Supreme Court Kills Riordan’s Airport Fee Hike on Airlines

The U.S. Supreme Court on Monday ended Los Angeles’ long-running bid to collect higher fees from the airlines using Los Angeles International Airport, an effort that Mayor Richard Riordan has pursued without success for almost seven years.

Some landing fee hikes at LAX have been upheld over the years, but the city’s controversial formula for computing a portion of the fee has been contested all along. Monday’s decision ends the city’s attempt to legalize its approach.

The results of the Riordan administration’s failed gambit: Taxpayers are stuck with millions of dollars in wasted legal expenses, and the airport owes the airlines nearly $100 million in fees that it charged, all of which now have been deemed illegal. Airport officials have been putting that money aside in case the Supreme Court elected not to hear the city’s appeal of a lower court ruling, so they do not anticipate any disruption to city or airport services as a result.

Jessica Copen, a spokeswoman for the mayor, said the administration was not particularly surprised or disappointed by the court’s decision, which simply allowed the lower court’s ruling to stand.

“We’re moving on,” she said.

When he ran for mayor in 1993, Riordan’s main campaign plank was his promise to add 3,000 police officers to the Los Angeles Police Department in four years. He said he would do that without raising taxes and proposed instead to extract the money from the airport, either by leasing it to a private operator or by raising landing fees.

In essence, the Riordan administration argued that the city should be allowed to charge landing fees based on the value of the land at the airport in terms of what is known as “opportunity cost.” That would mean that the airport would be valued not just according to its value as an airport but according to its worth if put to another use.

From the start, however, the airlines vigorously objected. They complained that the city’s formula for computing the higher landing fees was illegal and without precedent.

In its lawsuit challenging the administration’s move, United Airlines argued that the opportunity cost scheme “was a dramatic departure from traditional airport practices in the United States.”

Laurence Silberman, a judge with the U.S. Court of Appeals for the District of Columbia, agreed last year with the airlines. Silberman noted that the city receives federal money for operating the airport and thus cannot argue that the land value of the airport can be based on anything other than its use as an airport.

“The city is like an owner of a hot dog stand who claims his opportunity cost is the revenue he would earn by selling cocaine rather than hot dogs,” he wrote.