Brendan Airways, LLC d/b/a USA 3000 Airlines, British Airways PLC, Scandinavian Airlines System, Societe Air France, Swiss International Airlines, Virgin Atlantic Airways Limited, Deutsche Lufthansa, AG, TAP Air Portugal, Alitalia-Linee Aeree Italiane-S.p.A., EL AL Israel Airlines Limited, Air Jamaica Limited, Singapore Airlines Limited and KLM Royal Dutch Airlines v. The Port Authority of New York and New Jersey and Newark International Airport

Order 2005-6-11
OST-2005-20407

Issued and Served June 14, 2005

Final Decision - Bookmarked

The Department has determined to adopt the results of the ALJ’s Recommended Decision on all of the issues except surplus/net income. In view of the Department's decision that the fees paid by the airlines are reasonable, except for those specific elements deemed unreasonable, the Port Authority must refund complainants the portion of the fees paid during the pendency of this proceeding that is unreasonable. In addition, the Port Authority must adjust its fees in accordance with this order.

As an initial matter, we note that the applicable statute and DOT Policy Statement expressly recognize that an airport has the right to establish a compensatory fee system if it wishes. If an airport chooses a compensatory methodology to set fees, those fees must be based on an airport's costs. In the current case, the Port Authority has characterized their methodology as compensatory; however, we note that in the distribution of concession revenue, the methodology incorporates aspects of a residual methodology. 10 Furthermore, when analyzing the appropriateness of a compensatory non-airfield fee methodology based on cost, the Department finds that it is reasonable to use as guidance the DOT Policy Statement provisions on airfield fees. The Department's view on this point is explained and applied below in our specific analysis of the surplus issue, but applies equally to the other cost issues presented here.

By: Michael Reynolds