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To Fly High, California's Economy Must First Get Airborne

By

Jock O'Connell


This article appeared in the Los Angeles Times Opinion section on Sunday, March 25, 2001. The submission text is reproduced below. If you wish to purchase the slightly edited published version from the newpaper's archives, click on the following link: Los Angeles Times Archives.


The inability of the nation's air transportation system to keep abreast of rising demand became starkly apparent last summer when millions of airline passengers were left exasperated by lengthy flight delays or outright cancellations. Yet, while the plight of stranded airline ticket holders became frontpage news, the frustrations of businesses trying to negotiate the same air transportation system to get their goods to market received virtually no attention. That's regrettable because deficiencies in air freight operations are apt to have a much more pervasive impact on the economy than hordes of disgruntled holiday travelers.

Unfortunately, like most Californians, our top policymakers seldom ponder the logistics of the Golden State's economy. Take exports, for example. Everyone agrees that our export trade -- valued at $130 billion in 2000 -- is absolutely vital to California's economic well- being. Yet in the state Capitol, whose denizens routinely indulge in rhetorical flourishes about the global economy, international trade is still commonly perceived as something that happens down by the waterfront, where longshoremen resembling Ernest Borgnine load tramp steamers bound for foreign ports.

Consider what happened at a meeting last year of the California State World Trade Commission - with Gov. Gray Davis in attendance - when one panelist justifiably inquired whether the state's transportation infrastructure is poised to accommodate anticipated growth in the volume of foreign trade. The ensuing discussion, which focused entirely on the road and rail links to the state's major seaports, prompted the commission to schedule its next meeting at the sprawling Port of Long Beach to get a closer look at the relevant transportation issues.

But what the commission - explicitly created to promote exports - failed to appreciate is that most U.S. exports go nowhere near a seaport. Nationally, according to U.S. Department of Transportation figures, 34.2 percent of the country's merchandise exports in 1999 were shipped by air. Furthermore, owing to the surge in trade with Canada and Mexico spurred by NAFTA, 27.4 percent of the nation's exports left by truck and another 2.5 percent by rail in 1999, while waterborne exports accounted for just 26.3 percent of U.S. exports. Here in California, where businesses have become singularly dependent on air shipments because of the high value-added goods California industry produces, over 60 percent of all exports are being sent by air.

No one disputes the enormous economic value of maritime facilities like the Port of Long Beach and the adjacent Port of Los Angeles. Together, they constitute the nation's largest port complex, handling three times the volume of the now familiar standardized shipping containers as the Ports of New York and New Jersey. Yet, the fact is that Los Angeles International Airport (LAX) and San Francisco International Airport (SFO) each handle more exports (measured in dollar value) than do the Ports of Los Angeles and Long Beach combined.

In 1999 (the last year for which comparable data are available), some $35.9 billion in merchandise exports departed from LAX, while another $32.1 billion exited through SFO. By contrast, the Ports of Long Beach and Los Angeles handled export shipments valued at $14.3 billion and $14.1 billion, respectively. Indeed, the two ports are primarily conduits for imports from the Far East.

Unhappily, neither policymakers nor the general public appreciate the crucial role air freight services play in the state's economy. As a 1998 report by UC Berkeley's Institute of Transportation Studies - commissioned by the California Department of Transportation - observed: "Little is known about the role of air cargo in California's goods movement."

Yet, as the UC report warned, the demand for air cargo services is rapidly outstripping current airport facilities, especially at LAX and SFO. This matters greatly to California's economy, key elements of which are embracing just-in-time manufacturing practices and management strategies that involve the coordination of global supply chains. To remain competitive, more and more businesses will be turning to air cargo. Not surprisingly, the Southern California Association of Governments expects regional air cargo demand will increase faster than the anticipated rise in passenger traffic in the next two decades.

In trying to meet growing demand for both passenger and air cargo services, airport authorities face daunting obstacles. Not only must they cope with a bureaucratic befuddlement of cross-cutting responsibilities involving hosts of federal, state, regional, and local agencies, they also have to deal with litigious neighbors and environmentalists who have succeeded in blocking expansion plans at virtually every major air terminal throughout the state. The situation is worse in the case of air cargo operations, which are elicit particularly intense opposition because so much freight flies by night.

Long missing in action has been the State Legislature, whose members have preferred to regard airport issues as someone else's responsibility. Thus, while the Assembly has a select committee on California ports and a panel to monitor the Alameda Corridor project, there is no legislative committee devoted to airport concerns. As a consequence, the needs of California's airports -- which include both expanded onsite facilities and imrpoved ground access -- are given short shrift in the process by which the state's transportation needs are identified and funded.

In dealing with surface transportation problems, the legislature has recently tried using economic incentives to encourage local governments to overcome the often petty jurisdictional rivalries that have long stymied regional cooperation. But no such incentives are being considered for insuring California industry's continued access to the global marketplace.

Unless airport capacity grows, however, California may not long remain a viable place for many companies to do business in the global economy. Transportation bottlenecks whether on the ground or in the air ultimately influence business location decisions. With the future of commerce is literally up in the air, the current level of official ignorance and indifference in Sacramento cannot be tolerated.


For other articles by Jock O'Connell, click on " Essays "