Alaska Airlines, et al v. Los Angeles World Airports

Order 2007-6-8
OST-2007-27331

Served June 15, 2007

Final Decision - Bookmarked

The Department of Transportation, pursuant to 49 U.S.C. § 47129(c)(2) determined that a February 16, 2007, complaint filed by seven domestic airlines against the Los Angeles World Airports challenging increased fees charged at Los Angeles International Airport, presented a significant dispute over the reasonableness of increased airport terminal fees. The T1/T3 Carriers are: Alaska Airlines, Inc., AirTran Airways, Inc., ATA Airlines, Inc, Frontier Airlines, Inc., Midwest Airlines, Inc, Southwest Airlines Co., and US Airways Group, Inc. The Recommended Decision of the Administrative Law Judge found against LAWA and in favor of the complaining carriers on most issues raised, including that the new and increased fees were unreasonable and unjustly discriminatory. The ALJ recommended that the Department order refunds to the complaining carriers for the disputed fees paid. This Final Decision finds that: (1) the new and increased maintenance and operations charges are reasonable; (2) the rentable space methodology is reasonable as imposed by LAWA on T1 but unreasonable as imposed on T3 (due to an improper application of the market value methodology); (3) LAWA’s imposition of the rentable space methodology on the T1/T3 Carriers is unjustly discriminatory; (4) the market value methodology is reasonable, but not as applied by LAWA; and (5) the T1/T3 Carriers’ claims are not barred by the “written agreement” exclusion found in § 47129(e)(1).

On review of his Recommended Decision, the Department has determined that: (1) the new and increased maintenance and operations charges are reasonable; (2) the rentable space methodology is reasonable as imposed by LAWA on T1 but unreasonable as imposed on T3 (due to an improper application of the market value methodology); (3) LAWA’s imposition of the rentable space methodology on the T1/T3 Carriers is unjustly discriminatory; (4) the market value methodology is reasonable, but not as applied by LAWA; (5) the T1/T3 Carriers’ claims are not barred by the “written agreement” exclusion found in § 47129(e)(1); and (6) the TBIT Carriers’ claims are barred as described below.

A supplemental proceeding within the next thirty days will be used to determine the appropriate amount of refunds due to the complainants. The Department has determined that the complainants failed to meet their burden of proof to show that LAWA’s fees are unreasonable with respect to all other issues raised. The Department has further determined that the T1/T3 Carriers are due a refund and interest for certain amounts set forth more fully below.

1. We find that the seven T1/T3 complainants, Alaska Airlines, et al., and the twenty-one TBIT complainants, Aer Lingus, et al., have otherwise failed to show that the new and increased fees and methodologies are unreasonable or unjustly discriminatory;
2. We order the Respondents to refund with interest the base rent and M&O fees paid for the T1/T3 “common areas” pursuant to the “rentable” space methodology, for the period from February 1, 2007, for the following T1/T3 Carriers: Alaska Airlines, Inc., AirTran Airways, Inc., ATA Airlines, Inc, Frontier Airlines, Inc., Midwest Airlines, Inc, Southwest Airlines Co., and US Airways Group, Inc.;
3. We order the Respondents to refund with interest the increased base rent fees paid on the “useable” space by the T3 Carriers based upon the difference between the imposed market value base rent and the fully allocated cost base rent, for the period starting February 1, 2007;
4. We will establish the refund amounts due under ordering paragraphs 11 and 12 in a supplemental proceeding as follows: Respondents must provide its calculation of the refund due consistent with this Final Decision on or before Friday, June 22. The complainants may then respond to Respondent’s position on or before Friday, June 29, and Respondents may file a reply by Tuesday, July 3;
5. We reject the findings made by Administrative Law Judge Richard C. Goodwin in his Recommended Decision, including Appendix A, in this proceeding except to the extent that his findings are consistent with the analysis and findings set forth in this order; and
6. We deny all other pending motions not addressed in this order.

By: Andrew Steinberg