DOT To Decide If High LAX Landing Fees Are Justified

The latest wrinkle in the four-year-old war between airlines flying into Los Angeles International Airport and the city government has one side claiming victory and the other claiming just another step toward the resolution of the dispute.

Last month, a federal court sent the issue of how much the airport can charge carriers for landing fees back to the Department of Transportation.

But for now, the airport has been allowed to continue to collect the higher fees, and both sides are intent on continuing a fight that has been characterized by an escalating amount of bitterness on both sides.

The conflict can be traced back to 1993, when the city began to assess landing fees based on fair market value¬an up-to-date assessment of airport property rather than the value of the original purchase of the land.

As a result, landing fees were raised from 51 cents to $1.56 in 1993 and to $1.97 in 1995. The airlines appealed to the DOT, which decided in their favor and said the fees should be set back. On top of that, DOT wanted the airport to refund money to the airlines retroactively based on the extra charges.

When the city appealed in late 1994, that refund was stayed. Since then, the difference in fees has been paid into escrow.

Confusing the situation even further was an accusation leveled at city hall charging that the municipality was illegally diverting airport revenues to other city projects.

Last year, a top Air Transport Association executive was quoted as saying, "the City of Los Angeles has pursued airport revenue diversion schemes and quadrupled the cost of doing business at the airport, which has alienated the industry."

While Tim Lynch, deputy controller for the city of Los Angeles, labeled the charges as "bull...," a recent article in the Financial Times stated that Mayor Richard Riordan is "still drawing funds which should under federal law be used for airport purposes." The publication quoted an ATA spokesman as saying the airlines would be less likely to fund any LAX expansion unless that revenue "milking" is stopped.

But as far as the ruling allowing LAX to raise the fees is concerned, a spokesman for the ATA¬which represents the carriers¬said the fees have been separated from the diversion issue.

For its part, airport management at LAX saw the latest decision as a significant victory.

"We feel totally vindicated," said John Driscoll, executive director of the Los Angeles Department of Airports. "The department has been under attack for four years for its fair market value approach. I hope this ends the political and legal attack conducted by the airlines, and we can address LAX's pressing capacity needs so it can continue as a world-class airport."

The ATA, however, is not ready to call it quits. "The decision by the court was to send the question back to DOT to seek more details," noted ATA spokesman David Fuscus.

He said the airlines believe the increased fees "are a way of diverting funds from the airport into the city's coffers, which is against federal law. We see the court's decision as one of our not providing enough information."

Sources at DOT said they will decide shortly whether to ask the court to rehear the matter.

Airport officials say the fee increases produce $15 million annually for LAX. One source said the airport earns $300 million in revenues annually, with two- thirds coming from concessions and the other third from landing fees.

Lynch said that even with the tripling of the fees in the past four years, "we are still at the bottom of the list among airports as far as fees. From the point of view of a travel planner, we are still one of the cheaper airports for flying in and out of. There is controversy, but this shouldn't have an impact on the traveler."

Marite Vella, travel manager for US Borax and president of the Los Angeles chapter of the National Business Travel Association, said the chapter has encouraged members to write to the city in support of using any fees or taxes to improve the airport. "My travelers have to travel and so are captive to whatever additional taxes or fees are in place," she said.