World Airports BOARD FILE NO. 1615

Los Angeles

World Airports

LAX

Van Nuys

City of Los Angeles

Eric Garcetti

Mayor

Board of Airport

Commissioners

Beatrice C. Hsu

President

Valeria C. Velasco

Vice President

Sean 0. Burton

Gabriel L. Eshaghian

Nicholas P. Roxborough

Belinda M. Vega

Karim Webb

Justin Erbacci

Chief Executive Officer

RESOLUTION NO. 27517

BOARD FILE NO. 1615

rescinded Resolution 27279

WHEREAS, on recommendation of Management, there was presented for approval, Fiscal Year

2022-2023 Passenger Terminal Rates and Charges for Los Angeles International Airport,

Attachments A -C hereto and made part hereof, for the period beginning July 1, 2022 through June

30, 2023, for [a] the Los Angeles International Airport Passenger Terminal Tariff, as amended, [b]

agreements for use of passenger terminal space and equipment using the Tariff rates and charges

methodology, and [c] the Rate Agreements; and

WHEREAS, the COVID-19 pandemic negatively impacted both airport and airline operations. The

decline in passenger traffic caused all "activity -based" rates and charges (e.g., landing fees,

common -use charges, the Federal Inspection Services [FIS] rate, among others) to increase

significantly. In response, Los Angeles World Airports (LAWA) successfully implemented the

"Airline Cost Stability and Recovery Plan" (Plan) beginning in Fiscal Year (FY) 2020 to: (1) make

Los Angeles International Airport (LAX) rates and charges more competitive, (2) mitigate the

increase in rates and charges for airlines due to reduced activity, (3) harmonize common -use costs

across the airport, and (4) achieve stability in LAX financial operations; and

WHEREAS, pursuant to said Plan, LAWA adopted and implemented the Amended Rate

Methodology and Further Amended and Restated Rate Agreement (FARRA), and took over

operations and maintenance and rate -setting responsibilities for the common -use facilities

previously managed by the Tom Bradley International Terminal Equipment Company (TBITEC);

and

WHEREAS, as aeronautical activities continue to recover, the cost reduction and deferral measures

undertaken as part of the Plan in previous budget years have abated for FY2023. While no further

debt restructurings or deferrals are contemplated, approximately $35 million of mitigations remain

to help stabilize the activity -based rates, subject to adjustment should conditions further improve;

and

WHEREAS, in accordance with the LAX Passenger Terminal Tariff (Tariff) and Amended Rate

Methodology, rates and charges for use of passenger terminal space and equipment at LAX are

set each fiscal year. These rates and charges are set pursuant to the rate -setting methodology

outlined in the Tariff, which is based on the recovery of capital investments and actual incurred and

accrued expenses associated with the operations and maintenance of Terminals 1 through 8, the

Tom Bradley International Terminal, Bradley West Gates, and other passenger terminal -related

areas. The Rate Agreement, which was approved by the Board of Airport Commissioners (Board)

in September 2012, and amended and restated in December 2019, and further amended in June

2021, modifies the Tariff rates and charges established each fiscal year for airlines that are

signatories to the Rate Agreement; and

WHEREAS, the airline rates and charges included the following major modifications and common -

use costs:

Rate Mitigation

While passenger traffic is forecasted to reach 38 million enplaned passengers, a 73% increase

from the FY2021-2022 forecast of 22 million, the rates and charges still reflected higher than

expected increases in common -use charges. To effect a steady increase in common -use rates,

World Way Los Angeles

California

90045-5803 Mail

P.O. Box 92216 Los Angeles California

90009-2216 Telephone

855 463 5252 Internet www.lawa.org

Resolution No. 27517

- 2

LAWA budgeted $35 million in mitigations pursuant to the Methodology to the FIS, common use

holdroom, and baggage system operations and maintenance requirements.

Debt Restructuring

No further debt amounts are to be restructured to reduce the FY2022-2023 debt service.

