San Bernardino International's terminal almost ready; airlines are not
August 17, 2009
By LOU HIRSH
The Press-Enterprise (Riverside)
Counters and kiosks are in place, ready to sell tickets and check in travelers at San Bernardino International Airport's newly refurbished passenger terminal.
High-definition TV monitors display place-holder arrivals and departures, escalators and decorative water sculptures are in motion, and a high-tech security room monitors for suspicious activity. A booming recorded voice tells visitors not to leave bags unattended.
One thing is missing from this picture: The airport has yet to land a commercial airline to bring revenue-generating passenger service to the terminal.
Fifteen years after the 1994 closing of Norton Air Force Base, local authorities are close -- yet in many ways still very far away -- from turning the abandoned military airfield into a productive enterprise that generates jobs and tax revenues.
Non-aviation development has generated hundreds of jobs and brought big-named companies to the project. Still, it produces nowhere near the 10,000 direct jobs of the airbase's heyday, not to mention the ripple impact those positions once generated.
More than $180 million has been spent on aviation-related base renovations -- $80 million of which has been spent or committed to the nearly completed passenger terminal, whose cost has more than doubled from original estimates. Final work on the passenger terminal, tarmac and parking lots will be completed by year's end.
Officials for the past year have said a seriously interested but undisclosed domestic passenger carrier could announce new service for the terminal at any time. But in a still brutal economy for the airline industry, even if a carrier arrives this year, airport authorities and aviation economists say the local facility could face unknown millions more in investment costs to make commercial air service viable.
Authorities say they've boosted the San Bernardino airport's prospects considerably with the recent hiring of New Jersey-based AvPorts to oversee local airport operations. The firm, once part of Pan American Airlines, has an 80-year track record that includes managing seven airports, mostly on the East Coast, as well as one of the larger passenger terminals at Newark International.
"This is a crucial launch point for the airport," said Pat Morris, San Bernardino's mayor and head of a joint-powers authority that oversees the air base refurbishing, referring to the new hire.
Starting Sept. 1, AvPorts' top priority is to use its expertise and industry contacts to bring in the mix of passenger carriers, private aircraft, cargo and support services that the local airport must have to become economically viable.
"Our experience is that people who want to come to an airport want to be able to deal with one entity," said AvPorts Chief Operating Officer John Harden, referring to companies the airport will be looking to attract. "We work well that way, as a one-stop resource."
TOUGH JOB AHEAD
Construction continues at San Bernardino International Airport. Pictured is the departures area of the new terminal.
For years, San Bernardino airport development has come in fits and starts. As the economy nosedived, authorities have increasingly found themselves offering financial assistance to keep crucial aircraft support businesses afloat.
Experts say it may take even more international lobbying and enhanced financial incentives to get airlines to operate locally, at a time when carriers have been cutting flights drastically at airports, including Ontario International.
"The economy we're operating in is much different now than it was just two years ago," said Scot Spencer, who has been overseeing improvements to the main terminal since 2007 and who leases and subleases space in the airport's service hangars. "For us lately it's been for every two steps forward, it's maybe one-and-a-half steps back."
In some ways, the Norton renovation has been a tale of two projects.
On the outskirts of the airfield, more than 3,000 jobs and millions in new tax revenues have been generated by offices and distribution centers operated by companies such as Stater Bros., Mattel, Kohl's and Pep Boys in projects master-planned by Texas-based Hillwood Development.
That revenue, combined with federal transportation and development grants, has fueled the bulk of work done so far on the airport.
"If it weren't for those industrial projects, I don't think we would have what we have now on the airport side," said Don Rogers, interim executive director of the Inland Valley Development Agency, which oversees projects tied to the Norton refurbishing.
Getting and maintaining crucial aviation-related businesses to locate at the airport has been a much tougher sell. As happened with other former military bases, including Southern California Logistics Airport in Victorville, the developer of industrial properties on the site turned down offers by authorities to develop the airfield portion.
"It really comes down to the ability to make a profit on a development," said Keith Metzler, director of the Victorville economic development agency, which has helped bring new business to the former George Air Force Base. At 85,000 acres, that property is the largest of the California military bases that closed in the 1990s.
In the early days, that airport had to offer incentives such as rent discounts to lure support companies, and even purchased equipment that some businesses could share. Metzler said those incentives haven't been needed during this decade, as the airport's hangars have filled with more than 30 tenants, including global aircraft makers, parts suppliers and maintenance businesses.
The Victorville airport to date has spent more than $250 million on improvements, including the addition of four new hangars in the past three years. However, Metzler notes the airport is devoted largely to storage and maintenance of aircraft -- which thrives during up and down economies -- rather than passenger service.
To improve passenger service and other on-site business prospects, the San Bernardino airport may need to do more financial pump-priming.
Michael Burrows, assistant director of the Inland development agency, said officials are in the "very preliminary" stages of figuring out how to financially assist businesses on the airport grounds and lure new ones. That might include setting up a loan or matching-funds program with the help of government grants.
Local officials may need to go well beyond previously discussed start-up incentives, such as reduced landing fees for carriers.
"To get someone to add flights, you would probably have to pay them a lot of money to do that - maybe $2 million a year," said Darryl Jenkins, a former airline business professor at George Mason University near Fairfax, Va., who is now an airline consultant. "You would probably have to find a way to guarantee them no losses for at least a couple of years."
Alan Bender, an airline business expert and professor with Embry-Riddle Aeronautical University in Daytona Beach, Fla., said San Bernardino may have to offer airlines a way to share the risk of setting up new service. For instance, some smaller airports have set up ticket banks, through which businesses guarantee they will buy a fixed number of tickets per year to ensure the airline makes a set level of revenue.
San Bernardino may need to emphasize leisure rather than business travel, and it may become a good tourist alternative to the Palm Springs airport when the economy improves -- for instance, as an arrival point for mountain ski resort visitors. Major carriers likely won't be looking to add new business services in the current economy.
"There's a large number of people for whom San Bernardino will be the most convenient place to fly out," Bender said of leisure travelers.