ORDER 2011

- 1

- 13

UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D.C.
Issued by the Department of Transportation on the 14 th day of January, 2011

________________________________________________ : ALASKA AIRLINES, INC ., ET AL. , :
: DOCKET NO.

v. : OST

- 20 0 7

- 27331

: LOS ANGELES WORLD AIRPORTS, ET AL

. :
:

THIRD ORDER GRANTING AN IN TERIM STAY OF PROCEE DINGS AND EXTENDING DEADLINE TO FILE PROCEDURAL C OMMENTS

By this Order, the United States Department of Transportation (Department)
grants the Complainants’ and Respondents’ December 15 , 2010 request , in the

Com plainants’ and Respondents’ Joint Report on the Status of Settlement Discussions
( Dec. 15, 2010 Joint Report)
, to stay further proceedings in the case until July 31 , 2011. 1

This Order also requires the parties to continue to file with us status reports of their

settlement discussions.

We initiate d further proceedings in this case following the issuance of the
mandate on September 25, 2009, by the United States Court of Appeals for the District of

Columbia Circuit in Alaska Airlines, Inc., et al. v. U.S. Department of Transportation
, 575 F.3d 750 (D.C. Cir. 2009). See, Or ders 2009

- 11

- 24 (Nov. 24, 2009) and 2009

- 12

- 17

1 The Complainants in this case include certain carriers operating out of Terminals 1 and 3 at Los Angeles International Airport (LAX). Southwest Airlines and US Airways operate out of Terminal 1 (T/1 Carriers). Alaska Airlines, AirTran Airways, ATA Airli nes, Frontier Airlines, and Midwest Express operate out of Terminal 3 (T/3 Carriers). The Respondents include the Los Angeles World Airports (LAWA), operator of Los Angeles International Airport (LAX), owned by the City of Los Angeles. The parties includ e the Complainants and Respondents. The stay will continue until Monday, August 1, 2011.2

(Dec. 22, 2009)

. That case arose out of our Final Decision (Order 2007

- 6

- 8, June 15,
2007) issued under 49 U.S.C. § 47129 on the reasonableness of new terminal fees and
new fee methodologies imposed at the Los Angeles International Airport, following a
complaint filed by c ertain air carriers in Terminals 1 and 3 (T1/T3 Carriers) against the
airport operator, Los Angeles World Airports (LAWA). As explained in Order 2009

- 11

- 24, the D.C. Circuit remanded five issues for us to address.
Since the commencement of the proceeding s on remand, we have encouraged the
parties to attempt resolution of the outstanding issues. To this end, we have issued

Orders that requir ed periodic filing of status reports of settlement discussions, extend ed
the time to file procedural comments on the administrative process for our consider ation

of the remanded issues, and stay ed the proceeding on remand to provide additional time
for the parties to achieve a local resolution of the issues. See, Orders 2010

- 01

- 14 ( Jan.
21, 2010 ) and 2010

- 11

- 18 (Nov. 1 8, 2010)

. Pursuant to our Orders, the parties have filed
Joint Reports on the Status of Settlement Discussions (Joint Reports) on March 18, May

17
, September 24, and December 15, 2010

. In the Joint Reports, t he parties have informed us of the progress m ade to date in
reaching agreement on the outstanding issues and of the possibility of progress to be

made in the near future

. In January of last year
, LAWA and the T1/T3 Carriers informed
us that they had reached agreement on one of the five remanded issues (that is, the
timeliness of the T1 Carriers’ objection to LAWA’s use of fair market valuation in setting

the base rent in Terminal 1 )

. More recently
, as stated in t he Dec

. 15, 2010 Joint Report
, they to ld us that the one

- on

- one discussions between LAWA and Alaska Airlines resulted
in “significant progress” to “finally and completely” resolve all their outstanding disputes

in the matter. De c. 15, 2010 Joint Report, at 3.3 Importantly, the Joint Reports al so described the continued discus sions between

LAWA and the LAX A irlines, including the T1/T3 Carriers, on possible revisions to the

Tariff imposing terminal charges at the airport. LAWA, according to the Dec. 15, 2010
Joint Report, recently agreed to pro vide the financial information that has been requested
by the T1/T3 Carriers
, related to the proposed changes to the terminal charges Tariff