Revenue Sharing

Approximately $8 million in the FIS Tier -One concessions revenue sharing is budgeted for

FY2022-2023. This provided credit and reduced the FIS requirement used to calculate the FIS

rate to be charged to signatory airlines. FIS Tier -One concessions revenue sharing represent

25% of revenues received from duty free and foreign exchange concessions at the airport. Staff

are estimating that no Tier -Two terminal cash flow revenue sharing will be available in FY2022-

2023. Tier Two revenue sharing is calculated based on net cash flow in excess of the Terminal

Renewal and Improvement Fund established in the Rate Agreement.

TBITEC Common Use Services

The FY2022-2023 rates include TBITEC's budgeted operations and maintenance costs to

support common use facilities and equipment, including baggage systems, passenger boarding

bridges, and FIS areas.

Prior to the transition, these costs were recovered by the airline

consortium directly from the airlines. Now these costs are included in, and recovered through,

LAX Rates and Charges; and

WHEREAS, by this Resolution, the Board approved the following actions for terminal rates and

charges:

1. Rates and Charges based on the Amended Rate Methodology for f ii the Tariff and Agreements

using the Tariff Rates and Charges Methodology, and [II] the FARRA

[i]

Rates and Charges for the Tariff and Agreements using the Tariff methodology

Staff requested that the Board approve the rates and charges (Attachments A -C hereto

and made part hereof) for use of demised and common -use passenger terminal space and

equipment at LAX. The rates and charges shall be applicable to terminal users subject to

the Tariff, and to agreements that use the Tariff rates and charges terms and/or

methodology.

The Amended Rate Methodology will include the following types of rates and charges,

including the revised equalized common -use rates, applicable to the use of all LAWA

common -use facilities and equipment:

Terminal Buildings Rate - to recover capital costs, operations and maintenance (O&M)

costs and reserve deposits (if any) allocable to the terminals;

FIS Fee - to recover capital costs, O&M costs and reserve deposits (if any) allocable to

the FIS facilities;

Common -Use Holdroom Rate - to recover estimated holdroom requirement, which is the

product of the Terminal Buildings Rate and the total square footage of all Common Use

Holdrooms in the Terminals;

Common -Use Baggage Claim Rate - to recover the estimated baggage claim

requirement, which is the total of the sum of O&M expenses associated with the

common -use inbound baggage systems, and the product of the Terminal Buildings Rate

and the total square footage of all Common Use Baggage Claim Areas in the Terminals;

Resolution No. 27517

- 3

Common -Use Outbound Baggage System Rate - to recover the estimated outbound

baggage system requirement, which is the total of the sum of O&M expenses associated

with the common use outbound baggage systems and the product of the Terminal

Buildings Rate and the total square footage of all Common -Use Outbound Baggage

System Areas in the terminals;

Common -Use Ticket Counter Rate - to recover estimated common -use ticket counter

requirement, which is the product of the Terminal Buildings Rate and the total square

footage of the Common -Use Ticket Counter space in the terminals;

Terminal Special Charges - to recover charges for certain equipment and services that

LAWA provides in certain terminals. These include charges for:

- Custodial Services

- Terminal Airline Support Systems

- Loading Bridge Capital and Maintenance

The calculated Tariff Terminal Buildings Rate is $247.05 per square foot per year (psfpy),

6.6% higher than the current rate of $231.76 psfpy. The rate increase is primarily due to

the cessation of debt restructuring for FY2023.

The FIS Fee, pursuant to the Tariff, is $18.54 per deplaned international passenger, and

is 4.2% higher than the current rate of $17.79. The rate increase is mainly due to the

cessation of debt restructuring for FY2023.

