Airlines Ask Supreme Court to Hold Down Landing Fees

By virtually any measure, the last decade has been a wrenching one for the airline industry.

Commercial air carriers lost $10 billion in the past three years alone--in large part because intense competition held down ticket prices. Between 1982 and 1992, the average ticket price rose by only 7%, the Air Transport Assn. of America says.

At the same time, landing fees and airport rental costs paid by commercial airlines easily outpaced inflation. Those fees--levied by airport authorities--have risen by 83% over the decade, the association says.

Now, a desperate airline industry is urging the Supreme Court to rein in the charges, arguing that federal law and the Constitution’s interstate commerce protections forbid municipal authorities from charging excessive fees for the use of their airports.

“This case goes to the whole theory of what airports are supposed to be doing,” said Washington attorney Walter S. Smith Jr., who represents Northwest Airlines in a challenge to the landing charges at the Grand Rapids, Mich., airport. “Are they supposed to make profits, or simply recover their costs? Of course, the passengers ultimately end up paying these costs through higher fares.”

The justices will hear arguments Monday, in the case of Northwest Airlines vs. County of Kent, Mich., 92-97, and the outcome is almost certain to influence a similar dispute between air carriers and the Los Angeles Airport Commission.

Earlier this year, Los Angeles International Airport announced that it would triple airline landing fees, but the carriers balked. The dispute has escalated, and the Airport Commission has threatened to block carriers that refuse to pay the higher rates from landing at the nation’s third-busiest airport, starting Dec. 4.

BACKGROUND: In 1972, the Supreme Court appeared to give airports a green light to charge airlines per-passenger fees to cover operating costs. But Congress quickly passed the Anti-Head-Tax Act, which prohibited airports from collecting “a tax, fee, head charge or other charge” on each passenger using the facility. However, the same law said an airport may impose “reasonable rental charges, landing fees and other service charges” to help make the facility “self-sustaining.”

Not surprisingly, the courts have split on determining what constitutes a reasonable charge.

In one case, a U.S. appeals court in Chicago struck down the fees charged by Indianapolis’ airport as “wholly disproportionate to the costs . . . of serving the airlines and their passengers.” But other judges have given airports broad leeway to collect fees far above current costs so they can establish funds for expansion.

Based on this rationale, a U.S. appeals court in Cincinnati upheld the fees charged at the Grand Rapids airport.

In July, the airlines filed suit in Los Angeles federal court to challenge the new fees at LAX as unreasonable. That case is to be heard in December.

The airlines say the new fees will cost them $50 million per year. The Airport Commission counters that such fees nationwide account for only about 2% of total operating costs for the airlines, and the LAX increase amounts to only about 30 cents for a $100 ticket.

In their brief, lawyers for LAX say the new fees rightly force the airlines to help pay the true costs of handling airplanes.

Under the old formula, profits from the terminal concessions helped to subsidize such expenditures as runway maintenance and hangar operations, said Steven S. Rosenthal, an attorney representing LAX.

OUTLOOK: Lawyers for the Clinton Administration have entered the dispute and sided with airport officials.

They argue that the airlines do not even have a right to be heard in federal court. Instead, they say the airlines should have taken their complaints to the Federal Aviation Administration.

In recent years, the high court has sought to keep such disputes out of the federal courts, especially when a federal agency has been given regulatory responsibility.

The high court could reject the airlines’ claim on this basis alone. A written ruling can be expected early next year.