The Los Angeles Board of Airport Commissioners announced a short-term settlement Tuesday that resolves a year-long fee dispute with five airlines.
As part of the settlement, United, American, Continental, Northwest and Delta agreed to pay a combined $33 million worth of annual increases for terminal maintenance and operating costs dating back to 2006. Additionally, the airlines agreed to help pay for a new $218 million central utility plant at the airport.
In return, Los Angeles World Airports - the city agency that operates LAX - will credit the airlines $20 million for expenses the carriers had paid in protest during the dispute.
Airlines operating at LAX pay a base rent in addition to extra fees for security and upkeep of common areas. The airport commission rewrote its leasing policy at the end of 2006, causing operating costs to nearly triple for airline carriers. LAX stood to collect an additional $35million a year under the disputed contracts, which went into effect in February 2007.
The five carriers had locked in their rental rates with long-term leases established during the 1980s, but were charged significantly more for terminal maintenance and operation costs. In a federal lawsuit filed last year, United, American and Continental claimed that the airport overstepped those long-term leases by reworking the formula.
Low-cost airlines operating at LAX have month-to-month leases that offer no rent protections.
No that ever slow saga continues, and will go trial it appears. LAWA recently appointed new NY based attorneys for such eventuality with next hearing scheduled for March.
What this agreement does for Delta is that it basically along with other 4 airlines agrees to pay new higher LAWA facility rates dating back to 2006, however does not cure the default which LAWA feels DL is in to begin with, and no longer should be able to occupy T-5.
While things clearly can take time to work their way through, LAWA at the end of the day tends to have the last laugh as this rental dispute settlement shows even after having lost out with the DOT judge initially.
From the desert to the sea, to all of Southern California