Airports Ask For AA Fees To Be Separated In Bankruptcy Case
Dec. 20-- Two U.S. airports where American Airlines has major operations have asked a federal bankruptcy court to order the carrier to segregate locally collected Passenger Facility Charges and continue disbursing them to the airports, court documents show.
Lawyers for the Dallas/Fort Worth International Airport Board and the City of Los Angeles Department of Airports have asked the U.S. Bankruptcy Court in the Southern District of New York to clarify the PFC issue beyond its Interim Tax Order issued on Nov. 30.
The tax order directs Fort Worth-based AMR Corp., the parent of American, to continue paying its taxes and disbursing PFC revenue to the airports.
"Despite this directive in the Interim Tax Order, DFWIAB requests that the final order include the specific requirements provided for in the aforementioned statutes and regulations in order to ensure that the debtor's obligations are fully understood and DFWIAB and other airports' rights are fully protected," lawyers for the DFW board say in their request for a final order.
"Because of the trust fund status given to PFCs, airlines hold neither legal nor equitable interest in the PFC revenues. The airlines hold mere possessory interest in the PFCs through their handling and collecting of the fees. Accordingly, these funds are not property of the (bankruptcy) estate under Section 541 of the Bankruptcy Code. Therefore, along with the other requirements described herein, debtor airlines may not grant a security interest in the PFCs to any third parties.
"A separate order would also eliminate the confusion between the debtor's request for authority to make discretionary payments of other taxes and the mandatory requirement to remit PFC funds to airports as established above."
At Tulsa International Airport and many other airports, PFCs of $4.50 per enplaned revenue passenger are collected by the airlines along with the air fare and held in a separate fund. The airlines issue a check to the airports each month to account for the PFC collections, airport executives said.
The PFC revenue is used by the airports to make infrastructure improvements.
Carl Remus, Tulsa's deputy airports director of finance and administration, said American Airlines collects from $110,000 to $120,000 a month in PFCs.
The five airlines serving Tulsa International Airport -- American, Delta Air Lines, Continental Airlines, Southwest Airlines and United Airlines -- collect $6.2 million in PFC revenue annually, Remus said.
AMR's bankruptcy filing also raises issues about American's payment of rates, fees and charges in the passenger terminal and aircraft landing fees, airport officials said.
American pays $81.43 per square foot per year for public space such as ticket counters and hold rooms; $61.07 per square foot per year for office space, and $40.71 per square foot per year for storage space, Remus said.
American also pays landing fees of $2.91 per thousand pounds of gross landed weight.
In the fiscal year that ended June 30, American paid the Tulsa Airports Improvement Trust terminal rents of $1.5 million and landing fees of $1.4 million, Remus said.
Although TAIT was notified by AMR of its bankruptcy filing, the company has provided no additional information about its intentions, airport executives said.
"American can't tell us anything until they file their reorganization plan with the bankruptcy court," Remus said. "Until the plan is filed, we're all in the dark."
Nancy McNair, airports legal counsel, said TAIT will be represented in AMR's bankruptcy case.
"(Airports Director) Jeff Mulder and I have recommended that TAIT retain Foley & Lardner, who has represented airports in numerous airline bankruptcies, to represent TAIT's interests in the AMR matter," McNair said. "And TAIT will receive the benefit of motions previously filed by DFW and LAX (Los Angeles International Airport)."
With 900 attorneys in 21 offices, Washington D.C.-based Foley & Lardner LLP is one of the nation's largest and most prestigious bankruptcy and business reorganization law firms.
D.R. Stewart 918-581-8451
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