Less Turbulence

A strategy to make Van Nuys Airport more self sufficient is beginning to pay off with the current budget for the Valley airfield breaking even, This breaks a pattern of revenues falling short of covering expenses that resulted in subsidies from Los Angeles International Airport to make up the difference All areas of the airport’s operations, from personnel, supplies, office space, have been pruned to bring down costs to meet the goal of self sufficiency yet meet the overall mission of a safe and secure airport. “I cannot tell you we are finished,” said Jess Romo, the airport’s manager. “We’ll see how the rest of the fiscal year materializes. There are other opportunities to fine-tune.” The fiscal year 2010-11 budget adopted by the Board of Airport Commissioners in June had Van Nuys collecting revenues of $16.9 million with expenses of $16.2 million. To bring costs down, the airport shifted employees over to LAX and cut back on information technology support, noise management, and public and community relations. Expenses related to the Flyaway shuttle service, long on the Van Nuys books, have been removed and charged to LAX. At the airport administration building at Sherman Way and Hayvenhurst Avenue, staff has been consolidated from multiple floors to office space on just one floor to save up to $50,000 on lease expenses. “We’ve always looked at the non-critical type of expenses,” said Ryan Yakubik, director of capital development and budget for Los Angeles World Airports. What the budget does not cover is the cost of depreciation and amortization of capital expenses that are spread out over the long term. There will be more of those costs as the airport proceeds with more capital projects. For instance, there is a pavement management program for the runways that will be paid for primarily through grants but will require the airport to chip in $1.5 million, Yakubik said. Finances at Van Nuys Airport have become just as important as the flying taking place there, especially when deficits neared $10 million as happened several years ago. Criticism This situation led to some criticism from some tenants at the airport of a bloated bureaucracy that costs too much and that LAWA dragged its feet on the development of unused property that could otherwise bring in rental income. The 7-acre Jet Center property has not been active in several years, and a 5.8 acre parcel on Valjean Avenue between the Airtel Plaza Hotel and Clay Lacy Aviation has long been empty and much coveted by existing leaseholders. When the airport agency floated some 18 months ago an Airport Deficit Recovery Program to recover charges from use of common areas such as runways, taxiways and service roads, major tenants balked and claimed the airport was trying to balance the budget on their backs. The actions taken by the airport to bring down costs, however, have softened somewhat the criticism. LAWA has made a sincere and concerted effort to reduce its manpower expenses, said Robert Rodine, a consultant with clients in the aviation industry. “What we do not know is if those reductions are trimming out the fat or a reflection of fundamentally making the airport operation more efficient,” Rodine said. Change under Birk The road to self-sufficiency began under former airport manager Selena Birk and continues under Romo, who splits his time between Van Nuys and LA/Ontario International Airport. The mindset Romo takes is based on what he has learned at Ontario and making decisions of how best to spread out the resources and meet the mission of a safe, secure airport and meet the needs of the tenants. “I came here with this message and instruction to take a look at the airport and find ways to save money,” Romo said. Recommendations on improving the airport’s finances were made in a study commissioned by the City Controller’s office released at the end of 2008. The report included increasing fees levied against leaseholders and users of the airport. The airport commissioners stepped in that direction in March 2009 by approving an increase in the fuel flowage fee to $0.11 per gallon from $0.03 per gallon. That increase has helped the airport despite the amount of fuel being sold has dropped due to less aircraft activity, Romo said. Another option for self-sufficiency recommended in the report was contracting out management of Van Nuys to a private company. The airport was identified as a good candidate for private management because there would likely be more bidders because of fewer barriers to entry and its less complex regulatory environment as compared to Ontario Airport, which handles commercial flights.