.
Due to confidentiality concerns , LAWA will provide the information directly to
AvAirPros, the LAX Airlines’ outside consultant . AvAir Pros subsequently will analyze

the information and advise the T1/T3 carriers on their negotiations over the revised

Tariff.
The parties note that, “[i]f an agreement can be reached relating to a revised

Tarif f, it may moot the four remaining remanded issues

. ” Dec. 15, 2010 Joint Report at 4.
The parties further stated that it will take several months before the T1/T3 C arriers and
LAWA will be in a position to reach agreement, if at all, on the revised Tariff. To
facilitate this progress on a possible settlement agreement, the parties requested that we
continue to stay the remand ed case until July 31. Neither Airports Council International

NA ( ACI

- NA ) n or Air Transport Association ( ATA ) filed objections or co mments to the
parties’ request

.
We are heartened that the parties have moved forward in their attempts to achieve
a local resolution of the remaining issues and expect t hem to be in a position to make
significant p rogress in the upcoming six and a half months. Accordingly, because we
wish to encourage a local settlement of the remaining remanded issues
, we are willing to
grant the relief requested in the motion. We will continue to require the parties to
provide periodic status report s of settlement di scussions during this time period, in order
to keep the Department apprised of the progress of the negotiations. The status repo rts4

will be due by February 15, April 15, and June 15
, 2011, or such earlier time s as we may deem appropriate

. Accordingly,

1. We grant the Joint request ;

2. We stay the proceeding on remand until August 1
, 2011, during which the Los
Angeles World Airport (LAWA), on the one hand, and any or all of the T1/T3
Carriers, on the other hand, will attempt to resolve the remaining remanded i ssues

described in Order 2009

- 11

- 24 at 2

- 3, namely Paragraphs No. 1 (Airfield vs. non

airfield space), 2 (Other aeron autical uses of terminal space) , 4 (Burden of
persuasion on rentable space) and 5 (Monopoly power);

3. We order the T1/T3 Carriers and the LAW A to file a written status report as to the
progress of their settlement discussions by February 15, 2011, April 15, 2011, and

June 15
, 2011, or by such earlier time as the Department may order as
appropriate;

4. We invite the T1/T3 Carriers, the Los Angeles World Airport, the Airports

Council International

– NA, and the Air Transport Association to file replies to
the submissions described in Ordering paragraph 2, no later than August 11, 2011,
if a settlement ag reement is not achieved by August 1 , 2011

.
SO ORDERED
By:

CHRISTA FORNAROTTO Deputy Assistant Secretary for Aviation and I nternational Affairs
(SEAL)

Dated5 An electronic version of this document is available on the World Wide Web at

http://dms.dot.gov//reports/reports_ aviation.asp OST

- 2001

- 27331

We served a copy of Order on the persons listed in the Service List

. SERVICE LIST

U.S. DOT Dockets U.S. Department of Transportation 1200 New Jersey Avenue, S.E., Washington, DC 20590
Steve S. Rosenthal, Esq. Jeffrey A. Tomasevich, Esq. J.D. Taliaferro, Esq. KAYE SCHOLER LLP 901 Fifteenth Street, N.W., Suite 1100 Washington, DC 20005

- 2327 srosenthal@kayescholer.com;jtomasevich@kayescholer.com ; jtaliaferro@kaysc holer.com TEL: (202) 682

- 35 00 FAX: (202) 682

- 3580

Roy Goldberg Sheppard, Mullin, Richter & Hampton 1300 I Street, N.W., Suite 1100 East Washington, DC 20005

- 3314 rgoldberg@sheppardmullin.com TEL: (202) 218

- 0007 FAX: (202) 218

- 0020
Robert S. Kneisley Associate Counsel Leslie Abbott Attorney Southwest Airlines Co. 1901 L Street, NW Suite 640 Washington, DC 200366

Howard Kass Vice President, Legal Affairs US Airways Group, Inc. 1401 H Street, NW Suite 1075 Washington, DC 200 0 5
Thomas O’Grady Deputy General Counsel Alaska Airlines, Inc. 19300 International Boulevard Seattle, WA 98188

