UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY Washington, D.C.

ALASKA AIRLINES, INC., et al .,

v. LOS ANGELES WORLD AIRPORTS, LOS ANGELES BOARD OF AIRPORT COMMISSIONERS, and THE CITY OF LOS ANGELES, CALIFORNIA

. Docket No. OST-2007-27331

COMPLAINANTS’ AND RESPO NDENTS’ JOINT REPORT ON THE STATUS OF S ETTLEMENT DISCUSSIONS

M. Roy Goldberg SHEPPARD MULLIN RICHTER & HAMPTON LLP 1300 I Street, NW Suite 1100 East Washington, DC 20005-3314 Phone: (202) 218-0007 Fax: (202) 218-0020 rgoldberg@sheppardmullin.com

Counsel for: Alaska Airlines, Inc. AirTran Airways, Inc. ATA Airlines, Inc. Frontier Airlines, Inc. Midwest Airlines, Inc. Southwest Airlines Co. US Airways Group, Inc. Steven S. Rosenthal Jeffery A. Tomasevich J.D. Taliaferro K AYE S CHOLER LLP 901 Fifteenth Street, NW Washington, DC 20005 Phone (202) 682-3500 Fax: (202) 682-3580 email: srosenthal@kayescholer.com jtomasevich@kayescholer.com jtaliaferro@kayescholer.com

Carmen A. Trutanich Los Angeles City Attorney Kelly Martin General Counsel, Los Angeles World Airports Raymond S. Ilgunas Assistant General Counsel Lynn Mayo Deputy City Attorney L OS A NGELES C ITY A TTORNEY ’ S O FFICE Los Angeles World Airports One World Way Los Angeles, CA 90045 Phone: (424) 646-5010

Counsel for RespondentsCOMPLAINANTS’ AND RESPONDENTS’ JOINT REPORT ON THE STATUS OF SETTLEMENT DISCUSSIONS
Robert W. Kneisley Associate General Counsel Leslie Abbott Attorney SOUTHWEST AIRLINES CO. 1901 L Street, N.W. Suite 640 Washington, DC 20036

Howard Kass Vice President, Legal Affairs US AIRWAYS GROUP, INC. 1401 H Street, N.W. Suite 1075 Washington, DC 20005

Thomas R. O’Grady Deputy General Counsel ALASKA AIRLINES, INC. 19300 International Blvd. Seattle, Washington 98188-5303

Jacqueline Peter Counsel FRONTIER AIRLINES, INC. 7001 Tower Road Denver, Colorado 80249

Richard P. Magurno Senior Vice President, General Counsel & Secretary AIRTRAN AIRWAYS, INC. 9955 AirTran Boulevard Orlando, Florida 32827

Edward P. Faberman WILEY REIN LLP 1776 K Street, N.W. Washington, DC 20006

Counsel for: Air Tran Airways Frontier Airlines, Inc.

DATED: May 17, 2010COMPLAINANTS’ AND RESPONDENTS’ JOINT REPORT ON THE STATUS OF SETTLEMENT DISCUSSIONS

1 The T1/T3 Airlines 1 and Los Angeles World Airports 2 (“LAWA”) (collectively,

the “Parties”) hereby jointly file a status report, in conformity with DOT’s “Order

Granting an Interim Stay of Proceedings and Extending Deadline to File Procedural

Comments,” Order 2010-01-14 (“ January 21 Order”), regardi ng the settlement of certain

procedural and evidentiary issues relating to the remanded issues as set forth in DOT’s

Order 2009-11-24 (“November 24 Notice” ) and Order 2009-12-17 (“December 22

Order”).

BACKGROUND
On November 24, 2009, following remand of cer tain issues by the United States

Court of Appeals for the Dist rict of Columbia Circuit (the “D.C. Circuit”), the

Department of Transportation (“DOT”) issued the November 24 Notice in this case.

DOT’s November 24 Notice directed the T1 /T3 Airlines and LA WA “to advise the

Department . . . whether there is a possibility of settlement on the issues remanded” by

the D.C. Circuit. November 24 Notice at 5. The November 24 Notice further directed

another submission on procedural issues at a later date. Id

. Following LAWA’s and the T1/T3 Airlines’ initial submissions on December 2,

2009 and December 4, 2009, respectively, the Par ties held a conference call with DOT on

December 16, 2009. During that call, the Partie s discussed additional procedural issues,

and DOT subsequently issued the December 22 Order, directing the Parties to file, no

1 The T1/T3 Airlines are the seven air car riers that on February 16, 2007, filed with the Office of the Secretary of the United St ates Department of Transportation a “Joint Complaint in Opposition to New Terminal Charges at Los Angeles International Airport.”

