LAX Airport Fee Dispute: Airlines, 1 LAWA 0

Los Angeles World Airports (LAWA) lost the first round in its fight to raise fees for 29 airlines that fly out of Los Angeles International Airport, as I reported in the May 17 issue (subscribers only) of Aviation Daily. A U.S. Transportation Dept. administrative law judge called LAWA's fee hike for Terminals 1 and 3 carriers "unreasonable" and said it "unjustly discriminates" against the carriers.  Richard Goodwin made the same ruling for airlines operating out of LAX's Tom Bradley International Terminal.

Goodwin also ruled that LAWA refund carriers for increased fees already paid and pay interest on the money due. In his ruling, he called LAWA's financial information "inherently inaccurate," adding that this inaccuracy did not allow airlines to properly comment on the fee increase.

The LAWA board in January approved to hike the facility rental rates, along with maintenance and operations costs at LAX (DAILY, Jan. 5). A LAWA spokesman argued that LAX's airlines had historically paid only a fraction of the costs associated with operating out of the facility. Airlines have not been charged increased security costs at LAX, he added.

Lead plaintiffs Alaska Airlines and AirTran, ATA Airlines, Frontier, Midwest, Southwest and US Airways applauded the decision in a joint statement, while LAWA was understandably disappointed.  While the ALJ's ruling was tied to the facts and circumstances at LAX, he recognized that commercial compensatory rate setting is a reasonable method and that airports have some flexibility in choosing the rate-setting methods they will use, according to Airports Council International-North America.

DOT Secretary Mary Peters has until June 15 to accept or reject Goodwin's ruling.  Once that decision is made, each side can still take the case to federal court once her decision is made.  No one doubts LAWA's right to raise fees to cover its costs.  The issue is what methodology the airport operator uses to determine the fees and just how much those fees can be raised. 

It becomes an epic battle between airlines, still looking to cut costs, and airports, trying to maintain modern, safe facilities and fund costly security measures.  Some airports, including Detroit Metro and San Francisco International, have chosen to actually lower some costs for airlines and instead, raise fees for other non-airline related ventures including concessions.  Only time -- and a federal court judge -- will tell how this particular war will end.

Comments

[LAX airport]

Maybe you will find link to Lax airport web site useful.