The attached rates and charges list also include the following Tariff common -use rates

applicable to common -use passenger terminal space and equipment:

Common -Use Holdroom Rate - $969.59 per class 4 turn (which includes the following

aircraft types: B757-300, B767, and B787, as defined in the Amended Rate

Methodology), which is higher than the current rate of $920.75 per class 4 turn. The

increase is primarily due to the cessation of debt restructuring and lower COVID

mitigations;

Common -Use Baggage Claim Rate - $2.73 per deplanement, which is lower than the

current rate of $5.26 per deplanement. The decrease is due to higher -than -expected

passenger activity associated with common -use baggage claim devices;

Common -Use Outbound Baggage System Rate - $8.79 per enplanement, which is

higher than the current rate of $7.51 per enplanement. The increase is due to the

additional baggage system space and higher O&M costs due to higher common -use

activity and lower COVID-19 mitigation;

Common -Use Ticket Counter Rate - $0.73 per enplanement, which is higher than the

current rate of $0.29 per enplanement. The previous rate was a holdover rate and is not

comparable to the current common -use ticket counter configuration and passenger pool

for FY2023.

[ii]

Rates and Charges for the FARRA

Staff requested that the Board approve the rates and charges (Attachments A -C hereto

and made part hereof) based on the Amended Rate Methodology for use of demised and

common -use passenger terminal space and equipment at LAX, calculated in accordance

with the Rate Agreement. The Rate Agreement rates and charges shall be applicable to

airlines and airline consortiums that are signatories to the Rate Agreement. The rates and

charges are generally consistent with the projections provided to the airlines in past years.

Resolution No. 27517

- 4

The Terminal Building Rate pursuant to the Rate Agreement is $237.43 psfpy, 5.8 percent

higher than the current rate of $224.32 psfpy. The rate increase is primarily due to the

cessation of debt restructuring for FY2023.

The FIS Fee for Rate Agreement carriers is $17.03 per deplaned international passenger,

5.8% higher than the current rate of $16.09. The rate increase is mainly due to the

cessation of debt restructuring for FY2023.

Attachment A includes the equalized common -use rates to be charged to the Rate

Agreement carriers:

Common -Use Holdroom Rate - $925.54 per class 4 turn (which includes the following

aircraft types: B757-300, B767, and B787, as defined in the Amended Rate

Methodology), which is higher than the current rate of $869.73 per class 4 turn. The

decrease is primarily due to the cessation of debt restructuring and lower COVID

mitigations;

Common -Use Baggage Claim Rate - $2.69 per deplanement, which is lower than the

current rate of $5.15 psfpy. The decrease is due to higher -than -expected passenger

activity associated with common -use baggage claim devices;

Common -Use Outbound Baggage System Rate - $8.52 per enplanement, which is

higher than the current rate of $7.25 per enplanement. The increase is due to the

additional baggage system space and higher O&M costs due to higher common -use

activity and lower COVID-19 mitigation;

Common -Use Ticket Counter Rate - $0.69 per enplanement, which is higher than the

current rate of $0.26 per enplanement. The previous rate was a holdover rate and is not

comparable to the current common -use ticket counter configuration and passenger pool

for FY2023.

At the end of the fiscal year, LAWA will recalculate the rates and charges on the basis of

actual expenses, activity, and other factors affecting the calculations, and will determine

the amount of any overpayment (credit) or underpayment (deficit) due to or from each

airline.

2. FY2023 Rates and Charges for the Amended and Restated Rate Agreement

Certain carriers that are signatories to the Amended and Restated Agreement were unable to

meet the deadline to submit their signed FARRA due to low staffing and long lead times

resulting from the COVID-19 pandemic. Therefore, staff requested that the Board authorize

the Chief Executive Officer, or designee, to approve use of the FY2022-2023 FARRA rates for

signatories of the Amended and Restated Rate Agreement.

3. Terminal Buildings Rate for Non -Aeronautical Use

Staff requested that the Board approve use of the FY2022-2023 Tariff Terminal Buildings Rate

in effect under the Tariff for agreements covering non -aeronautical use of LAX passenger

terminals.

