A couple of months ago, I visited US Airways headquarters in Phoenix. Last week, I published the first part of my interview with Andrew Nocella, senior vice president, marketing and planning, about his impressions of LAX.
Today, we shift our focus to L.A./Ontario International Airport. I asked Nocella why the airport has had difficulty attracting and retaining flights. The airport has lost about 3 million annual passengers since 2007. On most days, US Airways and its regional partners operate five flights between Ontario and Phoenix.
This interview was edited for space and clarity.
Brian Sumers: Why do you think Ontario has faltered? And how has US Airways been able to make the market work?
Andrew Nocella: I think Ontario is a complicated situation. It doesn’t have the demand profile. It does not have the business profile that LAX or Orange County do. It just a matter of fact. But for us the reason Ontario works is the proximity to our Phoenix hub. If our hubs were all on the East coast, I think we would very much have a problem having a large operation at Ontario. But the proximity to Phoenix is something that makes it work. We are proud to fly between Phoenix and Ontario and say we make a profit doing it. It’s those unique factors that allow us to do it.
So if there was no Phoenix, US Airways wouldn’t be able to make Ontario work?
If we did not have the Phoenix hub, quite honestly I tend to think we would probably only serve LAX in the region.
Why do you suppose it’s so difficult for Ontario to be a considered a viable second option in the Los Angeles region?
LAX is such a magnet and is so diverse. Because LAX has the nonstop flight to (places like) Indianapolis and because it has the connectivity with the domestic airlines and the international airlines, it is so much more difficult to put a flight to a smaller destination out at a satellite airport. You would have to call Ontario a satellite to LAX. So the economics just don’t work. A key ingredient for airlines is scale and connectivity. (Those things are) really difficult to amass. It takes years if not decades to do. You’ll notice the big airlines today at LAX have been the big airlines at LAX for years. It would difficult for anyone to come in and displace them. That goes for Chicago, New York and Miami and Houston. These things are amazingly embedded in history in a way that is hard to describe.
Many politicians in the Inland Empire say the fees for airlines to operate at Ontario’s airport are too high. If landing and terminal rental fees came down, would the airport be more enticing for airlines?
I am not going to argue that I don’t want lower fees. I don’t want to argue that they are not thinking the right way. I think that is a smart way to think. However, for US Airways, we’re serving the airport in a way that we think is most lucrative for us. We have no plans to expand to the East Coast because we don’t think it works. I know that could be a hard thing for the community to understand but it’s the economics. The whole airline produces a four to five percent margin in a good year. We have to be very careful with flights that we put in and out. It depends on the geography and the demographics and so many other variables, which says Ontario is going to be a very successful market in these short haul operations but in the in the long-haul.
Most airlines, including yours, spend a lot of time chasing high value first and business class passengers, especially to international destinations. Do you see those passengers in Ontario? Perhaps they buy connecting tickets?
They are just not there. If you live anywhere near Ontario and you’re a business traveler and you you need to go to Zurich, we tend to think – and I think the data would show – that a majority of those passengers, the business class people, will drive whatever it takes to get to LAX and get on the nonstop flight. Nonstop flights and price points are two of the biggest drivers on how people pick the flight they are going to get on. In that particular place, people would still want to go out to LAX. Even if they say they want to go out of Ontario, the data would not support that.
Are you saying people some people lie?
There’s what you think and there’s what you do. We spend a lot of time asking people what they want, whether it’s a drink on board the aircraft or WiFi and then we try to figure out what they are really willing to pay for. There does seem to be a distinction between what they would like in services and what they’re wiling to pay for. We try to do our best to balance that equation.
Does this mean it’s hopeless for Ontario to gain more flights?
I don’t think it’s hopeless. I think you just have to put into the framework what the possibilities are. I would tend to think the best opportunity for Ontario is bigger aircraft and more service to hubs that are within a thousand miles of the airport. That’s were the economic sweet spot would be for airlines in my opinion. Beyond 1,000 miles would be a more challenging economic equation for airlines. It’s just inherent economics. So I would say continue to focus on what the true potential is, and that is flights to Phoenix and Dallas and Salt Lake City and up and down the California corridor.
Do you think things could improve for the airport in the future?
If the demand for a particular flight is there, I think rest assured that airlines are going to fill the opportunity. The flexibility is there. The question is whether we see the demand to make it work. For us, we are seeing a good and profitable operation between Phoenix and Ontario. It’s been stable. But there’s probably not a lot of expansion opportunity from a US Airways perspective.