60881742.DOCX -1- 

UNITED STATES OF AMERICA 

DEPARTMENT OF TRANSPORTATION 

OFFICE OF THE SECRETARY 

Washington, D.C. 

ALASKA AIRLINES, INC., et al., 

 v. 

LOS ANGELES WORLD AIRPORTS, et al. 

Docket No. 

OST-2007-27331 

COMPLAINANTS’ AND RESPONDENTS’ SEPTEMBER 7, 2012 

JOINT REPORT ON THE STATUS OF SETTLEMENT 

DISCUSSIONS AND JOINT MOTION TO EXTEND THE STAY IN 

THIS PROCEEDING TO JANUARY 28, 2013

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: 

AirTran Airways, Inc. 

ATA Airlines, Inc. 

Frontier Airlines, Inc. 

Midwest Airlines, Inc. 

Southwest Airlines Co. 

US Airways Group, Inc. 

Steven S. Rosenthal 

J.D. Taliaferro 

KAYE SCHOLER LLP

901 Fifteenth Street, NW 

Washington, DC 20005 

Phone (202) 682-3500 

Fax: (202) 682-3580 

email: srosenthal@kayescholer.com

 jtaliaferro@kayescholer.com

Carmen A. Trutanich 

Los Angeles City Attorney 

Raymond S. Ilgunas, 

 General Counsel, 

 Los Angeles World Airports 

LOS ANGELES CITY ATTORNEY’S OFFICE

Los Angeles World Airports 

One World Way 

Los Angeles, CA 90045 

Phone: (424) 646-5010 

Counsel for Respondents
COMPLAINANTS’ AND RESPONDENTS’ SEPTEMBER 7, 2012 JOINT 

REPORT ON THE STATUS OF SETTLEMENT DISCUSSIONS AND JOINT 

MOTION TO EXTEND THE STAY IN THIS PROCEEDING TO JANUARY 28, 2013

60881742.DOCX -2- 

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 and Government 

Affairs 

US AIRWAYS GROUP, INC. 

1401 H Street, N.W. 

Suite 1075 

Washington, DC 20005 

Jacqueline Peter 

Counsel 

FRONTIER AIRLINES, INC. 

7001 Tower Road 

Denver, Colorado 80249 

DATED: September 7, 2012 
COMPLAINANTS’ AND RESPONDENTS’ SEPTEMBER 7, 2012 JOINT 

REPORT ON THE STATUS OF SETTLEMENT DISCUSSIONS AND JOINT 

MOTION TO EXTEND THE STAY IN THIS PROCEEDING TO JANUARY 28, 2013

60881742.DOCX -1- 

The T1/T3 Airlines1 and Los Angeles World Airports2 (“LAWA”) (collectively, 

the “Parties”) hereby jointly file this status report and motion to extend time, in response 

to the DOT’s “Fifth Order Granting an Interim Stay of Proceedings and Extending 

Deadline To File Procedural Comments,” Order 2012-6-24 (“Fifth Order”), regarding the 

efforts to settle the remanded issues set forth in DOT’s Order 2009-11-24 (“November 24 

Notice”) and Order 2009-12-17 (“First Order”). 

BACKGROUND

On November 24, 2009, following remand of certain issues by the United States 

Court of Appeals for the District of Columbia Circuit (the “D.C. Circuit”), DOT issued 

the November 24 Notice in this case. The November 24 Notice directed the T1/T3 

Airlines and LAWA “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 Parties held a conference call with DOT on 

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

and DOT subsequently issued the First Order, directing the Parties to file, no later than 

 

1

The T1/T3 Airlines are six air carriers that on February 16, 2007, filed with DOT's 

Office of the Secretary a “Joint Complaint in Opposition to New Terminal Charges at Los 

Angeles International Airport.” Although Alaska Airlines, Inc. was a Complainant in this 

matter, by Order dated February 15, 2012, Alaska was dismissed from this proceeding 

with prejudice. 

2

Respondents in this case are 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’ SEPTEMBER 7, 2012 JOINT 

REPORT ON THE STATUS OF SETTLEMENT DISCUSSIONS AND JOINT 

MOTION TO EXTEND THE STAY IN THIS PROCEEDING TO JANUARY 28, 2013

60881742.DOCX -2- 

January 18, 2010, additional 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 remaining written and evidentiary 

issues from January 18, 2010 to October 18, 2010, but directed the Parties 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. 