2 Respondents in this case are the LAWA , the Los Angeles Board Of Airport Commissioners (“BOAC”), and the City Of Los Angeles, California (“City”). As used herein, LAWA refers to all Respondents.COMPLAINANTS’ AND RESPONDENTS’ JOINT REPORT ON THE STATUS OF SETTLEMENT DISCUSSIONS

2 later than January 18, 2010, additi onal comments with regard to the five issues remanded

by the D.C. Circuit as set forth in the November 24 Notice.

On January 11, 2010, the T1/T3 Airlines and LAWA filed a joint motion to

extend deadlines in this proceeding in order to attempt to reach agreement on the issues

identified in the Notice. In its January 21 Order, DOT granted the Parties’ motion to

extend the deadline to provide written submissions on remain ing written and evidentiary

issues from January 18, 2010 to October 18, 2010, but directed the Par ties to file periodic

reports regarding the status of settlement negotiations. The first such report was due

March 18, 2010, with successive reports to be filed approximately every 60 days

thereafter.

DESCRIPTION OF SETTL EMENT DISCUSSIONS SINCE THE PARTIES’ MARCH 18, 2010 JOINT STATUS REPORT
By the time of DOT’s January 21 Order, the T1/T3 Airlines and LAWA had

already reached agreement on one of the five remanded issue identified by the November

24 Notice — the “[t]imeliness of [the] T1 Air lines’ objection to fair market valuation”

used by LAWA in setting base rent (also known as the “Base Charge”) at LAX

Terminal 1. November 24 Notice at 2. DOT’s November 24 Notice identified four

additional issues for consideration on remand. Since January 11, 2010, the T1/T3

Airlines and LAWA have undertaken the fo llowing steps towards resolving those four

issues.

The Parties’ March 18, 2010 Status Report notified DOT that the airline members

of the Airport-Airline Affairs Committee 3 (a.k.a. the Airline-Air port Affairs Committee)

(“AAAC”) have created a “Subcommittee for Fina nce” consisting of airlines that have an

3 Every air carrier and foreign air carrier ope rating at LAX is a member of the AAAC.COMPLAINANTS’ AND RESPONDENTS’ JOINT REPORT ON THE STATUS OF SETTLEMENT DISCUSSIONS

3 interest in issues relating to rates and charge s at LAX. Airlines that are members of that

Subcommittee include airlines w ith long-term leases, airlines that have recently signed

leases, and airlines that are operating at LAX pursuant to the existing Tariff (portions of

which the T1/T3 Airlines challenged). The T1/T3 Airlines on the Subcommittee for

Finance include Alaska Airlines, Inc, Sout hwest Airlines Co. and US Airways Group.

The Subcommittee for Finance reports to the AAAC.

The Parties’ March 18, 2010 Joint Status Report described the first meeting

between the Subcommittee for Finance a nd LAWA, and described a framework for

ongoing discussions between the Subcommittee and LAWA. The Parties’ March 18,

2010 Joint Status Report also described ongoi ng discussions between LAWA and several

of the T1/T3 Airlines that were conducted on an i ndividual basis.

Since March 18, 2010, LAWA has continue d its one-on-one discussions with

several of the T1/T3 Airlines . These discussions are ongoi ng: LAWA management is

scheduled to meet with the Chair of th e Subcommittee for Finance on May 24, 2010. The

Parties remain interested in trying to reso lve the four remaining remand issues on or

before October 18, 2010.COMPLAINANTS' AND RESPONDENTS' JOINT REPORT ON THE STATUS OF SETTLEMENT DlSCUSSlONS
Dated: May 17,2010 Respectfully subm' ed, 

# /A?&

Steven S. Rosenthal Jeffery A. Tomasevich RICHTER & HAMPTON LLP J.D. Taliaferro 1300 I Street, NW KAYE SCHOLER LLP Suite 1 100 East 901 Fifteenth Street, NW Washington, DC 20005-33 14 Washington, DC 20005 Phone: (202) 

### 2 18-0007 Phone (202) 682-3500 Fax: (202) 2 18-0020 Fax: (202) 682-3580 rgoldber~@sheppardmullin.com email: srosenthal@,kayescholer.com j tomasevich@,ka~escholer.com - Counsel for: j taliaferro@,ka~escholer.com Alaska Airlines, Inc. A ir Tran Airways, Inc. Carmen A. Trutanich ATA Airlines, Inc. Los Angeles City Attorney Frontier Airlines, 