4. Per -Use Charge for Utilities

Staff requested that the Board approve an FY2022-2023 per -use charge for terminal utilities at

the rate of $7.49 psfpy, comprising $5.92 psfpy, $0.78 psfpy, and $0.79 psfpy for electricity,

water, and gas, respectively. The per -square foot costs are calculated as a pro -rata share of

Resolution No. 27517

- 5

concessionaires' estimated footprint as a proportion of total terminal usable square feet. For

FY2022-2023, concession spaces are estimated to occupy 5.64% of terminal usable square

footage. The equivalent per -usage rates are $0.2435 per kWh, $11.4304 per HCF, and

$0.9322 per Therm for electric, water, and gas, respectively.

5. Concessions Storage Rate

Concessionaires must rent storage space to meet health and safety requirements as well as

to store inventory to be able to meet customer demand. Staff requested that the Board approve

a separate Concessions Storage Rate at $247.05 psfpy. This rate represents an escalation of

the lesser of (1) the annual change in Consumer Price Index published by the Bureau of Labor

Statistics for "all urban consumers" for "all items" for the Los Angeles -Riverside -Orange County

Area (or a successor index), or 2) the annual change in the Tariff methodology Terminal

Buildings Rate.

Resolution 27279

Staff requested that the Board rescind Resolution 27279. The rates established through said

resolution have been superseded by the rates and charges presented for approval in this

Resolution.

7. Adjustments to Terminal Charges

Staff requested that the Board authorize the Chief Executive Officer, or designee, to adjust the

Terminal Charges as necessary to correct clerical or calculation errors upon approval as to

form by the City Attorney; and

WHEREAS, establishment or modification of any rate, fee or charge is exempt from California

Environmental Quality Act (CEQA) requirements pursuant to Article III, Class 1 (31) of the Los

Angeles City CEQA Guidelines; and

WHEREAS, actions taken on this item by the Board of Airport Commissioners will become final

pursuant to the provisions of Los Angeles City Charter Section 245;

NOW, THEREFORE, BE IT RESOLVED that the Board of Airport Commissioners adopted the Staff

Report; determined that this action is exempt from the California Environmental Quality Act (CEQA)

pursuant to Article III, Class 1 (31) of the Los Angeles City CEQA Guidelines; approved the Fiscal

Year 2022-2023 Passenger Terminal Rates and Charges for Los Angeles International Airport,

Attachments A -C hereto and made part hereof, for the period beginning July 1, 2022 through June

30, 2023, based on the Amended Rate Methodology for: [a] the Los Angeles International Airport

Passenger Terminal Tariff, as amended, and [b] the Further Amended and Restated Rate

Agreements; further approved the Fiscal Year 2022-2023 Passenger Terminal Rates and Charges

for Los Angeles International Airport, Attachments A -C hereto and made part hereof, for the period

beginning July 1, 2022 through June 30, 2023, based on the Amended Rate Methodology for the

Amended and Restated Rate Agreement; further approved use of the Fiscal Year 2022-2023

Terminal Buildings Rate for agreements covering: [a] non -aeronautical use of the Los Angeles

International Airport passenger terminals as such agreements' rental rate, and [b] concessions

agreements covering use of passenger terminal space as such agreements' rental rate; further

approved the Fiscal Year 2022-2023 per -square foot charge for utilities at the passenger terminal

buildings for the period from July 1, 2022 to June 30, 2023; further approved the Concessions

Storage Rate for concessions agreements covering use of passenger terminal space as such

agreements' concessions storage rental rate; further approved rescission of Resolution 27279,

thereby canceling the terminal rates and other charges set by the Board for the period ending June

Resolution No. 27517

- 6

30, 2022; and authorized the Chief Executive Officer, or designee, to adjust the Fiscal Year 2022-

2023 Passenger Terminal Rates and Charges as necessary to correct clerical or calculation errors,

upon approval as to form by the City Attorney.

o0o

I hereby certify that this Resolution No. 27517

is true and correct, as adopted by the Board of

Airport Commissioners at its Regular Meeting

held on Thursday, June 2, 2022.

