Both Sides Laud LAX Fee Ruling : Airport: Judge favors city on some points, airlines on others. U.S. transportation chief will review decision.

An administrative law judge said Wednesday that city officials erred in their calculations when they tripled airport landing fees at Los Angeles International Airport nearly two years ago.

But the city’s methodology was largely upheld and the fees will remain in effect while the judge’s ruling is reviewed by U.S. Transportation Secretary Federico Pena.

Landing fees were increased in the waning days of Mayor Tom Bradley’s Administration. Venture capitalist-turned-mayor Richard Riordan has aggressively promoted moneymaking schemes such as cappuccino bars at the airport to fund city services, including the hiring of more police.

Representatives of the city and the airlines both portrayed the ruling as a victory and suggested that Pena’s final decision, due June 30, will be subject to lengthy court appeals.

On the critical issue of valuation of airfield land, Administrative Law Judge John J. Mathias sided with the airlines, calling the city’s reliance on fair market value, rather than historical value, as “unreasonable.” But on other key points, the judge rejected the carriers’ claim that the city had inflated costs in order to raise landing fees.

The dispute started in July, 1993, when the city raised landing fees from 51 cents to $1.56 per 1,000 pounds. The airlines fought back and the city held firm, threatening to close LAX unless the fees were paid.

“This is a big win for the city,” said Ted Stein, chairman of the Board of Airport Commissioners. “Other than the cost of land, the judge went along with our entire methodology. The airlines challenged $1.01 of the [$1.56] fee, and the land issue accounts for only 20 cents.”

Carol Hallett, president of the Air Transport Assn., an industry trade group, claimed that Mathias’ ruling “vindicates our argument that the airlines and public are being charged fees beyond legitimate costs in order to divert excess revenue off the airport.” The group vowed to press Pena to order LAX to refund a portion of the fees or use the money as a credit toward future landing fees.

Both sides said that they expected Pena to go along with the judge’s ruling and that the dispute over airport land valuation would be decided by the courts.

Nothing in the ruling prohibits the city from further raising rates, Stein said. “The board will meet in July to examine its costs of service,” he said. “Then it will set rates.”

In December, 1993, Pena helped mediate an agreement in which the airlines paid the fees under protest while challenging their legality.