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FAA Docket for July 18, 2007

Updated: 7/18/07 | 4:42 PM


Applications and Petitions:

None

Answers and Replies:

Northwest Airlines, et al v. Indianapolis Airport Authority - Rebuttal of Respondants

Orders and Notices:

None

Rules and Regulations:

None

Grant of Petitions:

None




Northwest Airlines, Inc., Delta Air Lines, Inc., AirTran Airways, Inc., Continental Airlines, Inc. and Southwest Airlines, Inc. v. Indianapolis Airport Authority, Indianapolis International Airport, BAA-Indianapolis LLC

FAA Airport Docket No. 16-07-04

July 16, 2007

Rebuttal - Bookmarked

The Complaining Airlines' story is simple, and might even be compelling if it were true. They claim that the Authority made a sweetheart deal with FedEx, and now is sticking the Complaining Airlines with the bill. The reality is that the Authority negotiated the most advantageous deal it could obtain from FedEx - one that is consistent with the Authority's Grant Assurances. The resulting agreement is one that provides substantial benefits not only to FedEx and the Authority but also to the Airport's other users, including the Complaining Airlines. The Complaining Airlines make it appear that they have been harmed only by focusing selectively on parts of the story.

As explained in detail in Respondents' Answer and Motion to Dismiss and as elaborated below, the Authority staff negotiated a carefully crafted contract with FedEx that protects other Airport users from any negative landing fee rate effects of the FedEx deal. By design, the rent credit to which the Complaining Airlines object will always be less than the incremental landing fees paid by FedEx above a baseline amount (based, initially, on the amount of weight that FedEx was landing at the time the deal was struck), because the credit is defined as a percentage of the incremental landing fees (up to a maximum of 75%). Thus, if FedEx's landing fee revenues fail to exceed the baseline amount in any given year, there will be no credit and FedEx will pay (via "Additional Special Facility Rent") the full amortization of the cargo apron expansion. If FedEx's landing fees do exceed the baseline revenue level, then FedEx receives a rent credit limited to a percentage of the incremental revenue, up to (and capped by) the amount of the Additional Special Facilities Rental. The balance of FedEx's incremental landing fees go to reducing the landing fees payable by other airlines. Thus, contrary to their central claim, FedEx is paying for its own facilities. The Complaining Airlines are not paying for them.

To claim to be "harmed" by the FedEx transaction, the Complaining Airlines are forced to disconnect the rent credit from the rest of Amendment No. 3, to look at it in isolation, and to assume that they would have received (and would be entitled to) all of the benefits of the FedEx transaction regardless of the rent credit. However, there is no evidence that such a deal was possible. The business deal negotiated at length and memorialized in Amendment No. 3 is the best deal that the Authority was able to negotiate. Without the rent credit offered to FedEx, FedEx would not have expanded its facilities and, consequently, would not be able to increase its operations at the Airport. By seeking to claim the benefits of FedEx's additional landing fees and rent without taking account of the corresponding rent credits, the Complaining Airlines seek to reap the benefits of a deal that was never negotiated and does not exist.

Counsel: Spiegel & McDiarmid, Pablo Nuesch, 202-879-4000

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