O rder 2012

- 2

- 12 Served: February 15, 2012

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

Issued by the Department of Transportation

on the 1 5 th day of February

, 2012

________________________________________________ : ALASKA AIRLINES, INC ., ET AL.

, :

: DO T

- OST

- 2007

- 27331

v. :

: LOS ANGELES WORLD AIRPORTS, ET AL

. :

:

ORDER DISMISSING ALASKA AIRLINES’ CLA IMS AND FOURTH 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 June 22 , 2011

, Joint Sti pulation of Alaska Airlines, Inc. and Respondents 1 for

Dismissal w ith P rejudice of Alaska Airlines’ claims in this case. T he Department also

grants the December 1, 2011

, Joint Motion of the Complainants 2 and Respondents to

continue the stay of further proceedings in the case and to extend the deadline for filing

written submissions on certain procedural and evidentiary issues (the “Remanded

Issues” ) until June 29 , 2 012. 3 This Order also requ ires the parties to continue to r eport to

us the stat us of their settlement discussions.

1 The Respondents in this case include the Los Angeles World Airports (LAWA), operator of Los Angeles International Airport (LAX), owne d by the City of Los Angeles.
2 The Complainants include certain carriers that operated out of Terminals 1 and 3 at Los Angeles International Airport (LAX) at the time the complaint was filed in Docket No. OST

- 2007

- 27331, namely Southwest Airlines and US A irways at Terminal 1 (T/1 Carriers) and AirTran Airways, ATA Airlines, Frontier Airlines, and Midwest Express at Terminal 3 (T/3 Carriers).
3 Due to our grant of the parties’ December 1 requests, there is no need to rule on the parties’ July 28 Joint Mot ion to Extend the Stay in This Proceeding to December 1, 2011.2 We initiated further proceedings in this case following the issuance of th e
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 Orders 2009

- 11

- 24 (Nov. 24, 2009) and 2009

- 12

- 17

(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 reaso nableness of new terminal fees and

new fee methodologies imposed at the Los Angeles International Airport, following a

complaint filed by certain air carriers in Terminals 1 and 3 (T1/T3 Carriers) against the

airport operator, Los Angeles World Airports (L AWA). As explained in Order 2009

- 11

-
24, the D.C. Circuit remanded five issues for us to address.

Since the commencement of the proceedings on remand, we have encouraged the

parties to attempt resolution of the outstanding issues. To this end, we have is sued

Orders that required periodic filing of status reports of settlement discussions, extended

the time to file procedural comments on the administrative process for our consideration

of the remanded issues, and stayed the proceeding on remand to provide additional time

for the parties to achieve a local res olution of the issues. See Orders 2010

- 01

- 14 (Jan. 21,

2010)

, 2010

- 11

- 18 (Nov. 18, 2010) and 2011

- 1

- 13 (Jan. 14, 2011). Pursuant to our

Orders, the parties periodically have filed Joint Reports on the Status of Settlement

Discussio ns (Joint Reports) from March 2010 through December 2011

. In the Joint Reports, the parties have informed us of the progress made to date in

reaching agreement on the outstanding issues and o f the possibility of progress to be

made in the near future. In January, 2010, LAWA and the T1/T3 Carriers informed us

that they had reached agreement on o ne of the five remanded issues, that is, the

timeliness of the T1 Carriers’ objection to LAWA’s use of fair market valuation in setting3 the base rent in Terminal 1 . More recently, as stated in the June 22, 201 1 Joint

Stipulation of Alaska Airlines and Respondents, they “ have entered into a settlement

agreement to, among other things, fully and finally r esolve all disputes related to the

claims Alaska Airlines raised [ in this proceeding ] ” Joint Stipulation, at 1. T he parties

also request that Alaska’s claims in this proceeding be dismissed with prejudice and stat e
that the stipulation “has no bearing on the remaining claims of the remaining

Complainants in this action.” Id.

The remaining parties, in their Dec. 1, 2011

, Joint Motion

, state that they have not

settled the four remaining remanded issues, but are interested in trying to resolve the

issues among themselves. They represent that they have engaged in “multiple meetings”

since July 28

, 2011, remain in discussions, and anticipate additional time to continue

nego ti ations . Dec. 1, 2011 Joint Motion at 4. T he remaining issues , as indicated in Order

2009

- 11

- 24 at 2

- 3

, are:

• Airfield vs. non

- airfield space . “We must therefore grant the T1/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. ”

• Bur den of persuasion on rentable space. “We therefore grant the City’s petition to the extent of directing the DOT on remand to revisit the T1/T3 Airlines’ complaint of discrimination and to apply to them the burden of persuasion that their disparate treatme nt is unjust. ”

• 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 powe r in a relevant geographic market.”

