United Airlines and Southwest Airlines confirmed last week they are in separate negotiations with Los Angeles International Airport officials concerning two terminal additions unveiled earlier this month.
To make way for one of those proposed terminal additions, a cargo warehouse operated by Torrance-based Mercury Air Group Inc. would be torn down, the company’s chief executive confirmed last week. Mercury Air had already planned to move out of that warehouse once a new consolidated cargo facility is built.
Airport officials on April 4 released a preliminary environmental planning document containing renderings and information about the general size and scope of a new terminal east of the current terminal loop and an add-on concourse to Terminal 1.
Both terminal additions had been on the books for years but only this month moved off the back burner. Airport officials’ stated goal is completing construction in time for the opening of the 2028 Summer Olympic Games, which will be held in Los Angeles.
The additions are not part of the $14 billion overhaul of the airport and its access routes now under way.
The proposed terminal additions face opposition from El Segundo, which borders LAX on the south. Immediately after the release of the environmental document on April 4, the city issued a statement opposing the terminal additions. A spokesman for the city late last week said officials from El Segundo “have had ongoing productive discussions” with airport officials but did not provide any more detail.
International airlines?
United Airlines, whose parent is Chicago-based United Continental Holdings Inc., is negotiating with officials from Los Angeles World Airports, the city agency that operates LAX, over United’s use of the proposed Terminal 9. The terminal, a 1.2-million-square-foot facility with 12 new aircraft gates, would be located east of Sepulveda Boulevard and south of Century Boulevard — most notably, east of the light pylons that mark the current entrance to the airport loop.
“The proposed new terminal would be state of the art with gates that can accommodate domestic and international aircraft, and connect to our Terminals 7 and 8 via a walkway,” United Airlines said in a statement released last week to the Business Journal.
United also said it would like to reserve much of the new terminal space for some of the 28 international airlines that are part of its Star Alliance global airline network.
United has long been the No. 3 carrier at LAX by passenger volume, behind American Airlines Group Inc. of Fort Worth, Texas, and Atlanta-based Delta Air Lines Inc. Last year, according to statistics compiled by Los Angeles World Airports, 12.9 million passengers flew United at LAX, up from nearly 12 million in 2017; United’s market share climbed slightly to 14.8% from 14.2%.
Janet Lamkin, United’s California president, told the Business Journal last year the airline was looking to increase its market share at LAX, directly taking on American and Delta.
In a separate statement emailed to the Business Journal last week, Dallas-based Southwest Airlines Co. also confirmed it was in negotiations with Los Angeles World Airports over what’s now being called “Concourse 0,” a facility of about 740,000 square feet of terminal-related space and 11 new gates that would be added onto the east side of Terminal 1.
“The renderings bring a tangible visualization of the promise of more access at LAX for Southwest and our customers,” the statement read.
Southwest has long been the No. 4 carrier at LAX, behind United. Last year, according to the LAWA statistics, 10 million passengers used Southwest at LAX, up from 9.9 million in 2017; however, its market share dropped slightly to 11.4% from 11.7% as its pace of growth lagged behind overall passenger growth at the airport.
Airlines’ development role
According to Samantha Bricker, deputy executive director with the environmental programs group at Los Angeles World Airports, the negotiations with both United and Southwest are centering on whether they would be the main developers of Terminal 9 and Concourse 0 respectively. If the airlines do take on that responsibility, they would be the chief funders of these two terminal projects, both of which are likely to cost more than $1 billion each when ancillary improvements are factored in.
Even if the airlines are the lead developers, the terminal additions will be owned by the city, and United and Southwest would lease the space. Airlines see the initial cost of terminal development offset by gains in ticketing revenue that comes with the additional passenger volume made possible by the expanded capacity.
More detailed information on the cost and construction timetables for the new terminal additions would be released in draft environmental documents that Bricker said would be released next year. She said the aim is to get final approval for the terminal additions by the end of next year.
Bricker said the new terminal additions would include 23 new gates while two current gates at Terminal 1 would be removed as part of the construction.
Both terminal additions would have space to handle U.S. Customs and Border Protection equipment and inspections, allowing for international travel, she added.
Cargo questions
To make way for Terminal 9, a 200,000-square-foot cargo-handling facility operated by Mercury Air Group’s cargo subsidiary would have to be torn down.
According to Mercury Air Chief Executive Joseph Czyzyk, the building first opened in 1948 as a hangar and commissary for Western Airlines, which was sold to Delta in 1986. Mercury leased the building in 1995 and spent $11 million to convert it to handle air cargo, one of three such facilities that Mercury now leases and operates at LAX. He said it now has roughly 300 employees processing about 4,000 tons of cargo each month.
Czyzyk said the company anticipates it will move out of its current building and into a planned $400 million two-story cargo handling facility on LAX grounds as soon as that new facility opens.
Czyzyk said his company has been in discussions with Los Angeles World Airports for more than a year on the Terminal 9 project and its impact on Mercury’s cargo space. If the new consolidated facility isn’t finished in time, he said Mercury may have to add temporary warehouse space.
As for who would pay for that warehouse space, Czyzyk said that discussion is still some ways off. “I’ve been dealing with LAWA for many years now, and if there’s one thing I’ve learned, it’s not to get too far ahead on these things — one thing at a time.”
