The U.S. Department of Transportation on Friday upheld a ruling that rents charged by the city airport agency are unreasonable and discriminatory to low-cost carriers at two terminals at Los Angeles International Airport.
But the airport claimed at least a partial victory because the decision also stated that it could raise its rates to cover the increased cost of security and maintenance at its terminals.
The decision came one month after a judge for the transportation department issued a sweeping ruling in favor of the airlines after the city Airport Commission nearly quadrupled rent and maintenance costs for domestic carriers at Terminals 1 and 3. The carriers at those terminals contended that the increases put them at a competitive disadvantage because other airlines had long-term rents that can't be raised until 2023.
The federal agency modified the judge's ruling, allowing LAX to claim a partial victory in that the transportation department said the airport could collect more for security and maintenance, although no dollar figure was attached to that increase.
In the near term, the win was more significant to the carriers at Terminals 1 and 3 -- including Southwest and Alaska Airlines -- where the amount of money in dispute was estimated at about $55 million. LAX has been collecting the increased rent since earlier this year. Now it must refund a major portion of it.
"Today's DOT ruling represents a clear victory for the airlines," said a joint statement by the seven carriers operating out of the two terminals.
Both sides said details of what the ruling will mean for the carriers and LAX will take some time to digest, given the length and complexity of the ruling.
But the airlines struck a conciliatory note, saying that they hoped the airport's new leadership "will see this decision as an opportunity to embark on a more constructive partnership and negotiate a new agreement that is fair and equitable to both the airlines and LAX."
In last month's ruling, the airport and carriers were surprised that U.S. Administrative Law Judge Richard C. Goodwin sided so completely with the airlines, which had argued repeatedly that the rent increases and other costs would have to be passed on to the customers in rate hikes and a decreased number of flights.
The transportation department decision is final and cannot be appealed.
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