Following a three decade-long legal battle, Los Angeles has agreed to relinquish struggling LA/Ontario International Airport and return it to the city of Ontario.
The deal, announced Thursday, Aug. 6 by the mayors of both cities, calls for Ontario to pay Los Angeles World Airports $190 million as reimbursement for its investments in maintaining and improving the facility and job protection for the airport’s 182 employees.
The Ontario International Airport Authority, which will operate the facility upon completion of ownership transfer, will also incur airport debts, bringing the cost of the deal to approximately $250 million.
Before the agreement is finalized, both LA and Ontario city councils, airport authorities and the Federal Aviation Administration must approve.
“I have supported the transfer of ONT to local control since my first day in office and I am thrilled that we can stop litigation and focus on a partnership that expands Southern California’s commitment to superior air travel,” said Los Angeles Mayor Eric Garcetti, according to The Associated Press.
Los Angeles began operating in the Ontario Airport in 1967; in 1985, the Inland Empire city gave ownership to LA under the condition that officials put forth their best efforts to bring airlines to the facility.
In the last few years, the airport has experienced a drop in the number of passengers who pass through. In 2007, Ontario saw 7.2 million passengers at its facility; that number fell to 4.2 million in 2012 and 3.9 in 2013, although the passenger count for 2014 saw a slight increase.
Following the decline, Ontario sued, alleging Los Angeles World Airports (LAWA), which also operates Los Angeles International Airport and Van Nuys Airport, breached the contract and mismanaged the facility.
LAWA, however, denied that it was trying to hurt business at the Ontario facility in favor of LAX, citing the economic recession as the reason for the decline.
The lawsuit was scheduled for trial on Aug. 17 in Riverside County Superior Court.
If Ontario successfully proved its case, LAWA could have potentially paid up to $4 billion in damages. LAWA had been hesitant about letting go of the Inland Empire airport, arguing it had invested much into the facility during the worst economic downturn since the Great Depression.
With the trial less than two weeks away, Mark Austin, a partner at Costa Mesa-based law firm Rutan & Tucker LLP, told Inland Valley Daily Bulletin that both parties would have had “the clearest picture of how strong their case is.”
“Once the trial begins, the parties are faced with the consequences: ‘I might be hit for $4 billion,’ and from Ontario’s standpoint, ‘We may lose out on this airport,’” he told the publication.
Ontario Councilman Alan Wapner told the Bulletin that he felt the city had a strong case against Los Angeles and could have been awarded the damages. However, he said he knew Ontario could have also lost, so a settlement was a win for both parties.
“Parties don’t settle unless they are getting something out of it or they are going to lose,” Austin said, according to the Bulletin.
Los Angeles officials priced the Ontario airport between $400 million to $475 million, saying it was a valuable asset; L.A.’s consultants put the facility’s worth between $243 million and $605 million.
Ontario officials, however, said passenger decline put the airport at a negative value, citing a study conducted for Los Angeles that stated the facility is worth $140 million.
The Ontario airport currently has about 60 daily departures by eight carriers. (Inland Valley Daily Bulletin, Los Angeles Times and The Associated Press)