- 5303
Jacqueline Peter Counsel Frontier Airlines, Inc. 7001 Tower Road Denv er, CO 80249

Richard P. Magurno Senior Vice President, General Counsel and Secretary Air Tran Airways , Inc. 9955 AirTran Boulevard Orlando FL 32827

Edward P. Faberman Wiley Rein LLP 1776 K Street, NW Washington, DC 20006

Carmen A. Trutanich Los Angeles City Attorney Kell e y Martin, Esq. General Counsel of LAWA Ra ymond S. Ilgunas, Esq. Assistant General Counsel City of Los Angeles Attorney’s Office Los Angeles World Airports One World Way Los Angeles, CA 90045 Kellymartin@lawa.org ; rilgunas@lawa.org ; c.trutanich@lacity.org TEL: (424) 646

- 5010; FAX: (424) 646

- 96177

David A. Berg, Esq. Vice President & General Counsel Airport Transport Association of America 1301 Pennsylvania Avenue, NW Washington, DC 20004 dberg@airlines.org ; kandrus@airlines.org TEL: (202) 626

- 4234 FAX: (202) 626

- 4139

Robert P. Silverb erg, Esq. Silverberg, Goldman & Bikoff, LLP 1101 30 th Street, N.W. Suite 120 Washington, DC 20007 rsilverberg@sgbdc.com TEL: (202) 944

- 3300 FAX: (202) 944

- 3306

Scott P. Lewis Anderson & Kreiger LLP One Canal Park, Suite 200 Cambridge, MA 02141 slewis@andersonkreiger.com TEL: (617) 621

- 6560 FAX: (617) 621

- 6501
Monica R. Hargrove, General Counsel Airports Council International

– North America 1775 K Street, N.W. Washington, DC 20006 mhargrove@aci

- na.org ; TEL: (202) 293

- 8500 FA X: (202) 331

- 1362
Nancy Kessler, Esq. Office of General Counsel U.S. Department of Transportation 1200 New Jersey Avenue, S.E. Washington, DC 20590 Nancy.kessler@dot.gov TEL: (202) 366

- 9287 FAX: (202) 493

- 01 54

The Honorable Richard C. Goodwin Administrative Law Judge Office of Hearings, M

- 20, Room 5411 U.S. Department of Transportation 1200 New Jersey Avenue, S.E. Washington, DC 20590 Richard.goodwin@dot.gov;ira.leibowitz@dot.gov;patricia.matthews@dot.gov TEL: (202) 366

- 2139; (202) 366

- 2139 Legal Assistant (202) 366

- 5121 FAX: (202) 366

- 75368

Ros alind A. Knapp Deputy General Counsel U.S. Department of Transportation 1200 New Jersey Avenue, S.E., W92

- 312 Washington, DC 20590 Lindy.knapp@dot.gov TEL: (202) 366

- 4713

Paul M. Geier Assistant General Couns el for Litigation U.S. Department of Transportation 1200 New Jersey Avenue, S.E., W94

- 310 Washington, DC 20590 Paul.geier@dot.gov TEL: (202) 366

- 4731

Christa Fornarotto Deputy Assistant Secretary for Aviation And International Affairs U.S. Department of Transportation 1200 New Jersey Avenue, S.E., W88

- 324 Washington, DC 20590 Christa.fornarotto@dot.gov TEL: (202) 366

- 4551

Dana Gresham Assistant Secretary for Governmental Affairs U.S. Department of Transportation 1200 New Jersey Avenue, S.E., W85

- 332 Washington, DC 20590 dana.gresham@dot.gov TEL: (202) 366

- 4573

Jill Zuckman Assistant Secretary and Director of Public Affairs U.S. Department of Transportation 1200 New Jersey Avenue, S.E., W93

- 310 Washington, DC 20590 Jill.zuckman@dot.gov TEL: (202) 366

- 45709

Bill Mosley Public Relations U.S. Department of Transpor tation 1200 New Jersey Avenue, S.E., W93

- 501 Washington, DC 20590 Bill.mosley@dot.gov TEL: (202) 366

- 5582