Air Transport Ass'n of Am. v. City of L.A.|L.A. Int'l Airport Rates Proceeding (L.A. Int'l Airport Rates Proceeding (LAX I)) -- No. 50176

Instituting Order (04/03/1995) [Determination No.11].

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Author:

Murphy, Patrick V., Acting Assistant Secretary for Aviation and International Affairs

Author Title:

Acting Assistant Secretary for Aviation and International Affairs

Complainant(s):

Air Transport Association of America

Respondent(s):

Los Angeles (Cal.)|Los Angeles (Cal.) Department of Airports|Los Angeles (Cal.) Board of Airport Commissioners

Airport(s):

Los Angeles International Airport (LAX)

History:

See Final Decision of Jan. 30, 1995 (Determination No. 15).

Holding:

Setting case for hearing.

Abstract:

Complainants Air Transport Ass'n of America (ATA) and sixteen airlines filed a complaint under 49 U.S.C. § 47129 against the City of Los Angeles, owner and operator of the Los Angeles International Airport, alleging that the increased landing fees imposed at LAX were unreasonable and otherwise unlawful under 49 U.S.C. §§ 47107, 40116 and Section 113 of the Federal Aviation Administration Authorization Act. Respondent City increased the landing fee rates from $0.51 per thousand pounds of aircraft weight to $1.56 for some aircraft and $1.87 for other aircraft. Complainants alleged that the new fees were unreasonably high and that Respondent intended to use the revenues generated by the landing fees for non-airport purposes. (p. 5). Respondent claimed that it increased the fees because the expiration of the airlines' longterm leases gave the City the opportunity to reassess its fee structure, and in doing so, Respondent switched from a residual fee methodology to a compensatory fee methodology. (p. 5) Director found that a "significant dispute" existed and referred the matter to an ALJ for hearing.|Jurisdiction:|Section 113 did not alter airport sponsors' substantive rights, since they already had the obligation to charge reasonable fees. The statute instead created only a procedural mechanism for quickly resolving disputes over the reasonableness of airport fees. Therefore, the fact that Respondent had not accepted any grant money since the statute was enacted did not prevent jurisdiction. (p. 12).|Section 113 governs investigations of whether an airport has violated the reasonable fee requirement imposed by both the Anti-Head Tax Act and the Airport and Airway Improvement Act. (p. 13).|Significant Dispute:|A "significant dispute" within the meaning of Section 47129 existed where LAX was the third busiest airport; the dispute involved a sizable amount of money (Complainants alleged that each year the City would collect $48 million more from the increased fees than its actual costs of operating the airfield and apron); the dispute concerned a major increase in fees (the new fees were three times the size of previous fees); and the arguments made by Complainants "on their face appear to be substantial and worthy of investigation). (p. 17).|Parties and Intervenors:|Foreign carriers may file complaints even though they do not have a statutory right to do so, because the FAA has adopted a policy of allowing them so as to promote efficiency. (p. 18).|"Follow-on complaints" were permitted as a matter of discretion, even though they were not filed within 60 days of the enactment of the statute, so as to promote efficiency. (p. 19). However, complaints filed after the 7-day deadline proscribed for follow-on complaints were not permitted. (p. 20).|ATA was not permitted to file a complaint, because the statute specifically limits the ability to file complaints to "air carriers," and Director found no reason to expand the category of complainants. However, since ATA was represented by the same counsel as the airlines, it will be treated as an intervenor in the case. (p. 22).|"Our rule states that we should liberally interpret the criteria for intervention to facilitate public participation in our proceedings." (p. 23). Airports Council Internationl (ACI) was permitted to intervene, because it has a substantial interest in this matter since decisions on reasonableness of fees are likely to affect its members and ACI's limited participation may reasonably be expected to assist in the development of a sound record and will not broaden the issues. (p. 23).|Unreasonable Fees:|A comparison between the fees charged at LAX and fees charged at other airports was irrelevant. "The hearing must determine whether the LAX fees are justified by the costs at LAX." (p. 25). However, the accounting practices used at other airports may be relevant. (p. 25 n.17).|In determining whether a fee is reasonable, DOT would review not only the reasonableness of the result, but also the methodology of calculation and components of the costs claimed by the Respondent. (p. 26).|Financial Security:|Respondent was exempt from the requirement to provide a letter of credit or other form of security until a decision was rendered where Respondent and Complainants had entered into a "standstill agreement," which preserved the airlines' right to challenge the lawfulness of the increased fees while requiring them to pay the increased fees under protest. The statute required the airport to provide financial security "unless the airport and complainant air carrier agree otherwise." They did agree otherwise when they signed the standstill agreement. (p. 34).

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