less seats available due to a smaller size aircraft.

February 23, 2007 12:56 AM  

Blogger Zuma Dogg said:

12:49pm,

Gonna keep a copy of your post handy, for public comment, as needed. West-siiiiiiiiiiiiied!

February 23, 2007 5:17 AM  

Anonymous westchesterkids.org said:

Absolutely. Great stuff Westside.

February 23, 2007 7:22 AM  

Blogger Walter Moore said:

Westsider --
GREAT analysis. Thank you.

Let me add one more reason to the lis for decline travel to L.A.: the city has become a cesspool, and is hostile to business.

Fewer businesses here means fewer business trips.

More traffic, congestion, and third-worldliness means less appeal to tourists, who can instead visit beautiful San Francisco or the various geographic wonders around America.

February 23, 2007 9:21 AM  

Blogger Archie Bunker said:

9:21

Right on Walter. Folks don't realize that it is the current clowncil and our wonderful media Whore Mayor Beaneraigosa and his right hand gouls Jack Dumbass and Bitter Bernie Parks that prevented the Modernization from happening for so long.

February 23, 2007 10:17 AM  

Anonymous Anonymous said:

You've got to admit that the arrival area for international flights is in grave need of a complete makeover. No matter where I've flown in from, arriving back to that craphole is depressing.

February 23, 2007 10:52 AM  

Blogger Westsider said:

Archie,
The reason why modernization has taken so long at LAX has been the past failure of LAX management to actively include stakeholders in the formulation of the LAX Master Plan. Airlines, nearby residents and other government bodies were left out of the process.

When Jim Hahn was elected Mayor on a promise to not expand LAX into surrounding communities, he put incompetent political appointees in charge of LAX. If there is anyone is to blame for botching LAX modernization, then it’s former Mayor Jim Hahn, former Deputy Mayor Troy Edwards and former Airport Commission President Ted Stein. They cooked up LAX Master Plan Alternative D, the “Safety and Security Plan” to modernize LAX that the respected RAND Corporation found made LAX less secure.

Hahn, Edwards and Stein did not act upon input or ideas from the County of Los Angeles or the communities surrounding LAX to remove some major objections such as the Ground Transportation Center (GTC) in the Manchester Square residential neighborhood. The GTC was envisioned by LAX officials as a new front door to LAX; critics properly derided the GTC as a new terrorist target. Had Stein not arrogantly proclaimed that Manchester Square is “not negotiable,” then there might not have been any lawsuits. All of these groups sued over the LAX Master Plan and thanks to Mayor Antonio Villaraigosa and Councilman Bill Rosendahl, there was a stipulated legal settlement. The plaintiffs now have a role in helping to reshape the LAX Master Plan into something that they, and everyone else, can live with.

Villaraigosa and Councilmen Parks and Weiss should be congratulated for having had the courage to demand that the LAX Master Plan be reworked to prevent litigation. After the lawsuits, the other Council Members saw the errors of their ways and approved the settlement.

Now with regards to the upgrade of the Tom Bradley International Terminal: the interior upgrades to this terminal for items such as inline baggage screening and a new concession area above the check-in area were not a part of the LAX Master Plan. Work is already underway in the terminal to have new airline lounges group by airline alliances- OneWorld, Star Alliance and SkyTeam. A fourth lounge is being set-up for airlines not in an alliance.

February 23, 2007 12:27 PM  

Blogger Archie Bunker said:

"Villaraigosa and Councilmen Parks and Weiss should be congratulated for having had the courage to demand that the LAX Master Plan be reworked to prevent litigation. After the lawsuits, the other Council Members saw the errors of their ways and approved the settlement."

Wait a minute, the settlement was approved before either of these nutcases ran for Mayor. All this is rearranging deck chairs on the Titanic.

Nothing more and nothing less. If this is a case of hiring compentant staff or workers, Villaraigosa ain't doing much better hiring the same nutcases under Riordan's adminstration that screwed it up from the get go.

If this was what "courage" gets you, then no thanks the city doesn't need it.

February 23, 2007 12:57 PM  

Blogger Westsider said:

No, the settlement was announced on December 1, 2005- six months AFTER Villargosa was sworn in as Mayor. Jim Hahn was Mayor at the time of the lawsuits.

The City Council approved the settlement on January 18, 2006.

The press releases are available at www.laxmasterplan.org

There has been turn-over in LAX airport planning staff. There has not been a complete turn-over in mindset of some LAX Master Plan staff of excluding stakeholders from the planning process.

February 23, 2007 1:24 PM  

Blogger Walter Moore said:

The "settlement" was nothing to be proud of. First of all, the $11.5 billion LAX plan was a major boondoggle -- you spend more than K-Mart spent for Sears, and wind up with three FEWER gates.

Second, the "settlement" did not require LAWA to refrain from doing anything. All its doing is "reconsidering," after which, it can come right back and proceed with the same BS plan.

Third, the "settlement" was a taxpayer ripoff, because it called for something like $250 million to go to groups like the Nation of Islam, which has nothing to do with anything.

