Order 2014-6-7 

 Served: July 1, 2014 

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

 OFFICE OF THE SECRETARY

 WASHINGTON, D.C.

 Issued by the Department of Transportation

 On the First day of July, 2014 

________________________________________________ 

 : 

AER LINGUS GROUP PLC, ET AL., : 

 : DOT-OST-2007-28118 

 v. : 

 : 

LOS ANGELES WORLD AIRPORTS, ET AL. : 

 : 

ORDER TO SHOW CAUSE

Summary

This Order proposes to grant the September 4, 2013, motion of the Los Angeles World 

Airports (LAWA) to dismiss, with prejudice, the joint complaint by 22 foreign air 

carriers operating out of the Tom Bradley International Terminal (TBIT Carriers)

1 at the 

Los Angeles International Airport (LAX), and to terminate the proceeding. The proposed 

action is based on our tentative findings that: twenty of the TBIT Carriers signed rate 

agreements with LAWA that relinquished their rights to proceed with the subject case; 

one TBIT Carrier (Aer Lingus) entered into an independent settlement agreement with 

LAWA that resolved its fee dispute; and the other TBIT Carrier (Mexicana) entered into 

a partial settlement agreement with LAWA about its fee dispute, is in liquidation and 

 

1 The Complainant TBIT Carriers included Aer Lingus Group Plc (Aer Lingus); Air Pacific; Air Tahiti Nui; 

All Nippon Airways Co., Ltd.; Asiana Airlines, Inc.; British Airways Plc; Cathay Pacific Airways Limited; 

China Airlines, Ltd.; China Eastern Airlines; Compañia Mexicana de Aviación, S.A. de C.V.(Mexicana); 

Deutsche-Lufthansa AG; El Al Israel Airlines Ltd.; EVA AIRWAYS Corp.; Japan Airlines International 

Co., Ltd.; Korean Air Lines Co., Ltd.; LAN Airlines S.A.; Lan Peru, S.A.; Philippine Airlines, Inc.; 

QANTAS Airways Limited; Singapore Airlines Limited; Swiss International Air Lines Ltd.; and Thai 

Airways International Public Co., Ltd.
undergoing an asset sale in bankruptcy, and was subject to a Federal Aviation 

Administration (FAA) termination of its operations specifications. 

Accordingly, by this Order, we tentatively find that there is no significant dispute 

remaining in this proceeding. We direct interested parties to show cause why the 

Department should not dismiss the joint complaint of the TBIT Carriers and terminate the 

proceeding as moot. Any objections to this Order are to be filed no later than 21 days 

from the issuance date of this Order and any answers to objections shall be filed no later 

than seven days thereafter. 

Background 

On April 30, 2007, the TBIT Carriers filed a joint complaint against the Respondents

2 

about Los Angeles World Airport's (LA WA's) use of a new "rentable space" 

methodology that calculated airline charges based on a share of common areasincluding public corridors, lobbies, and restrooms- rather than based only on the TBIT 

space occupied by the airlines ("useable space" methodology). The TBIT Carriers 

requested that we determine that a "significant dispute" existed, under 49 U.S.C. § 47129, 

and that the fee increases were unreasonable, unjustified and unjustly discriminatory, 

under the Anti-Head Tax Act, 49 U.S.C. § 40116 and the Airport Improvement Program 

grant assurances, 49 U.S.C. § 471 07(a). They also asked us to order Respondents to 

refund, with interest, all fees the TBIT Carriers paid under protest that we deem to be 

unlawful, under the Secretary's administrative authorities, 49 U.S.C. §§ 40113(a) or 

47129. The TBIT Carriers also sought to reserve their contingent right to file a complaint 

2 The Respondents include the Los Angeles World Airports (LAW A), operator of Los Angeles 

International Airport (LAX), owned by the City of Los Angeles (City). 

2 
under Section 47129, pending final court action on a pending request for reconsideration 

or rehearing en bane of a recent court decision3 in another Section 4 7129 proceeding 

finding foreign air carriers were not "air carriers" for purposes of Section 4 7129. 

Respondents' answer to the joint complaint stated that foreign air carriers were not proper 

complainants under Section 47129, the TBIT Carriers failed to raise a "significant 

dispute" under Section 47129, the joint complaint was procedurally deficient, and 

requested that we dismiss the joint complaint or move it to the FAA for docketing under 

"Part 16" ( 14 CFR Part 16). 