Grace

igu Secretary

BOAR OF AIRPORT COMMISSIONERS

Attachments:

(A -C) Terminal Rates & Charges for July 1, 2022 - June 30, 2023

Los Angeles World Airports

Los Angeles International Airport

Terminal Rates and Charges

FY 2023 Budget

Terminal Buildings Rate per sqft per year

FIS Fee per deplaned international passenger

Common Use Rates -

Common Use Holdroom Rates per full turn (T5, T6 68B, TBIT, MSC) -

Aircraft class 1

Aircraft class 2

Aircraft class 3

Aircraft class 4

Aircraft class 5

Aircraft class 6

Attachment A

Passenger

Rate

Tariff

Agreement

247.05

237.43

18.54

17.03

2,666.37

$ 2,545.25

$ 1,696.78

1,619.70

1,211.99

1,156.93

969.59

925.54

775.67

740.44

484.79

$ 462.77

Common Use Baggage Claim System Rate per deplaned domestic passenge rate

2.73

2.69

Common Use Outbound Baggage System Rate per enplaned passenger

8.79

$ 8.52

Common Use BMU Fee per enplaned passenger

2.31

2.12

Common Use Ticket Counter Rate per enplaned passenger (T1.5, T6, TBIT)

0.73

0.69

Terminal Special Charges -

A. Custodial Rates

Average Custodial Rate per sqft per year

16.14

Custodial Charges for Common Use Areas -

a. Common Use Holdrooms (per enplaned passenger) (T5, TBIT, MSC)

0.44

b. Common Use Ticket Counters (per enplaned passenger) (T1.5, TBIT)

0.05

c. Common Use Baggage Claim Areas (per deplaned domestic passenger) ( T1.5, T5, TBIT dom)

0.04

B. Equipment Maintenance and Capital Rates

a. Terminal Airline Support System Rate per enplaned passenger (TBIT)

0.23

1. Terminal Airline Support System Special Charge for T1

2. Terminal Airline Support System Special Est. Charge for T2

b. Loading Bridge Rate - Maintenance (per full turn )-

& T3

138,390.62

$ 321,816.27

Aircraft class 1

262.91

Aircraft class 2

$ 167.31

167.31

Aircraft class 3

$ 119.51

Aircraft class 4

95.61

Aircraft class 5

76.48

Aircraft class 6

c. Loading Bridge Rate - Capital (per full turn )

47.80

Aircraft class 1

$ 187.28

Aircraft class 2

$ 119.18

119.18

Aircraft class 3

85.13

Aircraft class 4

68.10

Aircraft class 5

54.48

Aircraft class 6

34.05

$ 34.05

d. Loading Bridge Under Lease Capital Charge (per bridge per year)

52,000

$ 52,000

Specific per SQFT rate

Other

Rates

M&O Rate, UTC (Commuter & Other)

22.17

Concessions Storage Rate

247.05

Non -Aeronautical Utility Rates

Electricity per sqft per year

5.92

Water per sqft per year

0.78

Gas per sqft per year

0.79

Combined Utility Rate per sqft per year

7.49

Electricity per kWh

Water per HCF

0.2435

Gas per sqft per Therm

11.4304

0.9322

Note -

For purposes of setting rates for the fiscal year months ended June 2023, LAWA has made certain assumptions based upon existing leases.

Billing will be based on Leases/occupancy agreements in effect at the time of billing.

Terminal Rates and Charges - FY 2023

Exhibit 1

TERMINAL BUILDINGS RATES

Budget

2023

Budget

2022

Attachment B

Increase (Decrease)

Los Angeles International Airport

Amount

TERMINAL BUILDINGS REQUIREMENT

Unified Capital Requirement

Debt Service

348,629,539

$ 353,690,077

(5,060,538)

-1.4%

Less: Debt Service Restructured

(43,107,916)

Less: PFCs Used to Pay Debt Service

(129,883,601)

(97,507,062)

(32,376,540)

33.2%

Debt Service Net of PFCs

218,745,938

$ 213,075,100

5,670,838

2.7%

Debt Service Coverage

38,592,432

41,202,030

(2,609,599)

