In 1985, Orange County and Newport Beach made a deal, according to which the usage of john Wayne Airport was artificially limited to 8.4 million passengers a year. This agreement left the airlines with five million empty seats. Because, the airport in not used to its full capacity, the potential profit for both the airport and Orange County is decreased. Furthermore, the passengers have to pay higher fares from John Wayne because the airlines do not offer bargains to fill the seats. Regardless of the supply of seats or demand for them, no more than the agreed quota of passengers will be served. The airlines have no incentive to cut fares to fill the seats. They lack the opportunity cost, the value of the next best alternative, doesn’t exist because there is no scarcity of seats (limited resources pursue unlimited wants). A couple years ago, an idea for a new airport to be built in El Toro was created. Initially, the proposition sounded tempting, yet, as its results were further investigated, it lost its appeal, to many of its original supporters. In response, the Millennium Plan was created and it envisioned building businesses, an industrial park and an art center at the soon-to-close Marine Corps Air Station. The new plan was much less faulted in its ideology in comparison to the El Toro Airport.
On one hand, the new commercial airport would create 16,536 on-site jobs and bring $542 million in salaries. The proponents of the project argue that this would not only decrease the unemployment rate, which is the number of people unemployed- recently laid-off or actively seeking work within the last 30 days- over the total labor force, but also it would cause an increase in consumption. With more money in their pocket people would probably increase their marginal propensity to consume, the amount spent of one’s disposable income (what’s left after paying all the taxes). Also, it is said that a second airport, besides John Wayne, would attract more tourists and thus, help the economy with ‘non-domestic’ money.
However, this project for El Toro airport is not flawless. Already, the County loses revenue from making limited use of the John Wayne airport and it recently built a new terminal and parking structures. Another airport would add more expenses. Cites were asked to contribute $175,000 each as part of the public outreach program for the project. Millions of tax dollars are already wasted for planning and lobbying and litigating over a new airport, while the old airport is not used to its best capacity.
Another argument against the new project comes from the community. The latter question assumptions about the standards for acceptable noise levels. The residents certainly do not like the idea of such disturbances as the newly created pollution and uncomfortably loud environment (Please refer to Table 1). Property owners dislike the idea of the El Toro airport, because, as previous research has already demonstrated, houses in surroundings close to an airport are sold at about 10% less than if they were sold in other areas. Thus, the real estate values would decrease. The unpleasant elements of the surroundings would scare away any potential customers, and with them would disappear the money that could have been put into the economy. The decreasing demand for housing in such locations would result in the owner’s of the property to take their houses off the market.
Furthermore, Orange County economy is not based on the activity of an airport. Since the County produces more jobs than homes, more roads and homes would be desired rather than an airport which would not be able to accommodate all the new workers with homes. Consequently, the County roads would be highly overcrowded, as the workers would commute to their jobs.
On the other hand, there is the Millennium Plan (please refer to Table 2), which would transform Marine Corps Air Station El Toro into a highly complex urban center that emphasizes high-technology industries, providing a mix of residential, retail, and office uses. The newly created activities, including shopping, dining, entertainment, office, and residential areas, would have a much higher probability to attract new consumers as well as new investments. With such a variety of offers aggregate demand (total spending: Consumption + Investment + Government Spending + (Exports – Imports)) should increase. Besides increasing the consumption, the Millennium Plan would decrease unemployment, by producing higher quality jobs than the airport plan. All these factors would contribute to an increase in the County’s GDP. The average salary from the Plan jobs will be significantly higher than the jobs generated by the airport. As pointed out earlier, this project will also provide 6,000homes priced for a range of incomes. In addition, the commercial property values would not decrease, because of the distance from an airport.
Another argument pro-Plan states that the project would improve road conditions, by building them in all directions, allowing most of the cross-traffic from local communities to be contained within the site. The project also takes into account the issue of habitat preserves, by creating a special district containing neighborhood parks, greenway linkages, and recreational trails.
Presented with all the facts, I believe that the best solution to this controversial issue is to throw away the plans for a new airport and concentrate on the one that already exists. If the demand truly exists, we should allow the airlines to sell as many of the empty seats as they can, without adding a single airplane that would possibly bother Newport Beach. Furthermore, unlike building a new airport, this added capacity will come at almost no cost to the taxpayers and no pain to the residents. If the Millennium Plan were to be executed, there would result in a significant positive stimulation to the economy. The only downside to this project is that people would have drive a little bit further to the already existing airport. Another economical factor that could prevent the positive results would be that people did not respond to the project as expected. Yet, this is quite doubtful, if one looks at the demand for jobs as well as housing, now and in the future.
Table 1: Noise Chart
dB(A)Overall LevelCommunity Noise LevelsHome and Industry Levels
120Uncomfortably LoudMilitary jet aircraft take offOxygen torch
110Turbo-fan aircraft at takeoffRock band
100Very LoudBoeing 747 at one nautical mile
90Boeing 737 at one nautical mileNewspaper press
80Car washFood blender
70Moderately LoudPassenger Car at 20 feetVacuum cleaner
60Air conditioning unitDishwasher
50QuietLarge transformers at 100 feet
0Threshold of hearing
Table 2: Millennium Plan
Maximum Intensity Build-outLower Intensity Build-out
On site employment50,00041,000
Land Sales Revenue$1,054,900,000$919,200,000
Total Output$10.2 – 10.6 Billion$8.3 – $8.6 Billion
Total Income$3.6 – 3.7 Billion$2.9 – 3.0 Billion