The TBIT Carriers replied by renewing their original requests. Thereafter, the TBIT 

Carriers moved that we adopt the record in an earlier proceeding involving LAX4 (known 

as LAX lll) as full and complete evidence and testimony in this proceeding and enter 

summary disposition for the TBIT Carriers, on the grounds that the LAX 111 record 

addressed whether: new and increased maintenance and operation (M&O) terminal 

charges were unreasonable and/or unjustly discriminatory; the "rentable space" formula 

was justified and reasonable; and the market method used to set a component of terminal 

rent was reasonable. 

The Respondents sought additional time to file their opposition to the TBIT Carriers' 

motion. In July, 2007, we partially granted Respondents' request, noting the "novelty 

and complexity of the issues raised" in the TBIT Carriers' motion. See, DOT Order 

2007-7-20 (July 26, 2007). Respondents subsequently filed an opposition to the TBIT 

Carriers' motion, requesting that we deny the motion and clarify the procedures 

governing the joint complaint. The TBIT Carriers replied in support of their motion. 

3 See, Port Authority of New York and New Jersey v. Dept. of Transportation, 479 F.3d 2 1 (D.C. Cir. 

2007). As Respondents indicated in a subsequently filed Notice to us, the Court denied the foreign airlines' 

petitions for rehearing and for rehearing en bane. l.Q.,_. at 33. 4 Alaska Airlines, Inc. v. Los Angeles World Airports, Docket No. OST-2007-27331 (LAX 1/1). 

3 
A joint motion was filed by the parties on October 31 , 2008, to stay the proceedings until 

the earlier of the date they jointly agree to apply to release the stay, and 45 days after 

issuance of a final, non-appealable decision in the LAX Ill proceedings. 5 

In the course of the LAX III remand proceedings, the parties settled their disputes, and, on 

July 3, 2013, we issued a Final Order in LAX III that dismissed the claims of the 

remaining carriers with prejudice and terminated the proceeding. 

6 No petition for judicial 

review of that Order was filed within the 60-day prescribed statutory time period, under 

49 U.S.C. § 46110(a). 

On September 4, 2013, Respondents moved to dismiss the TBIT Carriers' complaint with 

prejudice. Respondents explained that 20 TBIT Carriers relinquished their rights to 

proceed with this case (known as LAX IV), under the terms of new rate agreements they 

signed, respectively, with LA WAin December, 2012.7 Respondents further stated that 

Aer Lingus ceased operations at LAX in 2008, that, in August 2009, Aer Lingus and the 

City entered into a settlement agreement under which Aer Lingus received a cash refund 

5 See Order 2007-6-8 (June 15, 2007), finding that the new and increased M&O terminal charges on the 

useable space were reasonable and not unjustly discriminatory; the "rentable" space methodology for 

Terminals I and 3 was reasonably calculated but unjustly discriminatory in effect; and the market value 

component of terminal rent for Terminal 3 was unreasonable because it did not constitute an objective 

determination of fair market value for terminal space and was unjustly discriminatory as applied. On 

petitions for review by both the TBIT Carriers and the City, the United States Court of Appeals for the 

District of Columbia Circuit granted each petition in part, denied each petition in part, and remanded 

certain issues to the DOT for further proceedings. Alaska Airlines. Inc. v. U.S. Department of 

Transportation, 575 F.3d 750 (D.C. Cir. 2009)._The remanded issues included: requiring DOT either to 

justifY or to abandon its disparate treatment of airfield and non-airfield space; directing DOT either to 

justifY or abandon its objection to the City's considering non-aeronautical uses when setting terminal rents 

based upon FMY; directing DOT to consider any argument of the Terminal I Airlines' arguments that the 

60-day limitation ought not be enforced against them; directing DOT to revisit the Terminal 1/3 Carriers' 

complaint of discrimination and to apply to them the burden of persuasion that their disparate treatment is 

unjust; and, fmally, directing DOT to explain why this case does not present the extraordinary situation in 

which the alleged monopoly power is relevant to a fee dispute or, if it cannot, then go on to consider 

whether LAX had monopoly power in a relevant market. 6 See Order 2013-7- 1 (July 3, 2013). 7 Each agreement contained the following clause: 

12. Pending USDOT Complaints.12.2. If Airline is a complainant in Aer Lingus Group PLC. v. 

Los Angeles World Airports, USDOT Docket No. OST-2007-28118 ("LAX IV"), Airline 

acknowledges and agrees that its complaint in such proceeding before the US DOT does not now 

present a significant dispute within the meaning of 49 U.S.C. § 47129(c)(2) and consents to its 

dismissal with prejudice. 