-6.3%

Amortization

122,575,009

105,708,041

16,866,968

16.0%

Unified Capital Requirement $

379,913,379

$ 359,985,171

19,928,207

5.5%

O&M Requirement

361,787,410

335,681,108 26,106,303

7.8%

TERMINAL BUILDINGS REQUIREMENT

741,700,789

$ 695,666,279

46,034,510

6.6%

Calculation of Tariff Terminal Buildings Rate

Terminal Buildings Requirement $

741,700,789

$ 695,666,279

46,034,510 6.6%

Divided by: Rentable Area

3,002,279

3,001,614

664

0.0%

Tariff Terminal Buildings Rate per sqft

247.05 $

231.76 $

15.28

6.6%

Calculation of Rate Agreement Terminal Buildings Rate

Terminal Buildings Requirement $

741,700,789

$ 695,666,279 $

46,034,510

6.6%

Less: Tier One Terminal Buildings Revenue Sharing

Less: TRIF Funded Delayed Amortization

(28,878,350)

(22,343,672)

(6,534,677)

29.2%

Net Terminal Buildings Requirement

712,822,439 $ 673,322,607 $

39,499,832

5.5%

Divided by: Rentable Area

3,002,279

3,001,614

664

0.0%

Rate Agreement Terminal Buildings Rate

237.43

224.32 $

13.11

5.8%

Rate Agreement Terminal Buildings Rate per sqft

237.43 224.32 $

13.11

5.8%

Terminal Rates and Charges - FY 2023

Exhibit 2

FIS RATES

Los Angeles International Airport

FIS REQUIREMENT

Attachment C

Budget Budget

FY FY

Increase (Decrease)

2023 2022

Amount

Capital Costs

Debt Service

Less: Debt Service Restructured

Less: PFCs Used to Pay Debt Service

64,886,836 $ 62,083,938

(50,731,629)

2,802,898

4.5%

Debt Service Net of PFCs

64,886,836 $ 11,352,309 $

53,534,527

471.6%

Debt Service Coverage

14,125,000 2,509,000

11,616,000

463.0%

Amortization

15,395,999

Amortization Deferral Recovery

2,883,643

1,415,421 $

1,468,222

103.7%

Capital Costs

97,291,478 $ 15,276,731 $

82,014,747

536.9%

O&M Expenses

O&M Expenses (Prior Actual FY) allocated on basis of space

51,023,997 44,829,908

6,194,089

13.8%

Specific FIS O&M --Custodial

13,507,316 19,020,479

(5,513,162)

-29.0%

Specific FIS O&M--Inbounds,Bag Carts, VSRs and APC

10,071,144 8,883,219

1,187,924

13.4%

Less: COVID 19 Mitigation

(15,000,000)

GROSS FIS REQUIREMENT

$ 156,893,935 $ 88,010,337 $

68,883,598

78.3%

NET FIS REQUIREMENT

$ 156,893,935 $ 88,010,337 $

68,883,598

78.3%

Calculation of Tariff FIS Rate

Net FIS Requirement

156,893,935 $

88,010,337 $

68,883,598

78.3%

Divided by: Deplaned International Passengers (forecast FY/actual FY)

8,462,209

4,947,086

3,515,123

71.1%

Tariff FIS Rate per deplaned international passenger

18.54 $ 17.79

0.75

4.2%

Calculation of Rate Agreement FIS Rate

Net FIS Requirement

$ 156,893,935 $ 88,010,337 $

68,883,598

78.3%

Less: Tier One FIS Concession Revenue

(8,309,000) (8,420,000) $

111,000

-1.3%

Less: TRIF Funded Delayed Amortization

(4,440,273)

Net FIS Requirement

$ 144,144,662 $ 79,590,337 $

64,554,325

81.1%

Divided by: Deplaned International Passengers (forecast FY/actual FY)

8,462,209

4,947,086

3,515,123

71.1%

Rate Agreement FIS Rate

17.03 $ 16.09 $

0.95 5.9%

Terminal Rates and Charges - FY 2023