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DOT Renders Final Decision in Alaska Airlines v. Los Angeles World Airports

On June 15, 2007, DOT rendered its Final Decision in Alaska Airlines v. Los Angeles World Airports, holding that basing terminal fees for the complaining carriers on "rentable space" is unjustly discriminatory at LAX because the Airport has an outstanding number of long term leases based on "usable space," and basing terminal fees for the complaining carriers on market value is unreasonable since LAWA did not obtain an independent third party appraisal. Favorable to LAWA, the Final Decision held that the new terminal fees for road access costs, security costs, and additional indirect administrative costs not previously charged to the complaining carriers, were reasonable and not unjustly discriminatory. Although, problematic to LAWA, the Final Decision is favorable to airports, in general, since it reaffirms the right of airports, in the absence of an existing agreement, to impose by tariff, terminal fees: (1) recovering all of an airport's direct and indirect maintenance and operations expenses; (2) based on "rentable space" so long as there are no long term outstanding leases based on "usable space"; and (3) based on the "market value" of aeronautical space, so long as it is based on an independent third party appraisal. The Decision has been appealed.