Issues surrounding airport finances and revenue use pose some of the most complex legal questions faced by airport sponsors. Kaplan Kirsch & Rockwell regularly advises clients on these issues and helps them find solutions. We represent clients in the structuring of airport rates and charges programs (including use and lease agreements and establishing rates by resolution), the structuring of financial arrangements with neighboring governments and negotiations with airlines, fixed base operators and other tenants. We work inside and outside of government to help formulate federal policies, legislation and regulations on Passenger Facility Charges (PFCs), permitted uses of airport revenues and airport rates and charges.
We litigate state and federal cases and administrative proceedings on virtually all aspects of airport finances and revenue: rates and charges, revenue diversion, PFCs and local taxation issues. Our lawyers negotiate agreements and work to resolve disputes with airlines and fixed base operators over lease and use agreements and rates and charges. We work with airports to resolve, or prevent, Federal Aviation Administration (FAA) Part 16 proceedings concerning airport rates and charges and revenue use issues, settle informal investigations concerning revenue diversion, and obtain PFC approvals for airport projects, often in the face of objections raised by air carriers and other parties.
In a time when non-aeronautical revenue is increasingly important, Kaplan Kirsch lawyers assist clients in developing innovative programs that generate significant non-aeronautical revenue while complying with the arcane and often counterintuitive federal land use, revenue use and revenue diversion requirements. We assist airports that want to be developers or enter into design-build-finance-operate-maintain arrangements and other bespoke structures with private sector enterprises, including negotiating novel use and lease agreements in which airlines or third parties provide capital financing for terminal development. Navigating the legal requirements for such complex projects, such as Public Private Partnerships, requires intimate knowledge of federal laws applicable to airport finances as well as broad expertise in real estate development projects and real estate financing.
Airline Rates and Charges: We represent clients in the evaluation of financial issues, negotiations with carriers and fixed-base operators, structuring of financial arrangements with neighboring governments and ongoing federal rulemaking and legislative activity. Our team helps formulate federal policies and draft agency rules governing permissible rates and charges methodologies, advises individual airports on innovative rates and charges methodologies negotiated with, or imposed on, airlines and other users, and participates in contested Part 16 administrative proceedings concerning airport rates and charges. We have assisted airports in negotiations with the FAA about the propriety of differential rates for different airport facilities in the face of aggressive litigation pressures from airlines and also have resolved potential problems through negotiations with FAA regulators to structure airport rates and charges to avoid compliance issues.
Air Service Incentive Programs: We have provided advice to large, medium and small hub airports on innovative means to attract and/or retain domestic and international air service for their communities. We accomplish these goals through fee waivers, marketing programs and non-airport revenue guarantees that are consistent with federal law and their contractual obligations. We have helped prepare programs to attract new service to resort airports in Florida and Colorado, incentivized up-gauging of aircraft at congested hub airports in the Southwest, and encouraged shift of service to secondary airports within busy metropolitan areas in the Tampa Bay and Phoenix metropolitan areas.
Airport Revenue Use Issues: We advise clients and coordinate with the FAA on the use of airport revenue in many contexts, including the settlement of disputes between airport sponsors and neighboring jurisdictions. The restrictions on the use of airport-generated revenues are not intuitive and many airports find themselves needing to work with state and local officials to understand and comply with federal revenue use requirements. We have advised clients on major intergovernmental settlement agreements in Denver, Minneapolis, Los Angeles, Cleveland and elsewhere. We also have negotiated payment-in-lieu-of-tax agreements between an airport and neighboring municipalities and advised multiple airports on permissible and impermissible uses of airport revenue.
Federal Grants, Loans and Passenger Facility Charges: We assist airports in obtaining federal grants, including Letters of Intent, and also restructure Letters of Intent to accommodate changed program needs. After the influx of federal funding related to the COVID-19 pandemic and the Bipartisan Infrastructure Law, we worked with airports to strategize the optimal use of such funds and ensure compliance with new and familiar federal requirements. We also advise on: development of PFC programs, demonstrating eligibility of the projects; holding airport consultation meetings and responding to airline comments; and completing the PFC application process, including meetings with the FAA where appropriate. Our team has successfully handled large, complex and controversial projects, including major international terminals, the issuance of PFC-backed bonds, and successfully advocating for the redeployment of PFC revenue on behalf of an airport sponsor. Kaplan Kirsch also advises airports and private developers regarding the extension of Transportation Infrastructure Finance and Innovation Act (TIFIA) loans to airport projects and the requirements applicable to qualifying for an airport TIFIA loan.
Competition Plans: We assist airports in the review and implementation of federally required competition plans and competition plan updates. We advise airport proprietors on possible impacts of their competition plans in negotiations with airlines of lease and use agreement provisions and other issues relating to the management of their facilities, particularly terminals. We also work with airports on ways to attract competitive service and limit the ability of dominant hub airlines to restrict competition. In addition to our specific experience relating to competition plans, Steve Kaplan has been engaged in airline and airport competition issues broadly throughout his career, including during his tenure as General Counsel of the United States Department of Transportation, as Vice Chair of the National Civil Aviation Review Commission (Mineta Commission), and in his representation of fortress hub airports throughout the country.