"Judge deals a blow to LAX fee increases"

Wednesday, May 16, 2007

Judge deals a blow to LAX fee increases
Assailing the airport agency's accounting, a federal jurist calls the hikes
unreasonable. U.S. officials are to issue a final ruling in June.
By Jennifer Oldham
The Los Angeles (CA) Times


In a potentially costly setback, a judge for the federal Department of
Transportation found Tuesday that higher terminal fees the city airport
agency imposed on low-cost and international carriers at Los Angeles
International Airport earlier this year are unreasonable and discriminatory.


The ruling, if upheld, could cost Los Angeles World Airports millions of
dollars and throw into question how the agency would pay for added security
since 9/11 and improvements at timeworn LAX. 

The fee increase, imposed by the city Airport Commission, nearly quadrupled
rent and maintenance costs for domestic carriers in Terminals 1 and 3.
Airport officials argued that the jump was necessary because they were
subsidizing the airlines. Carriers contended that the higher costs put them
at a competitive disadvantage, because airlines with long-term leases would
continue to pay lower terminal rent.

The carriers appealed the fee increase to the U.S. Transportation
Department.

Carriers and agency officials both expressed surprise that U.S.
Administrative Law Judge Richard C. Goodwin sided with the airlines, which
had repeatedly argued that the increases would force them to raise fares and
limit flights. The strongly worded, 78-page ruling also brought up broader
concerns, including what Goodwin termed systemic problems with the agency's
budgeting system. 

The agency's "entire accounting system is suspect and cannot be relied upon
to provide accurate and timely information," Goodwin wrote. Although the
ruling isn't binding, its findings are so strong that many participants
expect Transportation Department officials to take it to heart when they
issue their final decision June 15. 

During his seven-week investigation, Goodwin conducted a 15-day hearing in
Los Angeles, during which numerous airport and airline officials testified.
He also reviewed 11,000 pages of documents and 500 exhibits. 

Low-cost domestic carriers in Terminals 1 and 3, including Southwest,
Alaska, US Airways Group, Frontier and AirTran, issued a joint statement
saying they are "very gratified" by Goodwin's decision. 

"The ruling upholds clear and long-standing principles of law that are
designed to protect consumers and airline taxpayers alike from excessive,
unreasonable and discriminatory payments for the use of an essential public
facility," they said. 

An attorney representing 21 international carriers who operate out of the
Tom Bradley International Terminal at LAX also applauded the ruling, saying
it affirms their contention that existing leases bar the airport from
unilaterally charging higher maintenance fees. In a separate complaint filed
with the Transportation Department, the carriers are challenging increased
rents imposed earlier this year.

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