Blog, News
Runway needs $20M to rebuild
April 25, 2011
  • Share
  • By: Dana Bartholomew
    April 22, 2011

    Van Nuys Airport needs to rebuild its storied runway at an estimated cost of $20 million, although there’s no ready cash for the job, Los Angeles airport officials say.

    The 8,000-foot One-Six-Right strip is in dire need of an overhaul, according to a recent pavement survey, which could result in a temporary closure of the runway that serves small business jets. No date for the repair has been set.

    If sufficient funds aren’t found from Uncle Sam or airport revenue, the cost of the runway repair could fall on major business tenants in the form of fees tucked into newly renegotiated leases, said Gina Marie Lindsey, executive director for Los Angeles World Airports.

    “As leases cycle, we want to include in these leases the ability to put in an airport deficit recovery fee, if we need to,” Lindsey said during an interview this week. “Everybody who uses that airport is going to have to pay for it in one way or another.”

    The Van Nuys Airport Association, which represents businesses at Van Nuys Airport, is negotiating with LAWA over lease issues, including deficit recovery fees.

    The fees could compel individual tenants to help the airport break even should it ever be in the red.

    Critics, however, said there should be a limit on such fees, or banks may be loathe to finance large company projects.

    “Tenants have no oversight on how the money is spent, so it’s tantamount to an open-ended checkbook,” said VNAA President

    Curt Castagna, president and CEO of Aerolease-Aeroplpex Group, one of the airport’s fixed-base operators. “It’s not established. There are no controls. It’s an unfair assessment.”
    Lindsey and Van Nuys Airport Manager Jess Romo met on Thursday with Daily News editors and reporters after a story revealed the general-aviation airport was in steep operational decline.

    Critics have taken the city airport agency to task for negotiating leases that have stymied new investment and an alleged failure to support airport businesses and jobs.

    Van Nuys Airport was once the nation’s busiest general aviation facility, worth $1.3 billion to the San Fernando Valley economy.

    But the Sept. 11, 2001 terrorist attacks reduced flights into Los Angeles International Airport, which then cut its subsidies to Van Nuys. Airport operations have since falled about 10 percent a year as propeller plane operations and flight schools declined.

    The recent recession dealt another blow to airport companies whose business plunged by up to 45 percent.

    Van Nuys Airport, now expected to be self-sustaining like surrounding general aviation fields, earns most of its revenue from land leases and fuel fees. About $4 million in the red a few years ago, its managers saved $2 million by shifting 40 workers to LAX and other payrolls.

    As a result, Romo said, Van Nuys Airport expects to clear $1 million during the next fiscal year, excluding depreciation.

    “Kudos to LAWA for bringing VNY operations under budget,” Castagna said.

    Lindsey said she aims to replace the airport’s patchwork of leases with a fixed-rate offer, based on property size. The five fixed-base operators, which lease hanger space to smaller tenants, have until April 30 to respond.

    Negotiations are also taking place to build a 30-acre Propeller Park, which has been held up by a lack of private financing.

    “We are attempting to make some order out of chaos, by establishing consistent rates across the airport,” Lindsey said. “We are doing the best we can to include the tenants to come to a consensus.

    “We want to work with these businesses, so that they can stay viable.”

    In other airport news, Lindsey said part of Palmdale International Airport, which is also owned by LAWA, could be transformed into a solar energy farm. The airport has had commercial airline service in the past, but is currently unused.

    She said feelers have been put out to see if private companies are interested in leasing 17,500 acres at the High Desert airport for solar arrays.

    Date: 2011-04-22