Neither Airports Council International

- NA (ACI

- NA) nor Airlines f or America

(A4A , previously called Air Transport Association ) filed objections or comments to the

parties’ request.4 We are heartened that Alaska and LAWA have resolved their claims against each

other and that LAWA and the remaining carrier complainants are continuing their

attempts to achieve a local resolution of the remaining issues

. We expect the parties to be

in a position to make significant prog ress in the upcoming five months. Accordingly,

because of our continued 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 report to us on settlement discussions during this time period, in

order to keep the Department apprised of the progress of the n egotiations. The next

status report will be due by June 8, 2012.

Accordingly,

1. We dismiss Alaska Airlines’ claims in this action wit h prejudice;

2. We grant the Dec. 1, 2011

, Joint M o t ion ;

3. We stay the proceeding on remand until June 29

, 2012

, 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 issues

described in Order 2009

- 11

- 24 at 2

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

airfield space), 2 (Other aeronautical uses of terminal space), 4 (Burden of

persuasion on rentable space) and 5 (Monopoly power);

4. We order the T 1/T3 Carriers and the LAWA to file a written status report as to the

progress of their settlement discussions by June 8, 2012

.5 SO ORDERED

By:

ROBERT LETTENEY Deputy Assistant Secretary for Aviation and International Affairs

(SEAL)

Dated

An electronic version of this document is available on the World Wide Web at http://dms.dot.gov//reports/reports_ aviation.asp
DOT

- OST

- 200 7

- 27331
We served a copy of this Order on February 1 5 , 2012, on the persons listed in the Service List

.
SERVICE LIST

U.S. DOT Doc kets U.S. Department of Transportation 1200 New Jersey Avenue, S.E., Washington, DC 20590

Steve S. Rosenthal, Esq. Jeff e rey A. Tomasevich, Esq. J.D. Taliaferro, Esq. KAYE SCHOLER LLP 901 Fifteenth Street, N.W., Suite 1100 Washington, DC 20005

- 23 27 srosenthal@kayescholer.com;jtomasevich@kayescholer.com ; jtaliaferro@kayscholer.com TEL: (202) 682

- 35 00 FAX: (202) 682

- 3580

M. 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

- 00206 Robert S. Kneisley

Associate General C ounsel Leslie Abbott

Attorney Southwest Airlines Co. 1901 L Street, NW Suite 640 Washington, DC 20036

Howard Kass Vice President, Legal Affairs US Airways Group, Inc. 1401 H Street, NW Suite 1075 Washington, DC 20005

Keith Loveless General Counsel Alaska Airlines, Inc. 19300 International Boulevard Seattle, WA 98188

- 5303

Jacqueline Peter Counsel Frontier Airlines, Inc. 7001 Tower Road Denver, CO 80249

Steve Rossum Executive Vice President & General Counsel Air Tran Airways, Inc. 9955 AirTran Boulevard Orlando FL 32827

Edward P. Faberman Wiley Rein LLP 1776 K Street, NW Washington, DC 200067 Carmen A. Trutanich

Los Angeles City Attorney Raymond S. Ilgunas , Esq.

General Counsel of LAWA City of Los Angeles Attorney’s Office Los Angeles World Airports One World Way Los Angeles, CA 90045 rilgunas@lawa.org ; c.trutanich@lacity.org TEL: (424) 646

- 5010; FAX: (424) 646

- 9617

David A. Berg, Esq. Vice President & General Counsel Airlines for America 1301 Pennsylvania Avenue, NW Washington, DC 20004 dberg@airlines.org TEL: (202) 626

- 4234 FAX: (202) 626

- 4139

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

- 6560 FAX: (617) 621

- 6501

Monica Hargrove Kemp , Esq. General Counsel Airports Council International

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

- na.org ; TEL: (202) 293

- 8500 FAX: (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

- 01548 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

- 7536

Rosalind 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 Counsel 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

Robert Letteney Deputy Assistant Secretary for Aviation

And International Affairs U.S. Department of Transportation 1200 New Jersey Avenue, S.E., W88

- 324 Washington, DC 20590 Robert.letteney@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

- 45739 Sasha Johnson Assistant Secretary and Director of Public Affairs U.S. Department of Transportation 1200 New Jersey Avenue, S.E., W93

- 310 Washington, DC 20590 Sasha.johnson@dot.gov

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

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

- 5582