Let's not confuse "modernization" with "make-work public works ripoff fiasco."

February 23, 2007 3:16 PM  

Blogger Westsider said:

There were two settlements, so let’s not get confused.

The first one was a public relations fraud put on by the SEIU union organizing front group known as LAANE- Los Angeles Alliance for a New Economy. They were not going to sue; they got some groups together like a ministerial alliance headed by a LAANE employee and suckered in some other organizations such as the Natural Resources Defense Council into putting together a "Community Benefits Agreement." Other than job training and first source hiring benefits, the CBA didn’t guarantee anything than already committed to by LAX in the Master Plan such as electrification of gates for aircraft power and soundproofing. There were no benefits for communities north and south of the airport. This first settlement was approved during Hahn's term in office.

The second settlement was the result of an actual lawsuit by the City of El Segundo, the County of Los Angeles, ARSAC and the Federation of Hillside and Canyon Homeowners. This lawsuit was settled out-of-court during the Villaraigosa Administration.

The gate reduction will be 10 gates, not 3. Not all of the expensive projects will be built. The jury is still out on what the final plan will be and how much it will all cost.

February 23, 2007 4:13 PM  

Blogger Archie Bunker said:

4:13

This is what I never understood with folks bitching about the plan.

The original plans called for a full demolition of 3 of the oldest terminals that would reduce a lot of gates right of the bat in order to add widen the runways for the bigger jets because if you notice very carefully on the north runways, there's no room to just use eniment domain.

LAX is landlocked.

Some would spin and say that the centralized check-in area was more a terriorist target, but think about it someone in a van with a nice bomb could access the airport near terminal one, right next to taxiing jets loaded with fuel and cause major damage compared to just a few hurt with secured access points within the Central terminal.

Multiple entry points mean multiple ways for terriorists and other undesirables to get you.

February 23, 2007 5:00 PM  

Blogger Archie Bunker said:

3:16

Thank you Walter again. This Westsider can't get his own facts straight.

There were two lawsuits and because the first one dealt with the bulk of the concerns thereby making the second one meaningless.

All this so called "Courage" by Jane Harman and Antonio Villaraigosa (wow I'm shocked I didn't call him Beaneraigosa) was nothing more than ploys to get elected or re-elected.

Smoke and Mirrors.

February 23, 2007 5:05 PM  

Blogger Walter Moore said:

Thank YOU, Archie.

The reporter did write back to me, but provided zero names. I must therefore conclude that NO economists claim that international air traffic depends on who has the flashiest terminals.

I mean, come on! Carriers fly wherever people want to go. Now, more than ever, there is less reason than ever for anyone to fly to L.A. Businesses have fled in droves. Illegal aliens have flooded into the city, making it crowded and unpleasant. Why in the world would anyone want to fly here?

And to the extent that LAX was simply a good place to stop to refuel, well, advances in technology no longer force the unwilling to land here en route to somewhere better.

The good news is: this makes it more clear than ever that we do NOT need to expand the airport. With air travel down, and headed further down, we have no reason to spend money to facilitate MORE passengers. I have nothing against a new coat of paint, some new carpeting, and more TSA employees, but don't tell me we suddenly need to spend $11.5 billion in order to accomodate FEWER passengers!

February 23, 2007 6:55 PM  

Blogger Walter Moore said:

P.S. The settlement I mentioned was the one filed with and approved by the Court. I downloaded it long ago, and read it. There was no bravery involved by Villaraigosa & Co. It was another case of "screw the taxpayer."

February 23, 2007 6:56 PM  

Blogger Westsider said:

Archie, I have my facts straight. When we first started posting comments on this thread, you had referred to the first settlement and I referred to the second settlement. If you may recall, I did post again acknowledging two settlement agreements.

In the first settlement agreement, the LAX Coalition of LAANE, Nation of Islam et al got sound proofing money, job training programs, a health study on airport pollution and a reinforcement of previous LAX commitments to electrify gates and use clean fuel vehicles. The LAX Coalition also had the Inglewood and Lennox school districts as partners and those school districts will be paid over $100 million each for soundproofing schools. The first settlement did nothing to cap passenger traffic at LAX or promote use of regional airports such as Ontario and Palmdale. A missed opportunity in this settlement could have prohibited night overflights of Inglewood, Lennox and South L.A. beginning at 10:00pm or earlier instead of midnight. Instead this first settlement seeks to codify the midnight to 6:30am prohibition.

The LA County/ El Segundo/ ARSAC/ Hillside lawsuit settlement sought to put a cap on the number of gates at LAX (a reduction to 153 from the current 163), a revisit of the “yellow light” projects to come up with better alternatives, promotion of regional airport usage at Ontario and Palmdale, additional soundproofing, job training, and committing LAWA to work with Westchester neighbors. LAX, to its credit, announced this month that it has secured ExpressJet with new routes out of Ontario Airport and United Express with twice daily regional jet service from Palmdale to San Francisco.