4 
from the City, and the parties agreed, among other things, to resolve their disputes about 

terminal fees and charges at LAX. 8 Respondents further stated that Mexicana was a party 

(along with the other TBIT Carriers) to a 2008 partial settlement agreement with the City 

regarding the new terminal charges at LAX and received a terminal rental credit for 

future rent; that Mexicana filed for bankruptcy in Mexico and the United States on or 

about August 3, 2010, and suspended operations at LAX on or about August 28, 2010. 

The TBIT Carriers did not file in response to Respondents' motion to dismiss. 

Accordingly, we contacted counsel for the TBIT Carriers and received preliminary 

verbal confirmation that the subject issues had been resolved for 21 of the 22 TBIT 

Carriers. Subsequently, we held discussions with counsel for Mexicana about 

Mexicana's attempts to negotiate terms for its possible return to LAX; we also facilitated 

direct talks between LAW A and Mexicana. Nonetheless, we have not received 

Mexicana's consent to the dismissal of the subject case. 

In April, 2014, we learned that Mexicana was undergoing liquidation and that a Mexican 

judge ordered a sale ofMexicana's assets.9 On April30, 2014, effective May 29, 2014, 

FAA terminated Mexicana's operations specifications, under the authority provided by 

14 CFR Part 129. The FAA took such action due to Mexicana not possessing an air 

carrier operating certificate or aircraft, and not engaging in operations. 

Taking into account the above discussion and preliminary facts, we tentatively find that 

the respective TBIT Carriers have settled their fee disputes with the Respondents, that 

8 The Aer Lingus Settlement stated: 

Upon payment by the CITY to Aer Lingus, {Aer Lingus) will not seek a further refund from the 

CITY with respect to any aspect of fees or charges (such as landing fees, terminal fees and rental 

fees) it incurred in connection with its operations at LAX. Sections I, I. I (e). 9 See "Supplemental Disclosure by Maru E. Johansen Pursuant to II U.S.C. § 1518 Regarding Status of 

Concurso Proceeding." 04117/14, ECF No. 325, In re: Compania Mexicana de Aviacion, S.A.de C.V., 

Debtor in a Foreign Proceeding, (Bankr. S.D.N.Y.) (Case No. 10-14182). "[T]he Company's proceedings 

in Mexico have changed in status from proceedings seeking a reorganization result to proceedings in the 

nature of a liquidation." See also http://bigstory.ap.org/article/mexico-ends-bid-revive-mexicana-airline. 

5 
one TBIT Carrier no longer is in operation, and that no significant dispute exists under 

Section 47129. 

ACCORDINGLY, 

I. We direct all interested persons to show cause why the Department should not 

grant Respondents' Motion for Dismissal with Prejudice of the TBlT Carriers' 

Complaint, and dismiss, with prejudice, the claims of Aer Lingus Group Pic; 

Air Pacific; Air Tahiti Nui; All Nippon Airways Co., Ltd.; Asiana Airlines, 

Inc.; British Airways Pic; Cathay Pacific Airways Limited; China Airlines, 

Ltd.; China Eastern Airlines; Compafiia Mexicana de Aviaci6n, S.A. de C.V.; 

Deutsche-Lufthansa AG; El AI Israel Airlines Ltd.; EVA AIRWAYS Corp.; 

Japan Airlines International Co., Ltd.; Korean Air Lines Co., Ltd.; LAN 

Airlines S.A.; Lan Peru, S.A.; Philippine Airlines, Inc.; QANTAS Airways 

Limited; Singapore Airlines Limited; Swiss International Air Lines Ltd.; and 

Thai Airways International Public Co., Ltd., in this action; 

2. Objections or comments to our tentative findings and conclusions shall be filed 

no later than 21 days from the issuance date of this Order. Answers to 

objections shall be due no later than seven business days thereafter; and 

3. This Order will be served on the persons listed in the Service List. 

SO ORDERED 

By: 

>/v<1.J)rJ 

Brandon Belford 

Deputy Assistant Secretary for Aviation and International Affairs 

An electronic version ofthis document is available at www.regulations.gov , 

DOT-OST-2007-27331. 

