UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation on

the1 8 th day of September

, 2014 Order 2014

- 9

- 12

Served: September 18, 2014

AER LI N GUS GROUP PLC, ET AL.,

V.

LOS ANGELES WORLD AIRPORTS, ET AL. DOT

- OST

- 2007

- 28118

Summary FINAL ORDER

This Order makes final our proposed grant of the September 4, 2013, motion of the Los Angeles

World Airports (LAWA) Respondent s 1 to dismiss, with prejudice, the joint complaint, filed

April30, 2007, by 22 foreign air carriers operating out of the Tom Bradley International

Terminal (TBIT Carriersi at the Los Angeles International Airport (LAX), and to terminate the

proceeding, due to lack of a significant dispute. Respondents' motion had stated that 20 of the

22 TBIT Carriers had consented to dismissal of their claims through a new rate agreement with

LA WA, that Aer Lingus Group Pic (Aer Lingus) had ceased operations at LAX and received a

cash settlement resolving its claims and that Campania Mexicana de Aviaci6n, S.A. de C.V.

1 The Respondents include the Los Angeles World Airports (LAWA), the Los Angeles Board of Airport

Commissioners, and the City of Los Angeles, California (City).

2 The Complainant TBIT Carriers include Aer Lingus Group Plc (Aer Lingus); 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. (Mexicana); DeutscheLufthansa 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.(Mexicana), which was in bankruptcy, had suspended operations at LAX after having entered

into a partial settlement with LA W 

### A

By Order to Show Cause 2014

- 6

- 7 (July 1, 2014), we tentatively found there was no

significant dispute remaining in this proceeding (known as LAX IV) and directed interested

person s to show cause why we should not grant Respondents' motion. We required objections or

comments to be filed no later than 21 days from the issuance of the Order and answers to be filed

no later than seven days thereafter. No objections, comments, or answers have been filed.



### Background

As stated in our Order to Show Cause, the TBIT Carriers' had complained that

Respondents' use of a new (larger) "rentable space" methodology, vs. a formula based on the

(smaller) "useable space" methodology, for TBIT fees, was 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. § 47107(a), and constituted a "significant

dispute," under 49 U.S.C. § 47129. Respondents had objected to the joint complaint on the

grounds that the TBIT Carriers were not "air carriers" for purposes of Section 47129 and that

they failed to raise a "significant dispute," and requested that we dismiss the joint complaint or

move it to FAA for docketing under 14 CFR Part 16.

On June 15,2007, we issued our decision in LAX IIi finding, among other things, that

the use of the new rentable space methodology at LAX Terminals 1 and 3 as imposed on the LAX

III complaining carriers was reasonably calculated but unjustly discriminatory in effect. In July

2008, during the parties' respective judicial appeals of the Department's LAX III decision, the

TBIT Carriers entered into a partial settlement agreement with LA WA regarding certain terminal

charges at LAX for the period 2006 through 2009, and agreed to abide by a final, non

- appealable

3 See, Alaska Airlines, Inc. v. Los Angeles World Airports, Order 2007

- 6

- 8, Docket No. OST

- 2007

- 27331.decision in LAX III. On October 31, 2008, after other procedural pleadings had been filed in this

docket, the parties filed a joint motion that we stay the proceedings until the earlier of the date

they jointly agreed to apply to release the stay, and 45 days after the issuance of a final, non

appealable decision in the LAX III proceedings. On August 7, 2009, the United States Court of

Appeals for the District of Columbia Circuit issued its decision in LAX Ill, remanding certain

issues to the Department for further proceedings

. 4

On August 10, 2009, Aer Lingus (which had ceased operations at LAX by the end of

2008), received a cash payment by LA W A under a settlement agreement that resolved its fee

dispute. On July 21, 20 1 0, the TBIT Carriers and LAWA entered into an amended partial

settlement agreement regarding certain terminal charges at LAX for the 2010 calendar year.

In December, 2012, 20 of the TBIT Carriers (excluding Aer Lingus, which had resolved it s

fee dispute independently, and Mexicana, which was in bankruptcy proceedings) signed rate

agreements with LAWA that expressly relinquished their rights to proceed with LAX IV. On July

3, 2 0 13, we issued an Order in the LAX III remand proceeding that dismissed the claims of the

remaining carriers, with prejudice, and terminated the proceeding, due to the parties' settlement

agreements m . t h at case

. 5

On April17, 2014, Mexicana filed a disclosure in the Bankruptcy Court for the Southern

District ofNew York that the carrier's proceedings in Mexico changed from a reorganization to a

4 See 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 FMV; directing DOT to consider any argument of the Terminal ! Airlines'

arguments that the 60

- day limitation ought not be enforced against them; directing DOT to revisit the Terminal l/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.

5 See DOT Order 2013

- 7

- 1 (July 3, 2013).liquidation

. 6 Finally, on April30, 2014, effective May 29, 2014, the Federal Aviation

Administration (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.

On July 1, 2014, taking into account the above discussion and findings, we directed

interested parties to show cause why we should not dismiss the joint complaint of the TBIT

Carriers and terminate the proceeding as moot. No objections or comments were filed.

Decision

Based on above discussion and facts, we find that the TBIT Carriers have settled their fee

disputes with the Respondents, that one TBIT Carrier (Mexicana) no longer operates, and

therefore that no significant dispute exists under Section 47129.

ACCORDINGLY,

1. We grant Respondents' Motion for Dismissal with Prejudice ofthe TBIT Carriers'

Complaint, and dismiss, with prejudice, the claims of Aer Lingus Group Plc; 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. Except to the extent granted by this Order, we dismiss as moot any pending motions or

requests in this proceeding; and

3. We terminate this proceeding.

SO ORDERED

6 See "Supplemental Disclosure by Maru E. Johansen Pursuant to 11 U.S.C. § 1518 Regarding Status of Concurso

Proceeding." 04/17/14, ECF No. 325, In re: Campania Mexicana de Aviacion, S.A.de C. V

.. Debtor in a Foreign

Proceeding, (Bankr. S.D.N.Y.) (Case No. 10

- 14182).By:

Susan L. Kurland

Assistant Secretary for Aviation and International Affairs

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

DOT

- OST

- 2007

- 27331.

We served a copy of this Order on 18 September

in the Service List. , 2014, on the persons listed

### 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 700

Washington, DC 20005

- 2327

srosenthal@kayescholer.com; jtaliaferro@kayscholer.com

Michael Feuer

Los Angeles City Attorney

Raymond S. Ilgunas

General Counsel of L A WA

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. MolinesGeneral Counsel, North America

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 Transportation55 M Street, S.E.

Washington, DC 20590

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

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

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