I agree that spending $9 billion or $11+ billion on LAX is a waste of money. Moving the north runways and tearing down three terminals are not needed. LAX officials have been quoted in the newspaper that LAX can handle the new megajumbos such as the A380 today. LA City’s priority and focus needs to be placed on strengthening Ontario and Palmdale. Yes, Walter, you are correct that LAX could use some minor interior remodeling.

Hardly anyone outside of Mayor Hahn’s office liked Alternative D save the trade unions that were going to receive better than union wages under a “project-labor agreement” and a few sellouts in Westchester who sucked up to Hahn for political favors.

A word on security: Having separate terminals actually does help compartmentalize LAX. If there is a security problem in one terminal, that does not force the closure of all of the terminals. Had the GTC been built and there was a security problem in the GTC, then LAX would be completely shut down.

A word on who's paying for LAX- it's not screw the taxpayer. LAX is self-supporting through landing fees, terminal rents, fuel sales and concessions contracts. The airlines pass these costs onto airline passengers. We might all be taxpayers (even tourist and illegals aliens that buy a six pack at the convenience store), but not everyone is an airline passenger.

The second settlement is not perfect, but it has been the best chance so far to scale back expensive and community invasive plans to expand LAX.

February 23, 2007 11:16 PM  

Anonymous Anonymous said:

M. Moore,

I never knew an Economics degree was a prerequisite to be an economist.

Sure, it probably helps. But does the definition for "Economist" on ANY dictionary specify that a higher education degree is needed to fulfill this role?

Thanks in advance.

Cordialement,
Blogger Anonyme

February 23, 2007 11:29 PM  

Blogger Walter Moore said:

We're going to have to agree to disagree on the "screw the taxpayer" angle.

There is no free lunch. The money for the airport boondoggle comes from people and businesses that use the airport, and is not something they are free to pay or not pay. You either pay, or you take the bus or use another airport.

The tax is not a direct one, but it is a tax just the same, insofar as it is not a voluntary expenditure by parties dealing at arm's lengthy, but is instead a mandatory fee imposed by a government monopoly. Or something.

February 23, 2007 11:34 PM  

Blogger Walter Moore said:

I meant "arm's length," not "arm's lengthy," though the latter phrase is already growing on me.

"Fifteen dollars for a widget? That doesn't sound very arm's-lengthy to me!"

February 23, 2007 11:36 PM  

Blogger Walter Moore said:

To 11:29:

No, of course not! We should no more expect someone calling himself an "economist" to have a economics degree than we should expect a physician to have a medical degree.

As you point out, training is absolutely irrelevant to whether one is qualified as an economist. The same goes for the complete absence of any publications in a peer review journal.

This is America. What matters here is not how others (e.g., accredited universities) view you, but rather, how you view yourself. If you say you're an economist, biologist, physicist, architect, professor, mechanic or engineer, then how dare anyone say otherwise?

February 24, 2007 1:30 PM  

Blogger Archie Bunker said:

2/23 11:16

Westsider.

Oh they can handle the A380. How come it ain't landing here?

If that is the case. There must be something wrong with it.

And if there's any problem or incident at one of the terminals at LAX usually they shut the WHOLE airport down. This is something folks don't understand. Another thing is the space issue inside the terminals. If it all it took were hiring more ticketing agents and security screeners where's the space to prevent these lines outside? It has to come from somewhere.

February 24, 2007 10:33 PM  

Blogger Westsider said:

Archie,
The A380 is coming to LAX- but the first visit of the A380 to the U.S. will not be at LAX as Airbus had promised. Airbus has reneged on its promise to bring the A380 to LAX for airport and gate compatibility testing. Airbus claims that Lufthansa, one of the A380 customers, has chosen New York and Washington, DC instead as the first cities for an A380 visit. LAX will get an A380 visit, but perhaps not until July 2007.

The first A380 will not be delivered to an airline for passenger service until October 2007. Singapore Airlines will receive the first aircraft. There have been various newspaper articles about the A380 wiring problems. These wiring problems have resulted in a 2 year delay of delivering the aircraft.

Up to eight A380 flights a day will become common at LAX beginning in 2008. Singapore, Qantas, Korean, Virgin Atlantic (after 2013) are airlines likely to fly the A380 into LAX.

Since 9/11, none of the terminal evacuations at LAX have resulted in the entire airport being shut down. It has been just the terminal affected that is shut down. All of the passengers get moved out of the affected terminal, a security sweep is conducted and then passengers are re-screened to get back into the terminal.

There have been space issues in the terminals for security screening. LAX has been working with the TSA to address those issues. In-line baggage screening systems are being installed so that baggage screening devices are no longer in the check-in areas. Instead, baggage screening will be performed in terminal operations areas (under the terminal departures level) and out of public viewing. Additional passenger security lanes have been added to increase through put. In the near future, LAX should also see an “express lane” for security screening with a registered traveler program named “CLEAR.” See this website for more information: http://www.flyclear.com/

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