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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