The Los Angeles City Council Wednesday formally rejected an offer by the city of Ontario to take control of L.A./Ontario International Airport from the city of Los Angeles, but agreed to begin negotiating the terms of a future sale of the airport.
The council voted 12-2 to decline a $246 million bid package put forward by Ontario in December 2011. The proposal might have diverted aviation- specific money and would have drawn scrutiny from the Federal Aviation Administration and Congress, city officials said.
Pending Mayor Antonio Villaraigosa's approval, the council vote authorizes the city administrative officer to begin new negotiations with Los Angeles World Airports, the city of Ontario, San Bernardino County and the recently created Ontario International Airport Authority to determine the value of the airport and mechanisms for paying for the land and assets.
Revenue from the sale of the airport would go toward capital improvements at Los Angeles International Airport.
Ontario, along with dozens of , have been pushing hard for local control of the airport, which has been in serious decline since the Great Recession began. Passenger traffic was down 37.5 percent in 2011 from 2007, a decline of about 2.7 million travelers per year.
Ontario officials have accused Los Angeles World Airports, the independent city department that owns and operates LAX, Ontario, Van Nuys Airport and Palmdale Regional Airport, of driving airline traffic to LAX from Ontario.
Supporters of local control for Ontario say LAWA lowered the cost to airlines to fly into LAX, while keeping the costs at Ontario high.
"The only reason that the city of Los Angeles and Los Angeles World Airports has Ontario International Airport is to control your own competition, and your strategy has been very effective," Ontario City Councilman Alan Wapner told the council.
"Ontario Airport is on the brink of disaster," Wapner said. "We have as many passengers as we did in the old terminal back in 1983."
LAWA General Manager Gina Marie Lindsey disputed his claim. She said landing fees at Ontario are half what they are at LAX, and terminal rental fees are necessarily high at Ontario in order to generate enough revenue to cover nearly $500 million in terminal and runway upgrades at the airport since the mid-1990s.
The recession made airline executives more risk-averse, Lindsey said, causing them to base their decisions about where to fly on unemployment rates, new housing starts and average household income. Those statistics in the Inland Empire caused the decline in passenger traffic at Ontario, not LAWA, Lindsey said.
Lindsey said she supports the sale of the Ontario airport "if we can get to a reasonable price. We have always been open to discussing and negotiating a sales price. We have been opposed to giving a gift."
Councilmen Richard Alarcon and Tony Cardenas said they opposed a sale and voted against the plan to begin negotiations.
Alarcon accused City Administrative Officer Miguel Santana, who recommended negotiating a sale, of looking at the Ontario airport as a onetime moneymaker for LAX. He said the plan does not consider any future revenue or infrastructure commitments from the new owner.
"We may lose in the long run by virtue of enabling a competition to enter into the international market and steal our business," Alarcon said. "You might as well move the Chinese airlines over to Ontario, as far as I'm concerned, and I think that would be a huge loss."
The council vote requires Santana to report back to the council in 90 days about the progress of the negotiations.