May 5, 2004 - From the May, 2003 issue

Dan Garcia Comments on RAND's Analysis Of Mayor Hahn's LAX Plan

The public release of Mayor Hahn's Master Plan for the proposed reconfiguration of LAX has been pushed back to later this summer. However, the distribution of an issue paper completed by the RAND Corporation on the mayor's plan reinvigorated debate over how to best modernize LAX to meet future regional needs and make air travel more secure. Metro Investment Report is pleased to present this interview with Dan Garcia, Chief Compliance Officer for Kaiser Permanente and former president of the Los Angeles Board of Airport Commissioners, in which he comments on the findings of the RAND study and elaborates on the politics surrounding the contents and release of Mayor Hahn's proposal.


Dan Garcia

RAND's recent issue paper on the proposed plan to reconfigure LAX challenges the premise professed by Mayor Hahn that putting all the ingress through one centralized drop-off point would upgrade security. RAND suggests that this proposal would actually increase the potential threat of terrorism. Your thoughts?

One of my great concerns about the way that this plan is being sold is the assumption that by forcing people to remote staging areas and then bringing them all into a single check in location it somehow enhances the ability to provide security. I have always been concerned that this approach enlarges the security perimeter and increases rather than diminishes the security risk. Security at the staging areas is an issue. Security of the people and baggage transported from the remote facility to the main terminal is another question. The concentration of passengers into a single check in area could also increase its attractiveness as a target.

This plan raises more security questions than it answers. It's based on questionable assumptions and I'm happy to see that an entity as credible as RAND has examined the security issues raised by this plan. Obviously I am not surprised that they too have raised questions about security.

RAND suggests that any reconfiguration of LAX should be judged both on how efficiently the airport will function and on the impact that reconfiguration will have on the economy of Southern California. You mentioned, Dan, in your last interview with MIR, that the city had not yet done a cost benefit analysis on the Mayor's plan. Has such an economic impact analysis subsequently been done? If not, how can it be evaluated?

I'm not sure that we can. The way in which the plan has been presented, again, has relied on a series of assertions rather than on evidence. I don't know of any reliable source of an economic impact analysis relative to the costs and benefits of the real proposal here. When we started the master-planning effort, nearly 6 years ago the first thing we did was look at the regional forecast. In addition, we completed a very detailed study about the economic impact of the airport as it existed and what the long-term impact might be if we expanded it.

The massive expenditures contemplated by this plan coupled with the cap on passengers raise critical issues about the economic impact of this plan both for the state and the regional economy. And, given the significance that air traffic represents to the local economy-which people still underestimate-it's imperative that we have some sense of what the economic benefit will be to justify the disruption and the cost contemplated by this plan. The truth is that with the aviation industry in an economic death spiral, with a sagging national and state economy and with international terrorism fears affecting the desirability of air travel, you could not have picked a worse time to think about spending billions of dollars for airport improvements which do not create huge economic rewards by enhancing capacity.

This inerview will accompany one with Lydia Kannard in MIR this month. The accomplished LA World Airports General Manager was forthright in her exchange, except she refused to comment on Alternative D or the results of the RAND study. She suggested that only the Mayor's office could respond to questions as it was the Mayor's Plan. Could you offer us context for Lydia's reluctance to offer comment either on the Mayor's Plan or the rather significant Rand report that's just been released?

In my opinion, this administration has manifested a thin skin with respect to public criticism. Yet, this is part of the job. The reality is that any airport issue is going to elicit controversy and public debate-and it ought to. If you noticed when we began our planning efforts years ago, we met with the public early on. We hadn't formulated any specific preferred plan and we took our lumps. But we created a dialogue. Here, my own view is that you have seen a tightly controlled very secretive process. Only one or two people have managed a lot of the information and they throw themselves over this issue like a blanket. Staff has clearly been muzzled from voicing any questions or concerns they might have.

This is not the way the administration should act on an issue that is so vital, not just to the city, but to the entire region. I'm hoping that, at some point as part of their public obligation, they conduct a full-blown discussion and debate about all elements of their proposal, even if it means that some of their views may be subject to further security and criticism. That is just part of the process. I've always had concerns about the way that this has been managed. And, the truth is that it's been way too politically managed and at the same time has been undernourished in the development of its own policy choices.

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The release of the LAX EIR has been delayed. It had been expected at the end of May and it now appears as if it might not be released until the end of the summer. With delay, are there opportunities now for alternatives to be discussed? Or, is it too late in the game?

Well, the truth is that this proposed master plan is just a planning exercise at this point. And indeed, even if it was approved, it wouldn't be self-executing. I still have to scratch my head to figure out where the capital would come from for these improvements. I don't think the federal government has a lot of money. I don't think the state government has any money. I don't think the airlines, given their financial performance, are in any condition to contribute billions for this plan particularly as it means little, if any, new revenue to them because of the passenger cap. I don't think you can raise landing fees. I doubt that the concessionaires are doing well. So, given all that, a lot of money is being spent on planning, community and press relations, etc. but for what purpose? Given all these negative economic factors this planning effort now is more theoretical then ever. It's never too late in the day to step back and take another look.

Let's conclude by asking what the next steps are in this LAX moderization saga? What do you predict transpires over the balance of this year?

The way I see it is that either the administration hopes that if they delay long enough, people will lose interest or it'll just get approved because it's not such a big deal. I don't think that's going to happen. I think you'll see a lot of questions being raised and the aviation industry will eventually move off the fence and decide to state their views about this plan. I believe those views are largely negative despite pressure from the administration to go along with the program. The other players will come forward as well. And, you know there will be factions. There always are. So, my guess is that later in the year if the plan is moved forward, you'll start to see a lot more public notoriety and scrutiny. It would be my expectation that a lot more pointed questions will be asked about who will pay for implementing this plan and who will benefit from it.

Mayor Hahn's insistence on a passenger cap at LAX highlights the need for regional aviation planning. Where should the leadership for this type of planning come from? In what form?

The Hahn administration caused to anti-airport expansion pressure during the campaign and signed a pledge to that effect (as did his opponent). I believe that decision was based on political calculations without regard to policy implications. The fear of losing one block of voters during a tight mayoral campaign over an issue with enormous regional, national and international consequences is yet more evidence of how local decision making will steadily erode a major source of our nation's economic vitality - our aviation infrastructure.

At some point local NIMBYism will get so bad the Federal government will have to intervene. In the short term, however, the world's attention has been absorbed by terrorism. One casualty has been the fragile economic structure of the aviation industry. It is a high cost, low margin variable adversely affected by changes in fuel prices or even minor fluctuations in air travel. Until the demon of terrorism has been dealt with in a fashion that restores public safety confidence the airlines will continue to suffer. That security fear will not be satisfied by the expenditure of billions of dollars spent on domestic security. Those expenditures divert capital investment away from more productive economic activity. Moreover, the added security measures are visible and reinforce the existence of real danger. Thus, real public confidence will only come through international diplomacy and perseverance. Until it occurs, however, it seems unlikely to me that the nation, including the federal government, will be capable of focusing on our long-term aviation needs.

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