Airports and their airline tenants build airport finances on use and lease agreements – particularly, for commercial service airports, signatory airport-airline agreements. An airline use and lease agreement (AULA)—sometimes called an airport-airline agreement, or more simply, a use and lease agreement—is the contract between an airport and its airline tenants that sets the terms for using airport facilities such as gates, terminal space, and other operating areas. AULAs also establish how the airport recovers its costs from those airlines through rates and charges. At most commercial service airports, these agreements are structured as signatory agreements: airlines that sign on receive contractual rights and rate treatment that non-signatory carriers do not.
We guide clients through negotiating and drafting airline use and lease agreements, often alongside a capital program and other use, lease, development, and concessions agreements underway at the same airport. We also advise on the type, duration, and terms of a use and lease agreement before it’s drafted—decisions that shape an airport’s operations, maintenance, and development for years afterward. Our first role is to listen, then to assist each of our airport clients in developing an approach and strategy that reflects that airport’s unique circumstances and needs.
The airline-airport relationship, typically defined by the use and lease agreement in place at a given airport, has shifted considerably over the past three decades. Airports can no longer rely on antiquated, standard-form agreements to manage today’s mix of legacy carriers, ultra-low-cost carriers, and evolving route networks. A modern AULA must address a wide range of interrelated issues—from an airport’s capital improvement plans to how that airport fits into each airline’s broader route system—and hold up as those variables shift over the life of the agreement.
Issues We Help Structure
We work with airports to weigh the differing business models of U.S. and foreign air carriers and to structure use and lease agreement terms—under a residual or compensatory rate-setting methodology, or a hybrid of the two—around issues such as:
- Gate use policies: whether gates are exclusive, preferential, or common-use, and how that affects airline flexibility and airport capacity
- Joint-use cost allocation: how an airport splits the costs of shared spaces and equipment fairly among multiple airlines using the same facilities
- Local air service concerns: how lease terms affect an airport’s ability to attract or retain service from specific carriers or routes
- Airport development project funding: how lease terms support or constrain the airport’s ability to finance capital projects through airline cost recovery
- Cost per emplaned passenger (CPE): the per-passenger cost metric airlines watch closely when evaluating an airport’s competitiveness
- Origination and destination (O&D) traffic: how O&D passenger volume factors into rate-setting and space allocation
- Non-aeronautical revenue: how revenue from parking, concessions, and other non-airline sources offsets what an airport charges airlines
- Passenger facility charges (PFCs): a federally authorized per-passenger fee airports can collect to help fund FAA-approved capital projects
That work extends to rates and charges resolutions, fuel farm leases, and airline terminal lease terms with individual airlines or with consortia. We work alongside airport staff, drawing on their institutional knowledge, experience, and expectations, to build and implement negotiation strategies and lease models around each airport’s specific circumstances and objectives.
We also advise commercial service and general aviation airports on related leasing arrangements for concessions, including in-terminal concessions, rental cars, ACDBE issues, general aviation users, and, increasingly, non-aeronautical development.
Federal Matters
Airline agreements implicate a wide range of an airport’s federal obligations, and the Firm often advises on airline-related compliance matters in the context of new or existing airline agreements.
Competition Plans
Federal law requires many airports to adopt and periodically update a competition plan, and those plans carry real weight at the negotiating table: they shape how far an airport can go in structuring lease and use agreement terms, particularly around terminal access and management. We advise airports on reviewing and implementing competition plan requirements and on how those plans intersect with lease negotiations—ncluding where airports can use them to attract competitive service and limit a dominant carrier’s ability to restrict it.
Air Service Incentive Programs
We advise large, medium, and small hub airports on ways to attract and retain domestic and international air service through fee waivers, marketing programs, and non-airport revenue guarantees that comply with federal law and each airport’s existing contractual obligations. That work has included building programs to attract new service to resort airports in Florida and Colorado, incentivizing up-gauging at congested Southwest hub airports, and shifting service to secondary airports in the Tampa Bay and Phoenix metropolitan areas.
Kaplan Kirsch is recognized as the oldest and largest law practice dedicated exclusively to airport law in the United States. Our airport attorneys are recognized nationally by Chambers and Partners, Best Lawyers in America®, and Super Lawyers®.