Order 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 15th day of February, 2012

________________________________________________

:

ALASKA AIRLINES, INC., ET AL. , :

: DOT-OST-2007-27331

v. : 

:

LOS ANGELES WORLD AIRPORTS, ET AL. :

:

ORDER DISMISSING ALASKA AIRLINES’ CLAIMS

AND

FOURTH ORDER GRANTING AN INTERIM STAY OF PROCEEDINGS AND 

EXTENDING DEADLINE

TO FILE PROCEDURAL COMMENTS

By this Order, the United States Department of Transportation (Department) 

grants the June 22, 2011, Joint Stipulation of Alaska Airlines, Inc. and Respondents1 for 

Dismissal with Prejudice of Alaska Airlines’ claims in this case. The Department also

grants the December 1, 2011, Joint Motion of the Complainants2 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, 2012.3

 This Order also requires the parties to continue to report to 

us the status of their settlement discussions. 

 1 The Respondents in this case include the Los Angeles World Airports (LAWA), operator of Los Angeles 

International Airport (LAX), owned 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 Airways 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 

Motion to Extend the Stay in This Proceeding to December 1, 2011. 
2

We initiated 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 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 reasonableness 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 (LAWA). 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 issued 

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 resolution 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 

Discussions (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 of 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 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 
3

the base rent in Terminal 1. More recently, as stated in the June 22, 2011 Joint 

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

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

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

also request that Alaska’s claims in this proceeding be dismissed with prejudice and state

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 

negotiations. Dec. 1, 2011 Joint Motion at 4. The 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.”

• 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 T1/T3 

Airlines’ complaint of discrimination and to apply to them the burden of 

persuasion that their disparate treatment 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 power in a relevant geographic market.”

Neither Airports Council International-NA (ACI-NA) nor Airlines for 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 progress 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 negotiations. The next 

status report will be due by June 8, 2012.

Accordingly, 

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

2. We grant the Dec. 1, 2011, Joint Motion;

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

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

4. We order the T1/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-2007-27331

We served a copy of this Order on February 15, 2012, 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. 

Jefferey 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@kayscholer.com

TEL: (202) 682-3500 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) 218-0020
6

Robert S. Kneisley

 Associate General Counsel

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 20006
7

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 30th 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) 493-0154
8

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) 366-4573
9

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