### Inc. Kelly Martin Midwest Airlines, Inc. General Counsel, LAWA Southwest Airlines Co. Raymond 

### L. Ilgunas US Airways Group, Inc Assistant General Counsel Lynn Mayo Deputy City Attorney Los Angeles City Attorney's Office 

## & &/IcI~/& One World Way Robert W. Kneisley Los Angeles, CA 90045 Associate General Counsel Phone: (424) 646-5010 Leslie Abbott Attorney Counsel for Respondents SOUTHWEST AIRLINES CO. 1901 

### L Street, N.W. Suite 640 Washington, DC 20036

4COMPLAINANTS' AND RESPONDENTS' JOINT REPORT ON THE STATUS OF SETTLEMENT DISCUSSIONS



## ,&ww tfi$/4~ Howard Kass Vice President, Legal Affairs US AIRWAYS GROUP, INC. 1401 H Street, N.W. Suite 1075 Washington, DC 20005

k? 

### d%pp*/-
- Thomas R. O7Grady Deputy General Counsel ALASKA AIRLINES, INC. 19300 International Blvd. Seattle, Washington 98 188-5303

Jacqueline Peter Counsel FRONTIER AIRLINES, INC. 7001 Tower Road Denver, Colorado 80249



### -4 

## A 4-/- Richard P. Magurno Senior Vice President, General Counsel & Secretary AIRTRAN AIRWAYS, INC. 9955 AirTran Boulevard Orlando, Florida 32827



### Pa Edward P. Faberman WILEY REIN LLP 1776 K Street, N.W. Washington, DC 20006

Counsel for: Air Tran Airways Frontier Airlines, Inc.

5CERTIFICATE OF SERVICE FOR COMPLAINANTS’ AND RESPONDENTS’ JOINT REPORT ON THE STATUS OF SETTLEMENT DISCUSSIONS

CERTIFICATE OF SERVICE

I, John David Taliaferro, hereby cer tify that on May 17, 2010, I caused to be served by email, a true and correct copy of the foregoing COMPLAINANTS’ AND RESPONDENTS’ JOINT REPORT ON THE STATUS OF SETTLEMENT NEGOTIATIONS on the following:

M. Roy Goldberg, Esq. SHEPPARD MULLIN RICHTER & HAMPTON LLP 1300 I Street, NW Suite 1100 East Washington, DC 20005-3314 Phone: (202) 218-0007 Fax: (202) 218-0020 rgoldberg@sheppardmullin.com Counsel for: Alaska Airlines, Inc. AirTran Airways, Inc. ATA Airlines, Inc. Frontier Airlines, Inc. Midwest Airlines, Inc. Southwest Airlines Co. US Airways Group, Inc.

David A. Berg, Esq. AIR TRANSPORT ASSOCIATION OF AMERICA 1301 Pennsylvania Ave., NW Washington, DC 20004 Phone: (202) 626-4234 Fax: (202) 626-4139 dberg@airlines.org

Robert P. Silverberg, Esq. SILVERBERG, GOLDMAN & BIKOFF, LLP 1101 30th Street, NW, Suite 120 Washington, DC 20007 Phone: (202) 944-3304 Fax: (202) 944-3306 rsilverberg@sgbdc.com

Counsel for ATA Scott P. Lewis, Esq. A NDERSON & K REIGER LLP One Canal Park Suite 200 Cambridge, MA 02141 Phone: (617) 621-6560 Fax: (617) 621-6660 slewis@andersonkreiger.com

Monica Hargrove Kemp, Esq. A IRPORTS C OUNCIL I NTERNATIONAL

- N ORTH A MERICA 1775 K Street, NW Washington, DC 20006 Phone: (202) 293-8500 Fax: (202) 331-1362 mkemp@aci-na.org

Counsel for ACI-NACERTIFICATE OF SERVICE FOR COMPLAINANTS' AND RESPONDENTS' JOINT REPORT ON THE STATUS OF SETTLEMENT DISCUSSIONS



### In 

### addition, I 

### caused a true and correct copy of the foregoing COMPLAINANTS AND RESPONDENTS9 JOINT REPORT ON THE STATUS OF SETTLEMENT NEGOTIATIONS 

### to be ernailed to Mary F. Withum, Esq., Office of the General Counsel, Department of Transportation, at mary.withum@dot.gov.

In addition, 

### I caused to be filed electronically one copy of the foregoing COMPLAINANTS AND RESPONDENTS' JOINT REPORT ON THE STATUS OF SETTLEMENT NEGOTIATIONS 

### in Docket Number DOT-OST-2007-2733 1 

### in the Federal