LOS ANGELES BOARD OF AIRPORT COMMISSIONERS APPROVES DELTA AIR LINES RELOCATION TO TERMINALS 2 AND 3 AT LAX

               The Los Angeles Board of Airport Commissioners (BOAC) today approved a lease and license agreement for Delta Air Lines to relocate from Terminals 5 and 6 to Terminals 2 and 3 at Los Angeles International Airport (LAX).  The airline’s move would occur no earlier than January 2017 and no later than December 2018, subject to Delta meeting certain preconditions.  The agreement requires Delta to invest a minimum of $350 million -- which includes a relocation plan for other airlines – with a potential future investment between $650 million and $1.51 billion to upgrade Terminal 2 and completely redevelop Terminal 3 while operating in those terminals, subject to environmental clearance and certain governmental approvals. Several of the affected airlines are Delta codeshare partners in the SkyTeam global alliance.  

            "LAX is America's gateway to the world, and it's helping to power an economic resurgence across our city," said Mayor Eric Garcetti.  "This agreement represents a monumental step forward as we invest billions to make LAX the world-class airport that Angelenos and our visitors expect and deserve."
            “The on-going $8.5-billion LAX Modernization Program has resulted in the new Tom Bradley International Terminal; a new Central Utility Plant; and improvements to the airfield and roadway, as well as in over $2 billion invested by airlines to renovate Terminals 1, 4, 5, 6, 7 and 8,” said BOAC President Sean Burton.  “Partnering with Delta Air Lines will allow both parties to further our shared goal to significantly improve the guest experience at LAX.”

            Delta currently leases Terminal 5 and parts of Terminal 6 at LAX.  The new lease and license agreement for Terminals 2 and 3 call for Delta to design and renovate passenger waiting areas (holdrooms), support space and other passenger amenities, and the club level for a Delta Sky Club, as well as make some upgrades to the baggage-handling systems and manage the relocations of current tenants according to a relocation plan approved by Los Angeles World Airports (LAWA).  The minimum investment requirement includesrenovations to “airline areas” and other building areas that can be used by any airline operating in these terminals; renovations to the public areas of the terminals; and proprietary upgrades including branded improvements unique to Delta’s operational needs, specialty lighting, finishes or other architectural elements specifically selected by Delta.

            In addition to these renovations, Delta may submit plans for potential future improvements costing no less than $650 million to cover:  new ticketing facilities; a new security-screening checkpoint; new baggage system upgrades; baggage-claim facilities including a new inline checked-baggage inspection system; a secure connector between Terminals 2, 3, and the Tom Bradley International Terminal; and new facilities that would be compatible with an Automated People Mover component of the proposed Landside Access Modernization Program.  Any proposed future improvements would undergo the environmental review process required by the California Environmental Quality Act (CEQA) prior to consideration by LAWA and the Los Angeles City Council.

“LAWA and all our airline partners are committed to continuing to transform LAX into a leading-edge facility that delivers an experience that truly caters to the modern traveler,” said LAWA Chief Executive Officer Deborah Flint.  “This project will create a more balanced and efficient airport for both customers and airlines, as well as allow for the co-location of Delta with its partners.”

“This is a significant milestone for Delta in Los Angeles, and it illustrates a strong, successful public-private partnership,” said Delta CEO Ed Bastian.  “Delta is working hard to become the preferred airline for Angelenos, and this project reinforces our commitment to our LAX hub and to an ever-higher level of service for our customers.  We are grateful for our partnership with LAWA as we work together to invest at LAX, and we look forward to engaging the Los Angeles City Council and other parties on forthcoming review and approval of this important investment.”  

Revenues to LAWA are expected to be $4.9 million during the first year of the new lease.   LAWA will acquire all potential future improvements from Delta through cash and rent credits, capped at $1.455 billion.  Delta will initially occupy all airline space in both terminals comprised of approximately 340,000 square feet.  By the fourth anniversary of Delta relocating to Terminals 2 and 3, Delta will occupy approximately 451,000 square feet.   

            The lease and license agreement are subject to approval by the Los Angeles City Council.  The lease would begin the first day of the month following the Council’s approval and expires April 30, 2039, unless terminated earlier if certain conditions are not met pursuant to the terms of the lease.

About Los Angeles International Airport (LAX)

LAX is the seventh busiest airport in the world and third in the United States.  LAX served more than 74.9 million passengers in 2015.  LAX offers 742 daily nonstop flights to 101 cities in the U.S. and 1,273 weekly nonstop flights to 76 cities in 41 countries on 64 commercial air carriers.  LAX ranks 14th in the world and fifth in the U.S. in air cargo tonnage processed, with more than 2.1 million tons of air cargo valued at over $101.4 billion.  LAX handled 655,564 operations (landings and takeoffs) in 2015.

An economic study based on 2014 operations reported LAX generated 620,610 jobs in Southern California with labor income of $37.3 billion and economic output (business revenues) of more than $126.6 billion.  This activity added $6.2 billion to local and state revenues and $8.7 billion in federal tax revenues.  The study also reported that LAX’s ongoing capital-improvement program creates an additional 121,640 annual jobs with labor income of $7.6 billion and economic output of $20.3 billion, $966 million in state and local taxes, and $1.6 billion in federal tax revenues.

            LAX is part of a system of three Southern California airports – along with LA/Ontario International and Van Nuys general aviation – that are owned and operated by Los Angeles World Airports, a proprietary department of the City of Los Angeles that receives no funding from the City’s general fund.