Court Backs Airports on Fee Hikes

In a decision that is likely to lead to a major victory for Los Angeles airport officials, the Supreme Court ruled Monday that local authorities have broad power to impose “reasonable” charges on airlines for use of their airports.

On a 7-1 vote, the court rejected a claim by the airline industry that courts should carefully review landing charges and limit fees that might be considered excessive.

The ruling rebuffs a challenge by Northwest Airlines to higher fees imposed at the Grand Rapids, Mich., airport but the case has been closely watched because the major airlines made a nearly identical legal attack on the sharply higher fees imposed last year at Los Angeles International Airport, the nation’s third busiest.

The high court said that federal law puts only two clear limits on airport fees. First, municipal officials may not impose a per-passenger charge. Second, they may not divert money from airport fees to pay for non-airport expenses.

Otherwise, an airport’s fees are legal so long as they are “based on some fair approximation” of its costs, the court said. An airport board may even accumulate a substantial surplus because the money could be needed for future building costs.

The law “does not authorize judicial inquiry focused on the amount of the airport’s surplus,” Justice Ruth Bader Ginsburg wrote for the court.

Ginsburg also said that the courts should not substitute for federal regulatory oversight, which is provided by the Department of Transportation. An airline attorney said Monday that air carriers may now ask transportation officials to review the fees.

Last year, the major airlines protested after the Los Angeles Department of Airports decided to impose a threefold increase, to $1.56 per 1,000 pounds gross weight on landing. Under the new fee schedule, a typical Boeing 747 would pay $900 to land at LAX.

Still, the new fees at LAX remain well below the levels at other major airports, such as Kennedy International in New York ($2.21 per 1,000 pounds), O’Hare International in Chicago ($2.27 per 1,000) and Washington Dulles ($2.70 per 1,000).

Nonetheless, the airlines initially refused to pay the higher fees at LAX, and airport officials threatened to bar them from landing. In December, a showdown was averted when the airlines agreed to pay the fees under protest while they fight them in federal court in Los Angeles. The case is pending before U.S. District Judge A. Wallace Tashima.

Not surprisingly, airport officials said that they were delighted with Monday’s decision and predicted that it will lead to the dismissal of the pending lawsuit.

“This validates what we were saying from the beginning, that municipalities can set reasonable rates and charges for the airport,” said Ted Stein, president of the Los Angeles Airport Commission.

The lead lawyer for the airlines agreed that his clients are not likely to prevail in the federal court.

“It’s clear the (Supreme) court really didn’t want to get into the business of scrutinizing rates at airports,” said Walter A. Smith Jr., who represents Northwest Airlines in the Los Angeles case. He noted, however, that the airlines remain free to file a complaint with the Transportation Department alleging that the fees are unreasonable.

The ruling also came as no surprise to lawyers who have followed the case closely. Repeatedly, the justices have taken a hands-off approach to complex matters of federal regulation.

During the oral argument in the Michigan case in November, Chief Justice William H. Rehnquist wondered aloud why federal judges should be presumed to have the expertise to scrutinize the mathematical formulas for assessing fees charged to commercial airlines, general aviation and concession operators. That job would be handled better by officials in the Federal Aviation Administration, a branch of the Transportation Department, he suggested.

Despite its legal authority, the FAA has not aggressively examined airport fees. In December, Transportation Secretary Federico Pena announced that his department will act promptly in the future to resolve a dispute, such as that in Los Angeles.

Monday’s opinion in the case (Northwest Airlines vs. Kent County, 92-97), stops short of ordering judges to drop any cases involving airport fees.

“Our opinion in this case emphasizes that the (Transportation Department) has regulatory authority to enforce the federal aviation laws,” Ginsburg wrote. “There is no cause for the courts to offer a substitute for conventional public utility regulation.”

In their appeals, the airlines argued that fees for using the nation’s airports rose 83% in the last decade, while their profits plummeted. In 1991, the commercial airlines paid $3.4 billion in airport fees, amounting to 4.5% of their total costs.

Their lawyers urged the Supreme Court to rein in the fees but federal law does not set distinct limits.

In 1973, Congress barred airports from charging per-passenger fees but it also said that airport authorities may “collect reasonable rental charges, landing fees and other service charges from aircraft operators for the use of airport facilities.”

Ginsburg said that those words give judges little authority for intervening. Justice Clarence Thomas dissented, charging that the majority opinion appears to give federal regulators a “broad mandate” to review airport charges.