Seven Airlines File DOT Complaint Opposing New Terminal Charges at LAX

AirTran Airways, Alaska Airlines, ATA Airlines, Frontier Airlines, Midwest Airlines, Southwest Airlines and US Airways Group have filed a joint complaint with the U.S. Department of Transportation...

AirTran Airways, Alaska Airlines, ATA Airlines, Frontier Airlines, Midwest Airlines, Southwest Airlines and US Airways Group have filed a joint complaint with the U.S. Department of Transportation (DOT) in opposition to new terminal charges at Los Angeles International Airport (LAX) that dramatically increase the airlines’ costs and could lead to higher airfares and reduced options for Los Angeles air travelers.

The massive fee hike, imposed Feb. 1 on carriers operating out of Terminals 1 and 3, forces the airlines to pay as much as 12 times more per square foot than their competitors at other terminals. The airlines estimate the collective financial impact of this differential over the next 15 to 20 years at more than $1 billion, with a near-tripling of charges from $20 million to $56 million in the first year alone. The differential could be significantly greater should Los Angeles World Airports (LAWA), the operator of LAX, impose further increases during this period.

The carriers argue that LAWA’s huge rent increase violates federal law because it unjustly discriminates against airlines with expired leases, while competing airlines with leases expiring in 15 to 20 years are charged dramatically less for comparable terminal space.

"LAWA is not a private commercial landlord," the filing notes. "Rather, LAWA is a public utility with monopoly power over the airlines wishing to serve LAX. And, in order for airlines to serve the Los Angeles area effectively, access to LAX on fair and non-discriminatory terms is essential."

An airport that receives federal funds is required to remain open to all airlines wishing to serve that airport on reasonable terms and without unjust discrimination.

The filing points out serious consequences for Los Angeles residents should the discriminatory charges be allowed to stand: "They would create significant barriers to new-entrant airlines wishing to serve Los Angeles, and force the predominantly smaller and low-fare Terminal 1 and 3 carriers to raise prices and/or curtail service to offset the dramatically higher terminal costs. As a result, the citizens of Los Angeles and other air travelers to the region will ultimately be penalized by LAWA’s new charges in the form of higher airfares and reduced travel options." In the end, LAWA’s massive rent increases are likely to hurt the Los Angeles economy by driving up fares at LAX and dampening air travel to the region.

The carriers attempted to negotiate with LAWA for more than a year before the new charges were imposed and are not opposed to reasonable, non-discriminatory and necessary cost-based increases in terminal rates.

LAWA is required to respond within 14 days to the carriers’ complaint. The DOT is expected to assign the matter to an administrative law judge for a hearing, and the Secretary of Transportation is required to issue a final decision in 120 days.

FCMN Contact: maria.koenig@alaskaair.com

SOURCE: Alaska Airlines

CONTACT: Caroline Boren, +1-206-392-5101, for Alaska Airlines; or Joe
Hodas, +1-720-231-8145, for Frontier Airlines; or Whitney Eichinger,
+1-214-792-6604, for Southwest Airlines; or Andrea Rader, +1-480-693-5729, for
US Airways