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Panel acts to control LAX terminals

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Times Staff Writer

Despite intensive lobbying from airline representatives to delay the matter, the city’s Airport Commission voted unanimously on Monday to spend up to $154 million to take over several terminals at Los Angeles International Airport.

By gaining control of Terminals 2 and 5, airport officials hope to free up aircraft parking spots for discount carriers and other airlines that have repeatedly asked to add flights at the world’s fifth-busiest airport.

Airlines that operate in the two terminals said they will fight the takeover in court, contending the airport agency would be violating the terms of their leases.

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“We’re very disappointed,” said Robert S. Span, an attorney with Paul Hastings, who represents Delta Air Lines, which operates in Terminal 5, and an organization of carriers that offer flights in Terminal 2. “We’re going to evaluate our legal options.”

But airport officials say the terms of the carriers’ leases specifically allow the airport agency to buy back bonds the airlines used to finance improvements to the terminals.

Once these bonds are paid off, the agency can terminate the leases, officials say. The agency said it will move immediately to use cash and credit to buy back the bonds.

Through long-term leases, five carriers control a majority of gates at LAX, leaving airport officials unable to accommodate many requests from other airlines to add flights. More than 60 passenger airlines offer service at LAX.

LAX is unusual in that it operates only 3 1/2 of its nine terminals, through what officials now call an outdated arrangement. Most other major airports control a majority of their facilities.

The city’s airport agency says several of the five carriers with long-term leases hoard their gates and use them inefficiently.

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“We know that there are airlines that can use some of these underutilized gates,” said Airport Commissioner Walter Zifkin. “We have a duty of fulfilling a public trust here.”

Monday’s vote is likely to exacerbate tensions between the airlines and the city’s airport agency. The Airport Commission voted recently to increase terminal rents for carriers in Terminals 1 and 3, and also doubled maintenance fees for other carriers. Carriers are lobbying the City Council to review the matter. The council has until Friday to decide.

On Monday, a trade group representing most airlines sent a strongly worded letter to Mayor Antonio Villaraigosa, asking him to urge the council to intercede.

“While we understand the airport’s desire to capture some additional revenues, the level of these increases ... [has] created a very untenable situation for all the airlines at LAX,” wrote Jim May, president of the Air Transport Assn.

Airport officials said Monday’s action was perhaps the most significant move undertaken at LAX in the last few decades, adding that it will have a measurable impact on how the airport looks and its flight mix.

The agency hopes eventually to take control of the other terminals it doesn’t operate. Officials said the agency plans to increase terminal fees to pay off debt it uses to pay back bonds.

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But airlines disagreed with airport officials’ arguments that they are not efficiently using their aircraft parking spots.

“Currently, 15 airlines operate 52 domestic and international flights daily out of the 10 wide-body aircraft gates at Terminal 2, making it nearly impossible to add additional capacity,” said a written statement from LAX Two Corp., an organization that represents airlines in Terminal 2.

The entity, which includes Hawaiian and Northwest airlines and Air Canada, also questioned the airport agency’s use of debt to pay off the bonds. In 2006, the bonds used to finance improvements at Terminal 2 had an average interest rate of 3.2%, the corporation said. Company officials added that using additional debt at a higher interest rate to buy out those bonds “doesn’t make financial sense.”

Airline representatives also repeatedly asked the commission to postpone the matter, saying they were unaware it was on the agenda until they were contacted by a Times reporter.

“We were extremely surprised and concerned about the item quietly appearing on the agenda,” said Doug Blissit, vice president of public affairs and corporate real estate for Delta.

Airport staff members told commissioners they had spoken repeatedly with airlines over the last decade about their plans.

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jennifer.oldham@latimes.com

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