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; namely, the “[t]imeliness of [the] T1 Airlines’ 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. The four remaining D.C.-Circuit-remanded 

issues from the DOT’s November 24 are: 

• Airfield vs. non-airfield space. “We must therefore grant the Tl/T3 Airlines’ 

petition and again remand the matter to the DOT either to justify or to abandon its 

disparate treatment of airfield and non-airfield space.” 

• Other aeronautical uses of terminal space. “We grant the City's petition in this 

respect and direct the DOT on remand, either to justify or to abandon its objection 

to the City's considering non-aeronautical uses when setting terminal rents based 

upon FMV.” 

• Burden of persuasion on rentable space. “We therefore grant the City's petition to 

the extent of directing the DOT on remand to revisit the Tl/T3 Airlines’ complaint 

of discrimination and to apply to them the burden of persuasion that their 

disparate treatment is unjust.” 
COMPLAINANTS’ AND RESPONDENTS’ SEPTEMBER 7, 2012 JOINT 

REPORT ON THE STATUS OF SETTLEMENT DISCUSSIONS AND JOINT 

MOTION TO EXTEND THE STAY IN THIS PROCEEDING TO JANUARY 28, 2013

60881742.DOCX -3- 

• Monopoly power. “On remand the DOT must explain why this case does not 

present the “extraordinary situation” in which 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 geographic market.” 

November 24 Notice at 2-3. 

 In a “Second Order” dated November 18, 2010 the DOT ordered the Parties to file 

a written status report and invited the parties to file, by January 17, 2011, written 

submissions on: 

 1. Whether the current record evidence on the four remaining remanded 

issues is sufficient or requires supplementation; 

 2. What, if any, additional fact finding or evidence is contemplated and for 

which of the remanded issues; 

 3. The justification for such additional fact finding or evidence; 

 4. Whether an oral evidentiary hearing is necessary to hear the new evidence, 

if any; and 

 5. Any other procedural or evidentiary issues the parties wish to note. 

 However, in response to a joint submission of the parties dated December 15, 

2010, which described efforts being made to resolve the outstanding disputes, DOT, in its 

Third Order, agreed to stay the remand proceedings until August 1, 2011 to allow the 

parties additional time to attempt to resolve the remaining issues. DOT also ordered the 

parties to file periodic Joint Status Reports. 

On June 22, 2011, Alaska Airlines and LAWA filed a Joint Stipulation for 

Dismissal, indicating that Alaska and LAWA have resolved their claims against each 

other. On July 28, 2011, the Parties filed a Joint Motion to Extend the Stay until 

December 1, 2011. On December 1, 2011, the Parties filed a Joint Motion to Extend the 
COMPLAINANTS’ AND RESPONDENTS’ SEPTEMBER 7, 2012 JOINT 

REPORT ON THE STATUS OF SETTLEMENT DISCUSSIONS AND JOINT 

MOTION TO EXTEND THE STAY IN THIS PROCEEDING TO JANUARY 28, 2013

60881742.DOCX -4- 

Stay until June 30, 2012. On February 15, 2012, DOT extended the Stay until June 29, 

2012 and also dismissed with prejudice Alaska’s claims against LAWA. On June 26, 

2012, DOT extended the Stay until September 28, 2012 and directed the parties to file a 

written status report as to the progress of their settlement discussions by September 7, 

2012. 

DESCRIPTION OF SETTLEMENT 

DISCUSSIONS SINCE JUNE 8, 2012

 Since June 8, 2012, the Parties have engaged in multiple meetings. Southwest 

Airlines and LAWA continue to be engaged in active settlement discussions and remain 

hopeful that a settlement can be achieved which will render moot the remaining issues 

between them (as well as AirTran, which is now a subsidiary of Southwest). 

 In addition, on September 17, 2012, LAWA staff intends to submit to the LAWA 

Board of Airport Commissioners (“BOAC”) an amendment to the Tariff. The Tariff 

amendment will include a new rates and charges methodology. If approved by BOAC 

and then subsequently accepted by any or all of the T1/T3 Airlines, the new rates and 

charges methodology could result in the complete dismissal of this action. Of course, the 

T1/T3 Airlines reserve their rights to challenge any new rates and charges methodology. 

The Parties therefore respectfully request that DOT stay further proceedings in 

this case until January 28, 2013.