We served a copy of this Order on 

listed in the Service List. 

July 1 , 2014, on the persons 

6 
SERVICE LIST 

U.S. DOT Dockets 

U.S. Department of Transportation 

1200 New Jersey Avenue, S.E., 

Washington, DC 20590 

Steven S. Rosenthal 

J.D. Taliaferro 

KAYE SCHOLER LLP 

901 Fifteenth Street, N. W., Suite 1100 

Washington, DC 20005-2327 

srosenthal@kayescholer.com; jtaliaferro@kayscholer.com 

Michael Feuer 

Los Angeles City Attorney 

Raymond S. Ilgunas 

General Counsel of LAW A 

Tamami Yamaguchi 

Deputy City Attorney 

City of Los Angeles Attorney's Office 

Los Angeles World Airports 

One World Way 

Los Angeles, CA 90045 

rilgunas@lawa.org; 

Brian K. McCalmon 

KLGATES 

1601 K Street, NW 

Washington, DC 20006-1600 

Brian.mccalmon@klgates.com 

Paul C. Jasinski 

General Counsel Americas 

James B. Blaney 

Senior Counsel Americas 

British Airways PLC 

72-20 Astoria Blvd 

Jackson Heights, NY 11370 

Jim.blaney@ba.com 

Arthur J. Molines 

General Counsel, North America 

7 
Deutsche Lufthansa AG 

1640 Hempstead Turnpike 

East Meadow, NY 11554 

Arthur.molins@dlh.de 

William C. Heuer, Partner 

Duane Morris LLP 

1540 Broadway 

New York, NY 10036-4086 

David A. Berg 

Vice President & General Counsel 

Airlines for America 

1301 Pennsylvania Avenue, NW 

Washington, DC 20004 

dberg@airlines.org 

Robert P. Silverberg 

Silverberg, Goldman & Bikoff, LLP 

1101 30th Street, N.W. Suite 120 

Washington, DC 20007 

rsilverberg@sgbdc.com 

Scott P. Lewis 

Anderson & Kreiger LLP 

One Canal Park, Suite 200 

Cambridge, MA 02141 

slewis@andersonkreiger.com 

Tom Devine 

General Counsel 

Airports Council International- North America 

1601 L Street, NW, Suite 300 

Washington, DC 20036 

tdevine@aci-na.org 

Nancy Kessler 

Office of General Counsel, U.S. Department of Transportation 

1200 New Jersey Avenue, S.E. 

Washington, DC 20590 

nancy.kessler@dot.gov 

The Honorable Richard C. Goodwin 

Administrative Law Judge 

Office of Hearings, U.S. Department of Transportation 

55 M Street, S.E. 

Washington, DC 20590 

richard.goodwin@dot.gov; patricia.mattbews@dot.gov 

8 
Judith S. Kaleta 

Deputy General Counsel 

U.S. Department of Transportation 

1200 New Jersey Avenue, S.E., W92-312 

Washington, DC 20590 

judy.kaleta@dot.gov 

Paul M. Geier 

Assistant General Counsel for Litigation 

U.S. Department of Transportation 

1200 New Jersey Avenue, S.E., W94-310 

Washington, DC 20590 

paul.geier@dot.gov 

Susan Kurland 

Assistant Secretary for Aviation 

and International Affairs 

U.S. Department of Transportation 

1200 New Jersey Avenue, S.E., W88-314 

Washington, DC 20590 

susan.kurland@dot.gov 

Brandon Belford 

Deputy Assistant Secretary for Aviation 

and International Affairs 

U.S. Department of Transportation 

1200 New Jersey Avenue, S.E., W88-324 

Washington, DC 20590 

brandon.belford@dot.gov 

Kathryn B. Thomson 

General Counsel 

U.S. Department of Transportation 

1200 New Jersey Ave., S.E., W92-308 

Washington, DC 20590 

kathryn.thomson@dot.gov 

9