A US Department of Transportation ruling on how payment should be divided for the new terminal at Miami International Airport could have a big impact on future airport funding.

The $975 million project, planned to be completed by the year 2003, became the centre of a legal dispute when six airlines objected to paying additional landing fees to fund the terminal, which will almost certainly be used exclusively by American Airlines.

In the ruling, a DOT judge agreed this was unfair and has recommended that at least $390 million of the overall cost should not be included in the airport's methodology for issuing general landing fees and should instead be picked up by American alone. At presstime, transportation secretary Rodney Slater was expected to make a final decision on the case in late March.

The six airlines which made the complaint - Air Canada, Delta Air Lines, Lufthansa, Trans World Airlines, United Airlines and US Airways - feel vindicated and believe the decision could establish an important precedent that carriers should not try to use this sort of funding to gain an unfair competitive advantage. But US airports are concerned in equal measure about such a precedent if Slater supports the ruling. They worry that the DOT could routinely interfere in how airports raise and manage their funds.

'We have expressed concern that airports ought to have a wide range of options as to how they structure their [financing]. Miami has to have the right to do that and we are trying to protect it,' says David Plavin, president of the Airports Council International - North America. 'We don't want to throw the baby out with the bathwater.'

But Tim Abbott, the assistant county attorney who led the counsel team for Dade County and the airport, says although the judge is not questioning the airport's methodology, the ruling could still affect how airports structure future deals. 'What is at issue is whether you can include all of these costs in that methodology. However, this has the effect of undoing the methodology itself,' he says.

The Air Transport Association says it is taking no stance on the issue. But there is growing antipathy between the ATA and the two US airport associations. The ATA has published an analysis of the capital requirements of 430 US airports which finds they will need $25 billion over the next five years - only half the estimate of the ACI-NA and the other airports association, the American Association of Airport Executives.

'We recognise our customers' needs on the ground as well as in the air, but we do not support grandiose, gold-plated projects,' says ATA president Carol Hallett. But the ACI-NA's Plavin argues that many of the primary airports in the US were built in the 1950s and 1960s, making them increasingly expensive to operate or modernise.


Source: Airline Business